CDC Group, which is UK’s development finance institution and impact investor, has recently announced commitment to lending $75 million risk sharing facility with the Absa Group. Absa is one of the largest financial services company in Africa.
This is one of the largest trade commitment that CDC has done in Africa. It therefore aims at enabling capacity for African businesses to benefit and take advantage of trade opportunities available.
The trade commitment was due to the fact that many international banks have been through the derisking process. This leads to decreased flow of currency to African banks that lend local businesses. This has resulted to negative effect on the corresponding banking relationship across Africa and weakening the trade sector.
The risk Facility will enable the Absa Group to increase its lines of credit to other banks across Africa. This will therefore result in an increase in trade offering to many local businesses.
Supporting trade in Africa is a key way to reduce poverty. Thus, it is important to advance trade in Africa but accessing financing has been a challenge. The trade commitment will be a way to close the trade finance gap in Africa. Absa operates in some of Africa’s most challenged countries such as Mozambique,Botswana and Zambia.
CDC Group is a development finance institution owned by the UK government. The Department for International Development is responsible for CDC, with shareholder duties managed by the Shareholder Executive. Since 201, it has focused on the emerging markets of South Asia and Africa.
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