AfDB approves US $100-million trade finance facility for Angola

Abidjan, Cote d’Ivoire (PANA) – Aiming to support international trade transactions of small and medium enterprises (SMEs) and local corporates in identified transformative sectors in Angola, the Board of Directors of the African Development Bank (AfDB) has approved a US $100-million Trade Finance Line of Credit to Angola’s Investment Bank (Banco Angolano de Investimentos, BAI).

In addition, a number of indirect benefits from this facility are expected to accrue to BAI’s subsidiaries in Cabo Verde and São Tomé and Príncipe through the strengthening of correspondent banking relationships by providing guarantees on their international trade transactions, said an AfDB statement issued on Tuesday.

According to the AfDB, this project comes at a time when banks in Angola are experiencing significant difficulties in securing foreign currency to finance the import of critical essential products and capital goods.

As a counter-cyclical intervention, this facility is similar to other initiatives provided to local banks in Nigeria and Ghana in the recent past.

Main objectives of the facility are: to enable BAI provide foreign currency liquidity support to finance export/import activities of SMEs and corporates in the non-oil sectors of the Angolan economy; and to support efforts to diversify the economy from oil dependency through the ‘Angola Invest programme’ under which the government provides credit default risk cover to financial institutions like BAI to fund SMEs in the non-oil sectors.

“This will spur investment in agriculture, fisheries/livestock, manufacturing and extractive industries, through facilitating the importation of raw materials, intermediate goods and capital goods,” the AfDB observed.

Also, it said the facility is expected to boost trade activities of at least 500 SMEs and local firms in the non-oil sectors, with a value expected to reach US $700 million in three and half years.

Enhancement of BAI’s capacity to originate trade finance transactions in the country and effect timely settlement of trade finance obligations to various counter parties, the AfDB explained, “is crucial to restore confidence in international counter parties supplying essential goods, agricultural inputs and capital goods/equipment to Angolan corporates and SMEs on favourable trade terms.”
-0- PANA AR 6March2018

06 march 2018 18:08:31

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