In a move set to bolster trade finance across Africa, Absa Bank has successfully secured a $150 million loan from British International Investment (BII).
The money will go towards Absa’s efforts to help close the trade finance gap* in the continent, estimated to be between $100 billion and $120 billion.
BII is the UK’s Development Finance Institution (DFI) and impact investor, focused on providing patient capital to foster productive, sustainable, and inclusive economies.
Through its long-standing partnership with Absa, it has facilitated over $1bn in trade volumes in Africa since 2019.
“Our unyielding commitment to the success of the continent continues to drive us to find solutions to serve our customers by addressing Africa’s trade finance gap, focusing on sustainable funding,” said Mosa Tshabalala, Head of FI Trade Sales (International), Risk Distribution, and Syndication at Absa CIB.
“Our role as a Pan- African bank is to channel the funds to reach our client base across our chosen markets. We continue to forge partnerships with DFIs, insurance companies, other commercial banks (locally, regionally, and globally), ECAs, and institutional investors to drive market access and provide the funding necessary to support our customers’ growth ambitions,” added Tshabalala, who described the deal as a ‘significant investment’ in keeping with Absa’s commitment to supporting economic growth and development on the continent.
By partnering with BII, Absa is making strides in advancing the efforts of the African Continental Free Trade Area (AfCFTA) agreement, which aims, among other objectives, to reduce the continent’s trade finance gap.
In addition, this transaction enables Absa to extend liquidity to clients across various geographies and trade product sets that are in high demand.
These funds are ringfenced for financing trade transactions, with a focus on sustainable funding.
This includes supporting small and midsize enterprises (SMEs) founded by youth and women engaged in intra-African and global trade. This aligns with Absa’s goal of concluding R100 billion in sustainability-related transactions by 2025.
“Our extensive presence across the continent, combined with our global reach, enables us to facilitate the flow of capital and trade finance that African businesses need to scale and compete internationally. By leveraging our cross-border expertise and strategic partnerships, we are driving sustainable growth and creating new opportunities in emerging markets, contributing to the broader development of Africa’s economic ecosystem,” said Charles Russon, Interim Group Chief Executive Officer (CEO) at Absa.
Absa’s long-standing partnership with BII reflects the depth of their relationship and shared vision for driving growth in emerging markets.
In the last five years, the partnership has provided much-needed trade liquidity in countries such as Ghana, Nigeria, Kenya, Uganda, Tanzania, and Mozambique – supporting over $1 billion in trade volumes, including over the course of the Covid-19 pandemic, which severely strained trade liquidity in Africa.
TRADE FINANCE GAP: The difference between the money available to finance trade transactions and what businesses receive through letters of credit, trade loans, and other trade-related financial instruments.
