The African Development Bank Group approved a $200 million trade finance line of credit for the Trade and Development Bank on 28 October to boost intra-Africa trade. The revolving facility, expected to support more than $1 billion in transactions, will improve access to credit for financial institutions, corporations, and SMEs, according to the AfDB.
The revolving facility, which can operate for up to three-and-a-half years, is designed to address cash shortages that businesses face between purchasing goods, shipping products, and receiving payments, according to the AfDB.
By allowing repaid funds to be lent again, the structure is expected to support more than $1 billion in trade transactions over its duration, officials said.
The financing aims to improve access to trade credit for eligible financial institutions, corporations, and small and medium-sized enterprises (SMEs) across African markets, according to the AfDB. The initiative is intended to strengthen commercial relationships between African countries and encourage regional economic cooperation, supporting the goals of the African Continental Free Trade Area (AfCFTA), which seeks to ease cross-border trade and expand economic opportunities across the continent.
Part of the financing will support the procurement of critical commodities, including refined petroleum products, fertilisers, pharmaceuticals, and essential food supplies in TDB’s eligible member states, according to the AfDB. The initiative falls under the AfDB’s recently adopted Global Energy and Fertilizer Crisis Response Framework, which addresses economic pressures from energy and fertiliser market shocks.
The funding arrives as African businesses face higher energy and fertiliser prices, disrupted supply chains, and difficult global financial conditions, according to the AfDB. Lamin Drammeh, AfDB’s Head of Trade Finance, described the approval as timely given rising commodity prices, logistics difficulties, tighter financing conditions, and geopolitical uncertainty. He highlighted TDB’s regional knowledge and financial network as key assets in deploying the funds.
Joy Ntare, TDB Group Executive Vice President for the Finance and Risk Complex, welcomed the agreement as another important development in the relationship between the two institutions. She noted that existing cooperation covers equity investments, risk-sharing arrangements, co-financing activities, and long-term funding.
The facility is part of AfDB’s Trade Finance Line of Credit programme, which provides short-term financing to African financial institutions supporting imports and exports, with attention to institutions serving SMEs, according to the bank. Eligible institutions must demonstrate satisfactory corporate governance and risk management practices. The programme supports trade finance products including pre-shipment financing, post-shipment financing, factoring, and import loans.
Smaller businesses are expected to benefit from improved access to credit, as they often face greater difficulties obtaining trade finance than larger corporations, according to the AfDB. Improved liquidity could help businesses purchase supplies, complete cross-border transactions, and develop stronger commercial relationships throughout Africa, officials said.
The Trade and Development Bank is a multilateral financial institution established in 1985 to finance and foster trade, regional economic integration, and sustainable development in member states. The AfDB’s approval of the facility follows its broader efforts to close the trade finance gap in Africa, which the bank has previously identified as a significant barrier to economic growth on the continent.
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