As per the latest news, the Board of Directors of the African Development Bank Group has supported a Risk Participation Agreement of $50 million with Crédit Agricole Corporate and Investment Bank.
This arrangement will help African Banks and their small and medium-sized enterprise (SME) customers to compete in more extended regional and international trade. It is focused on enabling a cumulative trade transaction volume of $450 million over the next three years.
“This agreement boosts certainty among various African leaders to support a new trade dynamic on the continent,” explained Mohamed El Azizi, the African Development Bank’s Director General for North Africa. He added, “And this is important for the realization of the African Continental Free Trade Area, which will aid in bringing resilience, attract growth and boost a recovery that sets out opportunities and jobs.”
Stefan Nalletamby, the Bank’s Director for Financial Sector Development, stated, “This association will help Crédit Agricole CIB, an institution which is known for its obligation to Africa, to provide more trade finance by further supporting local banks. At the point when it is completely ready to execute, the partnership will help some 50 local issuing banks and their customers across different African nations. It should act as a stimulator for bigger trade flows over the next three years. ”
The aforesaid Risk Participation Agreement is focused on fulfilling the increasing demand in African markets for trade finance in critical economic sectors, such as agri-food, energy, manufacturing, healthcare, and services. It will also boost productive diversification in various African economies, creating more job opportunities and tax revenues.
The agreement guarantees commercial banks and African SMEs access to trade finance so that it will boost economic growth and regional integration.
Currently, many African banks are undercapitalized - a situation provoked by the worst effects of the Covid-19 pandemic - that restricts their ability to access lines of credit from global banks. This situation has been worsened by the lack of equity capital and conformity-related legal requirements, which has made international banks decrease their dedications and the size of correspondents in Africa.
The approval of the risk participation agreement matches with the African Development Bank’s main five strategic visions to establish the policies required for solid, sustainable, and inclusive development on the continent.
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