The African Development Bank’s board has approved a 200 million dollar trade finance line of credit for the Trade and Development Bank (TDB), the bank announced on November 9. The approval was made on October 28. The facility runs for up to 3.5 years, during which repaid funds can be rolled over into new transactions, which is why the bank expects it to catalyse more than 1 billion dollars in trade over its life.
TDB will on-lend to financial institutions, companies and small and medium sized enterprises in its member states whose import and export growth has been constrained by inadequate liquidity. The facility also supports procurement of refined petroleum products, fertiliser, pharmaceuticals and essential food commodities under the bank’s Global Energy and Fertilizer Crisis Response Framework.
The African Development Bank’s trade finance head, Lamin Drammeh, said the approval comes as African economies face rising energy and fertiliser prices, trade and logistics disruptions and tighter global financial conditions. TDB’s group executive vice president for finance and risk, Joy Ntare, noted the two institutions’ partnership also spans equity, risk sharing, co-financing and long term financing.
The structure is the point: a relatively small revolving line, recycled several times through a regional lender with an existing client network, is development finance’s standard answer to a trade finance gap that cannot be closed with project loans.