AFC secures $300m to boost trade finance in Africa

AFRICAN BUSINESS AND ECONOMYSeptember 27, 2023 at 1:06 PM UTC

Africa Finance Corporation, the infrastructure solutions provider on the continent, has announced the successful signing of a $300 million loan facility agreement with the Export-Import Bank of China (CEXIM).

This landmark agreement, signed on the sidelines of the Asian Infrastructure Investment Bank (AIIB) Annual meetings in Egypt, is poised to drive increased trade finance and investment across the African continent, fostering economic growth and development.

The 3-year US$300 million loan facility is a significant development in AFC’s long-standing relationship with CEXIM. The two institutions have collaborated since 2018, with AFC receiving US$400 million in bilateral loans from CEXIM to date. The loan will provide critical financing to support trade finance and investment in Africa, further facilitating the flow of goods and services between Africa and China.

Key Takeaways

Over the past decade, Africa's trade growth has lagged behind other major global regions, primarily attributed to declining commodity prices, heightened competition, limited foreign exchange liquidity, regulatory complexities, and restricted access to trade finance. While trade finance remains a prevalent banking activity, participation rates have dwindled. Despite the enduring trade finance deficit, trade continues to be a pivotal catalyst for Africa's social and economic advancement. Consequently, development finance institutions like the Africa Finance Corporation, the African Development Bank, and the African Export-Import Bank have actively pursued solutions to stimulate intra-Africa trade.