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The Eastern and Southern African Trade and Development Bank (TDB) has secured a US$100mn facility from the UK’s development finance institution, the latest in several transactions aimed at boosting trade finance on the continent. 

The facility is provided by British International Investment (BII) and will enable TDB to finance the import and export of key commodities, as well as other goods and services, in African markets grappling with a turbulent economic environment. 

The two institutions say in a joint statement the facility aims to tackle food security, helping local companies produce agricultural goods such as fertilisers, seeds and machinery, as well as generate foreign exchange by boosting exports. 

“This allocation of capital is crucial for overcoming the barriers to trade in Africa, including the retreat of international correspondent banks from the continent, and addressing the substantial trade financing gap estimated at $80-120bn,” the announcement says. 

“Many African economies are facing various economic challenges, including currency depreciation, rising inflation, debt challenges, and climate-related vulnerabilities, all exacerbated by global economic factors such as the Russia-Ukraine conflict and post-Covid economic turbulence.” 

TDB will use the funds to support local businesses and financial institutions in key markets, it says. 

The deal is the fourth signed between TDB and BII, which was previously known as CDC Group.  

Earlier collaborations include a US$100mn facility agreed in January 2021, when the pandemic left businesses across the continent seeking short-term financing options, and a risk-sharing agreement inked in early 2020. 

“We are pleased to continue building this strategic partnership, and through this new facility, enhance efforts to address ongoing supply chain disruptions and forex shortages, and their impact on food security,” says TDB group president and managing director Admassu Tadesse. 

Andrew Mitchell, the UK’s minister for development and Africa, adds: “This funding will also help to lower trade barriers so that companies across the continent are better able to expand into overseas markets, access vital resources and tackle critical challenges such as food security.” 

The deal is the latest in a series of trade-related transactions secured by TDB. Earlier this month, the institution announced it had agreed a €240mn facility supported by Japan International Cooperation Agency (JICA), Citibank and SMBC Group, which aims to facilitate private sector initiatives and encourage growth in less developed countries. 

The line of credit includes a short-term trade finance tranche from the two banks, which acted as mandated lead arrangers, as well as longer-term project finance tranche from JICA. 

Last month, TDB agreed a US$150mn trade finance unfunded risk participation agreement facility with the African Development Bank (AfDB), which it says is expected to support US$18.bn of trade over the next three years. 

Under the facility, AfDB provides guarantee cover of between 50% and 75% for transactions in low-income countries, with funds provided to local and regional banks across Common Market for Eastern and Southern Africa member states. 

February also saw TDB sign a US$359mn credit enhancement facility with the World Bank Group’s Multilateral Investment Guarantee Agency (Miga). 

Under the agreement, Miga is providing a 10-year guarantee for commercial bank financing extended to TDB for trade finance lending. TDB said at the time the guarantees are helping address Africa’s US$120bn trade finance gap during a period “where financial institutions are more risk averse than usual”.