Standard Bank and OFID team up for African trade
Up to US$221mn in African commodity financing will become available after Standard Bank and the OPEC Fund for International Development (OFID) launched two unique initiatives.
The schemes, a smallholder risk-sharing agreement intended to make agricultural finance more readily available to smallholder farmers and SME agricultural producers; and a trade finance risk sharing agreement aimed at eligible African banks, are both designed to promote trade capacity across the continent.
Suleiman Jasir Al-Herbish, director general of OFID, and Brad Koen, managing director and global head of investment banking coverage at Standard Bank, signed the two deals at a ceremony at Standard Bank’s London offices.
The smallholder risk-sharing agreement hopes to provide commodity financing for up to 750,000 farmers and business owners in Ghana, Mozambique, Uganda and Tanzania. The three-year programme will make available up to US$55mn in the first year, US$66mn in the second and US$100mn in the third year for the countries.
Jaques Taylor, head of agricultural banking at Standard Bank SA, comments: “Agriculture is the heartbeat of a developing economy and we want to provide the small farmer with more than just finance. We don’t want to encourage small farmers to produce a commodity that there is no market for, for example, and a system has been developed to give farmers help in selling their items.”
In the trade finance risk sharing agreement, both OFID and Standard Bank have agreed to share financial risk on a 50/50 split basis on transactions of up to US$300mn.
However, Anne-Marie Woolley, director head of trade finance and services at Standard Bank thinks that the scope of the agreement is much wider, she says: “The US$300mn programme has been estimated at US$1bn over three years, but it’s likely to turn over US$1bn a year. With a possible 90 days at US£300mn, it will only take four-quarters to get to the numbers needed.”
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