The African Development Bank (AfDB) has approved a US$150mn trade finance facility to help South African lender Absa Group scale up its social and sustainable financing.

The AfDB also agreed a ZAR 1.7bn (US$90mn) sustainability-linked loan to the lender and an investment of ZAR 1bn (US$53.8mn) in Absa’s first social bond issuance, both of which will be classed as qualifying capital.

The trade finance facility will focus on promoting access to funding for businesses, improving trade facilitation in low-income African countries and fostering intra-Africa trade, the AfDB says.

It adds that the financing will enable Absa to increase its social and sustainable lending, particularly to SMEs, and support the provision of long-term affordable housing mortgage financing in South Africa.

Absa Group treasurer Parin Gokaldas says the deal will aid the bank’s efforts to close Africa’s trade finance gap.

“The financial close of this agreement will support our ambition to be an active force for good and strengthens our relationship with the AfDB,” Gokaldas says.

Leila Mokaddem, director general of the AfDB’s Southern Africa region, adds that the “comprehensive financing package will unlock financing including for youth and female entrepreneurs in South Africa, as well as for underserved female borrowers in the affordable housing sub-sector”.

Back in 2021, the International Finance Corporation provided Africa’s first green loan to Absa to fund renewable energy projects, with the bank’s interim group CEO Jason Quinn affirming its ambitions to be a leader in financing sustainable projects in South Africa.