africa Banking COMESA Finance

US$300m trade boost for Comesa members

The African Development Bank (AfDB) has approved a US$300 million facility for the Trade and Development Bank to support economic and regional development within the Common Market for Eastern and Southern Africa region.

In a statement, AfDB said approval of the facility was anchored on promoting trade and economic development across the Common Market for Eastern and Southern Africa (Comesa) region, which Zimbabwe is part of.

“AfDB has re-affirmed its intention to boost economic and regional development on the African continent when its board approved a US$300 million support facility for the Eastern and Southern African Trade and Development Bank (TDB) on July 17, 2019.

It said the Common Market for Eastern and Southern Africa (Comesa) regional trade and project finance package consists of a composite funded trade finance and project finance facility, and an unfunded trade finance risk participation agreement.

This, AfDB said, comes on the heels of the African Continental Free Trade Area agreement, which came into force this month and the bank’s partnership framework featuring African development finance institutions, including the TDB, which committed to working together to scale up, speed up, and synergise African development.

“The facility’s trade finance component will enhance the TDB’s confirmation capacity, support its rapidly expanding forfeiture business, and help it become a globally acceptable confirming bank.

“The project finance component will facilitate the delivery of export-oriented infrastructure, which will promote regional trade within the Comesa region,” said AfDB, adding that the facility further demonstrates the bank’s longstanding and growing partnership with the TDB as a regional development finance institution in pursuit of shared development goals.

AfDB director for financial sector development, Mr Stefan Nalletamby, was quoted as saying that the risk participation agreement will enable the Bank and the TDB to share confirmation risk on African issuing banks.

“This will promote broad-based economic growth on the African continent by making international trade easier. It will benefit no less than 43 financial institutions operating in over 15 regional member countries, catalysing up to $2 billion worth of trade over the three-year period,” he said.

The financing will also scale up intra-African trade, and foster regional integration.

It is hoped that the trade finance funding will also boost the import-export trade activities of local corporates and small to medium enterprises, while the project finance component will support regional infrastructure development.

Source: Chronicle

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