The Board of Directors of the African Development Bank Group approved a $10 million Trade Financing Transaction Guarantee (TG) for Banco Fomento de Angola SA (BFA). Leveraging BFA’s strategic presence in Angola, this guarantee will support small and medium-sized businesses, including women-led businesses.
The measure will ease the import and export trade financing requirements of SMEs and, by extension, will strengthen the Angolan credit market. The African Development Bank will provide up to 100% guarantee to participating banks for the risk of default arising from the confirmation of letters of credit and similar trade finance instruments issued by BFA.
Commenting on the approval, Bank Director General for Southern Africa Leila Mokaddem said: “The approval of this facility by the Board of Directors allows the African Development Bank to support BFA to finance trade-related transactions, such as exports of agricultural products, imports of raw materials and inputs. This will strengthen BFA’s ability to finance commercial transactions for SMEs and local businesses, providing essential risk coverage to support value chain finance, working capital, and export and import transactions.”
African Development Bank official in charge of the Financial Sector Development Department, Ahmed Attout, stressed the critical need for such support on the continent.
“We are excited about this partnership which will help BFA increase its commercial financial support to critical sectors of the Angolan economy by taking advantage of the capital relief provided by AfDB’s AAA-rated TG,” he said. “This is in line with the AfDB’s focus on private sector development through the provision of support to the financial sector,” he added.
Pietro Toigo, the Bank’s country manager in Angola, said: “The approval of this transaction is part of the African Development Bank’s efforts to support private sector growth and economic diversification in Angola, and extend the provision of credit to underserved segments of the market.
The African Development Bank estimates that Africa’s annual trade finance gap is about $81 billion. Compared to multinational companies and large local companies, SMEs and other national companies have greater difficulties in accessing trade finance. The GT is one of the strategic tools that the Bank deploys to help reduce the trade financing gap in the continent.
About BFA:
Established in 2002, BFA is one of Angola’s largest and most systemic financial institutions with a significant reach of operating branches across the country. It continues to leverage its corresponding relationships with international banks to support Angola’s real sector in the post-COVID 19 recovery phase.
Angola has been a Bank shareholder since 1977. The African Development Bank in Angola has a portfolio of $1.05 billion distributed in four of its five main priority areas: Power Africa (44%), Improving the quality of life of the people from Africa (31%), Feed Africa (17%) and Industrialize Africa (8%). Its operations are focused on five sectors: energy, agriculture, social, finance, water and sanitation.
