The Risk Participation will leverage Commerzbank support to African issuing banks seeking to expand their trade finance operations.
The facility will help address trade finance market demand in key economic sectors such as agriculture and manufacturing. It will also foster financial sector development, regional integration and boost government revenue generation.
Most African banks are small and struggle to obtain adequate trade finance facilities from international confirming banks to support African importers and exporters. The African Development Bank’s additionality lies in the use of its “AAA” credit rating to provide comfort to Commerzbank to increase its trade finance exposure to local African banks.
The Risk Participation Agreement will run for three years as a 50/50 risk sharing arrangement. Counting rollovers, it is expected that the facility will support approximately USD 700 million of trade in Africa over the period.
This is the African Development Bank’s second Risk Participation Agreement with Commerzbank.
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