THE African Development Bank (AfDB) has approved a second unfunded $100 million Risk Participation Agreement facility, which seeks to address trade financing gaps for exporters across the continent.
The regional bank said in a recent statement that the second Risk Participation Agreement (RPAII) was housed under its trade finance operations.
“AfDB on November 29, 2018, approved a second unfunded $100-million RPA II facility for First Rand Bank Ltd (FRB). Housed under the trade finance operations of the bank.
“This facility will enhance FRB’s ability to underwrite trade finance transactions originating from issuing banks in transition states across Africa,” it said.
It is estimated that the facility, when fully utilised, will support more than $600 million, double what was raised under the first RRPA in trade volumes over the next three years.
“The RPAII is expected to address the trade-financing gap in Africa’s low-income countries and support sectors such as agriculture, manufacturing, energy and retail trade.
It is consistent with the AfDB’s High 5 goals of industrialisation, agricultural modernisation and promoting the quality of life of Africans.
In presenting the project to the board the bank’s financial sector development director, Mr Stefan Nalletamby, said through strategic partners like the FRB, his organisation’s RPA instrument continues to facilitate trade financing on the continent.
This is believed to further promote regional integration and intra-African trade in line with the African Continental Free Trade Area provisions.
“This facility, premised on a strategic credit-risk sharing mechanism, will help to promote inclusive economic growth in Africa’s low-income countries and increase intra-Africa trade and regional financial integration in line with the Bank’s High 5s” said Mr Nalletamby.