The Board of Directors of the African Development Bank (AfDB) has approved a US$310 million Trade Facilitation Loan (TFL) for Ecobank Transnational Incorporated, parent company of the Ecobank Group.
AfDB made the decision recently in Abidjan and will provide trade finance to support economies in which Ecobank is currently operating, including Liberia, Sierra Leone, Guinea and Nigeria.
According to a statement from Abidjan, the intervention came at a time of falling commodity prices, which have caused shortages in foreign exchange supply that have led to unmet demands for trade finance instruments to support ongoing structural changes in the respective economies in sub-Saharan Africa.
The bank said through the Ecobank branch network across sub-Saharan Africa, the project would mainly support small and medium enterprises and local companies involved in import and export activities.
The loan, according to AfDB, will help address critical market demands for trade finance and dollar liquidity by supporting vital economic sectors such as agri-business, chemicals, construction and engineering, food processing, manufacturing and non-traditional exports.
“It will foster financial sector development, provide a platform to support intra-Africa and regional trade and support financing of medium term infrastructure projects, creating robust industries and employment opportunities for youth and will enhance support to local enterprises in sub-Saharan Africa, whose trading activities are being constrained by shortages in dollar funding,” the statement said.
The AfDB said when the fund is fully utilized, including rollovers, the interventions are expected to facilitate roughly US$2 billion of trade over a three and a half-year period and will contribute to the attainment of AfDB’s five operational priorities – its ‘High 5s’ – namely: Light up and power Africa; Feed Africa; Industrialize Africa; Integrate Africa; and Improve the quality of life for the people of Africa.
The project also aligns with AfDB’s ten-year strategy, particularly its financial sector development plan, which seeks to increase access to financial services for the underserved and broaden Africa’s financial systems, the statement said.
The AfDB’s Private Sector Strategy will contribute to the improvement of the investment and business environment in West Africa, subsequently promoting regional trade.
“We will promote enterprise development through increased access to appropriate levels of trade finance for small and medium enterprises and local corporations,” said AfDB.