The Board of Directors of the African Development Bank Group approved a $40 million Trade Financing Package in favor of Bank One Limited of Mauritius. The financial package comprises a $25 million Risk Participation Agreement and a $15 million Transaction Guarantee.
The transaction guarantee mechanism will allow the Bank to provide, on a transaction basis, up to 100% guarantee to confirming banks for the risk of non-payment arising from the confirmation of trade financing instruments issued by Bank One. On the other On the other hand, the risk sharing agreement will provide collateral coverage of up to 50% on a portfolio basis to support trade finance transactions originated by issuing banks in regional member countries. This financial support is expected to help Bank One increase its ability to support the trade finance needs of key sectors, including 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,” said Lamin Drammeh, director of the Bank. Head of Trade Finance, commenting on the 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.
About Bank One:
Bank One is a premier banking institution incorporated in 2008 in Mauritius. It is jointly owned by Kenya-based I&M Group PLC and Mauritian conglomerate CIEL Ltd. Bank One leverages the strong presence of its two equal shareholders to position itself as a leading Mauritian and regional banking force with continental and global reach.
