The World Bank’s investment guarantee agency has renewed €349mn in cover for a Standard Chartered-led loan to the Eastern and Southern African Trade and Development Bank (TDB), which will be used to finance trade transactions.  

The Multilateral Investment Guarantee Agency (Miga) is providing the cover, with a tenor of seven years, for a syndicated loan provided to TDB by Standard Chartered’s UK entity and Kenyan branch, and Citi. 

The guarantee replaces one Miga issued for the first time in 2020 for €358.9mn with a tenor of up to ten years, although original lenders MUFG and SMBC are no longer participating, according to a Miga spokesperson.   

Miga says in a statement that the funding will support TDB’s trade finance operations and help close the African trade finance gap, which the African Development Bank (AfDB) estimated to be US$81.8bn in 2019 and has likely grown since.   

TDB will use the facility to provide short-term financing facilities supporting specific transactions for both in-land and cross-border trade, according to Miga.  

“Miga is expanding its footprint in sub-Saharan Africa by supporting trusted partners like TDB,” says Hiroshi Matano, the organisation’s executive vice president. “Our trade finance guarantees offer a crucial instrument for attracting foreign direct investment, providing access to liquidity for low- and middle- income countries.”   

TDB’s member countries include some of the world’s poorest, where access to trade finance can be limited. Banks are increasingly looking to multilateral lenders and development banks to help bridge the trade finance gap in Africa, especially for SMEs that offer low returns for traditional lenders.  

“We are proud to be working together [with Miga] to help grow and transform our region’s economies through innovative trade finance solutions – important catalysts to our sustainable development,” says TDB group president and managing director Admassu Tadesse.  

The Miga announcement comes on the heels of a US$150mn unfunded risk participation agreement between the TDB and African Development Bank (AfDB), announced on February 27. 

Under the agreement AfDB will guarantee up to 75% of qualifying trade transactions, on a risk share basis with TDB, for qualifying banks in the Common Market for Eastern and Southern Africa.  

The AfDB says the arrangement is designed to help boost intra-Africa trade flows, and is forecast to support around US$1.8bn in trade over three years.  

Miga is also set to close another deal with Standard Chartered involving a €190mn trade finance facility to the government of Senegal, following a similar arrangement concluded last year with Rand Merchant Bank. Board approval for the Standard Chartered deal is expected on March 8, Miga’s website shows.