The Board of Directors of the African Development Bank Group has approved a $15 million trade finance package for First Capital Bank (FCB) in Zimbabwe to help bolster intra-African commerce in line with the goals of the Africa Continental Free Trade Area.
The package, comprising a $7.5 million trade finance line of credit and a $7.5 million transaction guarantee, is expected to catalyse about $146 million in trade over the next three years.
The line of credit will provide the much-needed hard currency financing to support FCB to close its trade finance gap and expand its trade finance support for SMEs and local corporates in Zimbabwe, a transition country. The transaction guarantee will provide a 100% guarantee to international confirming banks (CBs) for the non-payment risk taken on FCB's trade finance transactions conducted on behalf of SMEs, and women-led businesses. The approval came on 30 April.
Mr Tapera Mushoriwa, FCB's CEO, said, "We are thrilled about the growth prospects that this $15 million facility will unlock for the business communities driving our economy. The package aims to bolster our trade finance services in Zimbabwe, across Africa, and globally."
Moono Mupotola, African Development Bank Zimbabwe Country Manager, underscored the strategic importance of the facility. She said, "The facility is expected to support the importation of strategic commodities and promote the integration of Zimbabwe's economy into regional and global trade markets, which are essential for the country's growth."
About the African Development Bank Group 's trade finance instruments: The Bank Group's Trade Finance lines of credit, with a maximum tenor of 3.5 years, extend vital financial support to banks for facilitating trade transactions in Africa, including imports, exports, pre-shipment, and working capital. Through its Transaction Guarantee, the Bank Group leverages its "AAA" rating to provide up to a 100% guarantee to confirming banks for the non-payment risk they take on African local banks' trade finance transactions, thereby reducing the need for cash collateral. More information is available on the Bank Group's web site here.
