The African Development Bank (AfDB) has signed an unfunded US$40mn risk participation agreement (RPA) with Santander to help issuing banks in Africa expand their trade finance operations.

Through the facility, Santander will match AfDB’s undertaking in every transaction it provides. The facility is expected to support more than US$480mn of trade in Africa over a three-year period.

This is the AfDB’s first RPA with a Spanish bank.

“The facility will help address critical market demand for trade finance in Africa by providing support for trade in vital economic sectors such as agriculture and manufacturing. It will also foster financial sector development and regional integration, and contribute to government revenue generation,” says a statement issue by the development bank.

AfDB’s AAA rating gives greater comfort to Santander to take more risk on local banks in Africa and provide them with increased trade finance facilities, the statement adds.