EBID Secures $130m Funding To Curb Trade Financing Gap in Africa
As per the latest news, the ECOWAS Bank for Investment and Development (EBID) has revealed a dual-currency trade finance credit line worth around $ 130 million.
The funding will be utilized critically to upgrade food security and build up agricultural value chains across West Africa, the AfDB stated in the declaration issued.
The granted funds acknowledge the first time it has secured financial support from the African Development Bank (AfDB) which was honored with “Best Multilateral Financial Institution 2021” by Global Finance.
The AfDB is facilitating $ 50 million and €50 million to the three-and-a-half-year facility, while the People’s Bank of China is giving a further US$ 30 million through Africa Growing Together Fund - a solution provided by the Chinese central bank yet managed by the AFDB.
According to the AfDB’s head of trade finance, Lamin Drammeh, “Working with the EBID should assist with further developing its access to trade finance in the Ecowas area, which consists of 15 West African nations.”
He added, “Regional institutions like the EBID supplement the bank's endeavors to bridge the trade finance gap in Africa and act as a compelling course for directing much-needed funds to underserved nations and sectors.”
He also noted that the funding facility will be utilized with a “special emphasis on the agriculture value chain, SMEs, and women-owned businesses.”
The trade finance gap in Africa - estimated as the gap between demand and supply for funding facilities across the continent - is believed to aggregate around US$81bn per year, with SMEs, and domestic firms struggling with the prevalent difficulty in getting support, the AfDB stated.
As well as supporting direct funding from the EBID, the grants will be used for on-lending to regional banks. The prime beneficiaries will be SMEs, local firms, and farmers in the region, with stress on agriculture, infrastructure, and transport.
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The AfDB’s deputy director general for the West Africa region, Joseph Ribeiro, acknowledged the agreement as the Bank’s first funding for EBID and stated, he anticipates “a significantly more grounded association in the near future.”
The declaration follows the AfDB's October endorsement of US$25mn trade finance facilities for FSDH Merchant Bank in Nigeria, which similarly focuses on SMEs through on-lending.
Although a long-established issue, Africa’s trade finance gap deteriorated fundamentally during the initial months of the Coronavirus pandemic.