Trade and Development Bank secures $100m for Africa firms

    

Trade and Development Bank headquarters in Nairobi, Kenya. PHOTO | TDB

By JAMES ANYANZWA

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Trade and Development Bank (TDB) has acquired $100 million financing from the British International Investment (BII), a UK development finance institution, to

support businesses and financial institutions in Africa.

TDB, formerly Eastern and Southern African Trade and Development Bank, with assets of over $5 billion, is primarily involved in financing and fostering trade, regional economic integration and sustainable development in the continent through trade finance, project and infrastructure finance, asset management and business advisory services.

The latest investment from BII is designed to strengthen economic resilience in the region by supporting essential trade finance activity, foster agricultural development and address critical challenges such as food insecurity.

The facility will empower TDB to provide financial support to local businesses and financial institutions in several key markets in Africa.

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“This investment underscores the UK government’s commitment to supporting economic and agricultural development across Africa by empowering businesses, stimulating trade, and increasing the flow of essential goods and services, Andrew Mitchell, UK’s minister of State for Development and Africa said in a statement on Monday.

“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 transaction builds on BII and TDB’s shared ambition of empowering critical segments of the economy, as well as the private sector including small and medium-sized enterprises, to promote inclusive growth across the continent.

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 financing to fund trade transactions, including import and export, commodities, and essential services across the region.

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 between $80 billion and $120 billion.

«Our collaboration with TDB over the past seven years underscores our commitment to bolstering resilient economies and empowering communities across Africa,” said Seema Dhanani, head of Kenya office at BII.

“We are actively pursuing initiatives to deepen capital markets and catalyse innovation in Africa and our collaboration with TDB is instrumental in providing vital liquidity and deepening access to finance.

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The financing will enable local companies to procure essential agricultural inputs, such as fertilisers, seeds, and machinery.

The facility aims to enhance local production capabilities, increase agricultural productivity, support both export sectors stimulating forex generation and elevate the overall quality of food products.

This helps address immediate food security issues and increases the agricultural sector’s capacity, global competitiveness, and economic output.

In recent years, TDB has strengthened its collaboration with financial institutions, recognising them as essential partners to boost trade.
This strategic partnership is vital to increasing the flow of goods and services, including through financial institutions.

“TDB Group has been playing an important role in the trade finance space, often working countercyclically to contribute to the security of supply of essential commodities in high priority sectors such as agriculture and healthcare,” said Admassu Tadesse, TDB group president and managing director.

“This is the fourth facility we are signing with BII and its predecessor. 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.”

The improved access to trade finance and businesses is expected to engage more readily in import and export activities, facilitating increased cross-border trade, contributing to food security, and stimulating job creation, economic growth and resilience in Africa.