The African Development Bank Group is supporting the trade finance efforts of Bank One Limited.
The Group will provide a $40 million trade finance package that is meant to help Bank One of Mauritius increase its capacity to provide trade finance to small to medium-sized businesses (SMBs), local corporates and other key sectors in Mauritius and across Africa, the African Development Bank said in a Thursday (Dec. 22) press release.
The package includes a $25 million risk participation agreement and a $15 million transaction guarantee, the release said.
“Given the cross-sectoral nature of trade, the proposed facility, while leveraging Bank One’s footprint, is expected to enhance the African Development Bank’s efforts to integrate Africa and improve the quality of life for the African people,” African Development Bank Head of Trade Finance Lamin Drammeh said in the release.
Africa has an annual “trade finance gap” of $81 billion because SMBs and other domestic firms have greater difficulty accessing trade finance than do multinationals and large local corporates, according to the press release.
The African Development Bank aims to reduce that gap by deploying the new transaction guarantee and risk participation agreement with Bank One, which is a leading Mauritian and regional banking for with reach that extends across the continent and globally, the release said.
“This approval affirms the Bank’s support for financial integration as a cornerstone for the development of the private sector across the continent,” African Development Bank Deputy Director General for Southern Africa Kennedy Mbekeani said in the release.
This announcement comes about two months after Nigerian startup Breeze partnered with United Kingdom-based supply chain finance company Finverity to accelerate its mission of providing SMBs in Africa with access to trade finance.
Like the African Development Bank, these companies said that most of the trade financing from African banks goes to larger corporations, even though most of the regional trade participants are SMBs.
“This partnership provides us with the necessary fuel and support as we strengthen our presence in Nigeria,” Breeze CEO Chimenem Nnwoka said at the time. “Our partnership with Finverity enables us to provide modular supply chain finance products that are tailored to the specific needs of our customers.”
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