African Development Bank signs $40 million deal with Bank One of Mauritius

By Gloria Metri

The African Development Bank has approved a $40 million Trade Financing Package in favor of Bank One Limited of Mauritius. The package comprises a $25 million Venture Participation Agreement and a $15 million Transaction Security.

The transaction guarantee facility will enable Banco Africano to provide up to 100% guarantee to confirming banks for the risk of non-payment arising from the confirmation of trade finance instruments issued by Bank One.

On the other hand, the risk sharing agreement will provide collateral coverage of up to 50% to support trade finance transactions originated by issuing banks in regional member countries.

The package is expected to help Bank One increase its ability to meet the trade finance needs of small and medium-sized enterprises (SMEs) and local businesses in Mauritius and across the continent.

“Given the cross-sectoral nature of the trade, the proposed mechanism, leveraging Bank One’s footprint, is expected to enhance the efforts of the African Development Bank to integrate Africa and improve the quality of life of Africans,” he said. Lamin Drammeh, Head of Bank Trade Financeabout approval.

African Development Bank Deputy Director General for Southern Africa Kennedy Mbekeani, whose responsibilities also span Mauritius, added: “This approval affirms the Bank’s support for financial integration as a cornerstone for private sector development across the continent.” .

The African Development Bank estimates that Africa’s annual trade finance gap is about $81 billion. Compared to multinationals and large local companies, SMEs and other national companies have greater difficulties in accessing trade finance. The transaction guarantee and risk sharing agreement are some of the strategic tools that the African Development Bank is employing to help reduce the continent’s trade finance gap.