The African Development Bank (AfDB) has signed a risk participation agreement (RPA) with Standard Chartered.

Through jointly funding trade finance transactions with total volume of US$400mn, it’s estimated that the three-year RPA will facilitate approximately US$3.6mn of trade flows in intermediate and finished goods, raw materials and equipment across Africa.

The facility involves an unfunded risk participation of US$200 million, where Standard Chartered will match AfDB’s undertaking in every transaction, bringing the total maximum portfolio to US$400mn. The facility is based on a 50/50 risk sharing agreement.

It’s the second such agreement the development bank has struck in a week, having gotten Commerzbank on board last week and Yaw Kuffour, AfDB lead trade finance specialist, tells GTR that striking such deals are part of a long-term plan.

“With respect to RPAs, in addition to Commerzbank and Standard Chartered, on February 20 we announced the approval of a similar partnership with Ecobank for USD$100mn. As an ongoing programme we will continue to consider requests from regional and global confirming banks whose Africa trade finance strategies sufficiently align with those of AfDB, ie: to provide critical trade finance support to African financial institutions who cater to the needs of SMEs and local corporates.”