AfDB signs USD 250 mln agreement with ABSA bank

The African Development Bank (AfDB) has signed an unfunded USD 250-million Risk Participation Agreement (RPA) facility with ABSA bank.

In a statement, AfDB explains that the 3-year RPA facility was signed on 12 November 2019, on the sidelines of the Africa Investment Form through its trade finance operations. Under this 3-year RPA facility, the Bank and ABSA will share default risk on a portfolio of eligible trade transactions originated by African Issuing Banks (IBs) and confirmed by ABSA.

Leveraging the Bank’s  AAA rating, ABSA will underwrite trade transactions issued by African issuing banks across key sectors like agriculture, energy, and light-manufacturing with a special focus on small and medium-sized enterprises (SME’s)  in fragile and low-income African countries.

Working with strategic partners like ABSA, the Bank’s trade finance operations aim to facilitate inter and intra-Africa trade by reducing the trade financing gap on the continent. Since 2013, the Bank’s RPA programme has supported over 16 issuing banks with about USD 650 million limits in Southern Africa alone, with special focus on SMEs and local corporates in manufacturing, agribusiness, import/export and energy sectors.