- The facility will help businesses and financial institutions increase trade finance activities in Africa.
- Improved access to trade finance will help the flow of important goods and services.
- This includes agricultural goods like fertilisers, seeds, and machinery which will assist with food security issues in Africa.
British International Investment (BII), the UK’s Development Finance Institution (DFI) and impact investor, today announced a US$ 100 million finance facility with the Eastern and Southern African Trade and Development Bank (TDB). The investment is made to support essential trade finance activities, foster agricultural development and address challenges such as food insecurity.
The facility will enable TDB to provide financial support to local businesses and financial institutions in several key markets in Africa. Many African economies are facing economic challenges, including currency depreciation, rising inflation, debt issues, and climate-related vulnerabilities, all worsened by global economic factors like the Russia-Ukraine conflict and post-COVID economic turbulence.
TDB will use the financing to fund trade transactions, including importing and exporting goods, commodities, and essential services across the region. This capital allocation is crucial for overcoming trade barriers in Africa, including the withdrawal of international correspondent banks from the continent, and addressing the significant trade financing gap estimated at $80-120 billion. With improved access to trade finance, businesses can more easily engage in import and export activities, facilitating increased cross-border trade, contributing to food security, and spurring job creation, economic growth, and resilience in Africa.
The financing will allow local companies to acquire essential agricultural inputs, such as fertilisers, seeds, and machinery. By facilitating access to these critical resources, the facility aims to improve local production capabilities, increase agricultural productivity, support export sectors involving forex generation and raise the quality of food products. This helps address immediate food security issues and increases the agricultural sector’s capacity, global competitiveness, and economic output.
In recent years, TDB has strengthened its collaboration with financial institutions, seeing them as crucial partners to boost trade. This strategic partnership is important for increasing the flow of goods and services, including through financial institutions. The transaction builds on BII and TDB’s shared ambition of empowering important segments of the economy, as well as the private sector including SMEs, which the institutions are committed to supporting to promote inclusive growth across the continent.
Andrew Mitchell, Minister for Development and Africa, said: “This investment highlights the UK government’s commitment to supporting economic and agricultural development across Africa by empowering businesses, stimulating trade, and increasing the flow of essential goods and services. This funding will also help to lower trade barriers so that companies across the continent are better able to expand into overseas markets, access vital resources and tackle critical challenges such as food security.”
Ndaba Mpofu, the Director and Head of Financial Services Debt at British International Investment, said: “With this investment, BII is concentrating its money on providing important help to main financial organizations in countries we are committed to for a long time. This arrangement with TDB matches our main goal of dealing with the money shortages in areas that support local businesses to promote fair growth, increase trade flows, and strengthen economic resilience.”
Admassu Tadesse, the President and Managing Director of TDB Group, said: “TDB Group has been playing a significant role in the trade finance area, often working in opposition to economic trends to contribute to the availability of necessary products in important sectors such as agriculture and healthcare. This is the fourth arrangement we are making with BII and its previous form. We are happy to continue developing this important partnership, and through this new arrangement, improve efforts to deal with ongoing supply chain disruptions and currency shortages, and their impact on food security.”
