By CYNTHIA MWALE
THE African Development Bank (AfDB) and Standard Chartered Bank have signed a US$400million risk participation agreement to support trade finance in various sectors in Africa.
The deal will provide trade finance support for imports and exports across vital economic sectors including agriculture and food to corporate and financial institution clients.
According to a joint statement issued by AfDB and Standard Chartered Bank in Lusaka yesterday, the agreement was signed during the AfDB annual general meeting held in Marrakech, Morocco.
This is the first time AfDB has signed such a bilateral risk sharing partnership with a commercial bank that will support trade flows of about US$3.6 billion in intermediate and finished goods, raw materials and equipment in Africa.
The three-year facility will support economic growth, foster development of the financial sector and promote regional integration.
It involves unfunded risk participation of US$200 million, where Standard Chartered will match AfDBs undertaking in every transaction, bringing the total maximum portfolio to US$400 million.
The facility is established based on a 50/50 risk-sharing agreement.
Speaking at the ceremony, AfDB private sector operations director Tim Turner said: The majority of African banks have small capital bases, which constrain their ability to obtain adequate trade finance limits from international banks and to undertake sizeable transactions that have significant development impact.
Mr Turner said through the risk-sharing facility with Standard Chartered, the programme will bolster the trade finance capacity of banks in Africa, and in turn, expand trade and regional economic integration.
Commenting on the development, Standard Chartered Bank chief executive officer for Southern Africa Ebenezer
Essoka said, We are delighted to be partnering with the AfDB for this risksharing programme, which will support a significant increase in the availability of trade finance in more than 20 countries in Africa, thereby creating jobs and sustaining economic growth.
Global trade is the lifeblood of the world economy and Standard Chartered is committed to supporting the growth of trade flows across our footprint markets in Asia, Africa and the Middle East. This partnership further strengthens our ability to serve the African market.
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