Development finance institution the African Development Bank (AfDB) has approved an unfunded $75-million trade finance Risk Participation Agreement (RPA) facility for financial services firm FirstRand Bank, which will enhance FirstRand's ability to underwrite trade finance transactions originating from issuing banks in several countries, including transition States and low-income countries across Africa.
It is estimated that, when fully utilised, this RPA facility will support about $500-million to $600-million of trade over the next three years, of which more than $100-million will support intra-African trade and exports.
The facility will support sectors like agriculture, manufacturing, energy and retail trade, which is consistent with the AfDB's goals of ensuring that Africa industrialises, is able to feed herself and the living standards of its people are significantly improved.
The facility is also an enabler in achieving the United Nations Sustainable Development Goals, the AfDB says.
“This facility, premised on a strategic credit-risk sharing mechanism, will help to promote inclusive economic growth in Africa’s low-income countries through increased facilitation of multi-sectoral import-export activities of local corporates and SMEs. It will also increase intra-Africa trade and regional financial integration in line with the Bank’s Hi5 strategic objectives,” says AfDB financial sector development director Stefan Nalletamby.