Pan-African banking group Ecobank and French investment institution Proparco have announced a €10mn trade finance guarantee facility for Ecobank Chad to unlock imports of raw materials that underpin local manufacturing and food security.
The deal was announced by the two parties, which have a longstanding history of collaborating to address the continent’s SME financing gap, at the Africa Financial Industry Summit in Casablanca this week.
The facility forms part of the Farm initiative, aimed at strengthening food resilience across Africa’s most vulnerable economies by covering the imports of essential commodities that are not typically provided by local lenders – including fertilisers, rice, wheat and raw materials for industrialisation.
It also builds on a trade finance guarantee programme developed by Togo-headquartered Ecobank Group and Proparco, the private sector financing arm of the French Development Agency (AFD), since 2018.
Through the programme, Ecobank and Proparco help local economies by de-risking lending, supporting local banks to issue letters of credit for SME customers, and allowing small businesses to import essential inputs without heavy collateral requirements.
The latest €10mn announcement brings the total value of guarantees issued under the scheme to €125mn, and follows a successful rollout in previous countries such as Guinea, Burkina Faso, Mali and Côte d’Ivoire, among others.
The partnership leverages Ecobank’s pan-African network and expertise in trade structuring with Proparco’s risk guarantee, the announcement said, enabling SMEs to import goods that create local value.
Ecobank International, a French subsidiary of Ecobank, confirms the letters of credit backed by this facility and facilitates secure payments between African banks and international suppliers.
This model has “proven successful” when extended to other financial institutions, an Ecobank spokesperson told GTR, and “will now help replicate similar success in Chad”.
The newly announced transaction is part of Ecobank’s broader efforts to close Africa’s trade finance gap, which remains above US$80bn annually, according to estimates from the International Trade and Forfaiting Association.
The group’s network spans 34 markets. Its varied partnerships with development finance institutions often target small and traditionally “underserved markets” and key sectors including agriculture, health, education and energy, according to the spokesperson.
Its trade finance guarantee programme in partnership with Proparco also complements other risk-sharing facilities mechanisms implemented by the French investment group, with support from the European Union, in helping Ecobank de-risk SME lending.
In the last four years alone, Ecobank has structured over US$800mn in trade and development finance, including a US$25mn risk-sharing facility with British International Investment to expand SME lending in Sierra Leone.
Last year, the International Finance Corporation also issued a US$140mn guarantee facility to the African lender, boosting the availability of trade finance lines across seven markets on the continent.
“Together, these deals demonstrate how a truly regional banking network can structure sustainable, cross-border financing solutions in countries that global lenders often overlook,” the Ecobank spokesperson said.
