The African Development Bank (AfDB) has approved a US$280mn trade finance package for the African Export-Import Bank (Afrexim).

The package allows Afrexim to improve its risk-bearing capabilities and provide medium-term financing for trade and projects throughout Africa. It consists of a US$30mn equity investment, a US$150mn line of credit and a US$100mn unfunded risk participation agreement.

It is hoped the approval will boost intra-African trade, supporting at least US$2.2bn of trade in Africa over a four-year period. Over 100 financial institutions and corporates will be provided with finance in at least 30 African countries.

The AfDB announced in Tunis on May 28 that the facility “will enable Afrexim to increase its visibility as a confirming bank for trade transactions originated by African issuing banks”.

Afrexim president Jean-Louis Ekra welcomed the package. “This unprecedented trade finance package adds significant value to the Afrexim brand, both in terms of giving a substantial boost to our equity raising effort and in supporting our capacity to effectively deliver on the bank’s trade development mandate in the context of Africa’s rapidly developing economic landscape,” he says.

The AfDBs AAA credit rating is expected to help Afrexim’s capacity, via the facility, to confirm trade finance transactions and support appropriate trade finance to local banks and corporates.

“It demonstrates in a clear manner what can be achieved when Africa’s leading financial institutions come together for the common purpose of advancing the continent,” adds Ekra.