Absa has launched a US$100mn UK Export Finance (UKEF)-backed programme to support African businesses purchasing UK goods and services.
The pan-African lender will use an inaugural standard buyer loan guarantee (SBLG) facility to provide loans to African buyers of UK capital goods and services.
The first transaction under the deal is expected to close by September, Absa told GTR.
Under the buyer’s credit programme, Absa acts as guaranteed lender and strategic banking partner, with individual transactions subject to a credit assessment process. UKEF then guarantees up to 85% of the value of each export contract.
The initial US$100mn is “a tranche with scope to scale”, the Johannesburg-based bank added.
The facility is sector-agnostic, covering goods as well as professional services and fees across eligible sectors including healthcare, water and sanitation, power and infrastructure, and transport, subject to UK supply chain minimum UK content requirements. Fossil fuels are excluded from the scheme.
Absa said it expects take-up from the mid-tier corporate market, with enquiries to date ranging between US$10mn and US$35mn per transaction. Larger corporates can also be supported, provided “local [UK] content requirements are met”, according to Absa.
Tenors are expected to range from three to seven years, the lender said, noting that pricing and tenor will ultimately be assessed transaction by transaction.
The programme is focused on markets where Absa already has a presence, as well as “other strategic non-presence markets” its clients may want to operate in.
Additional countries may be considered on a case-by-case basis, subject to UKEF cover availability.
Absa said the programme was expected to support business expansion, infrastructure development and increased trade activity across African markets, and would create opportunities for clients that might otherwise face constraints accessing cross-border capital of this kind.
“Access to affordable capital for investment in African businesses and infrastructure remains critical for economic development across the continent,” said Theuns Ehlers, head of resource and project finance at Absa CIB.
He added that Absa’s on-the-ground presence in African markets, combined with its “understanding of clients’ financing requirements, put it in an ideal position to unlock value for its clients by providing financing solutions in partnership with UKEF”.
The tie-up adds to a run of Africa-focused UKEF support activity. In recent months, the UK export credit agency signed a €198mn facility with Standard Chartered for a road project in Cameroon’s South Region, guaranteed a £746mn loan from Citi to fund the redevelopment of two of Nigeria’s major trading ports, and backed a €192.9mn loan to finance the first phase of a key agricultural project in Uganda.
