Asian and African Development Banks to Set Up African Trade Finance Programme

The Asian Development Bank (ADB) and the African Development Bank (AfDB) have signed an agreement to help AfDB set up a trade finance programme to boost African trade, and, more broadly, south-south trade.

AfDB is scaling up its trade finance activities to channel critical trade support to companies across the African continent, much as the ADB’s programme has done in developing Asia.

Companies in developing countries have difficulties in getting the trade finance they need from banks in order to buy key components from overseas or to sell their goods to other countries. This prevents them from participating fully in global trade, which grew 14.5% in 2010, its fastest annual pace on record.

ADB’s Trade Finance Programme provides guarantees and loans in support of trade in developing Asia through over 200 partner banks. Under the just-signed memorandum of understanding (MOU), ADB will share all legal document templates, operation manuals, information technology, and know-how related to its Trade Finance Programme with AfDB.

“Partnerships are key to promoting economic growth, and using the Trade Finance Programme framework developed by ADB will help AfDB to achieve in Africa the success ADB has achieved in Asia, but much faster and at a fraction of the start-up cost,” said Philip Erquiaga, director general of ADB’s private sector operations department, which oversees the Trade Finance Programme. “In time, we would expect the relationships between developing Africa and developing Asia to expand, resulting in much greater south-south trade which could help ease global economic imbalances.”


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