The purpose of the signed risk-sharing agreement is “to encourage African banks and their clientele, made up of small and medium-sized enterprises (SMEs), to become more involved in regional and international trade. Objective: to support a volume of commercial transactions of 450 million dollars (cumulative value) over the next three years”explains the AfDB.
The African Development Bank (AfDB) has signed a risk participation agreement with Crédit Agricole CIB to boost intra-African trade, the AfDB said in a statement. “The Board of Directors of the African Development Bank Group has approved a Risk Participation Agreement (RPA) in the amount of $50 million for the benefit of Crédit Agricole CIB”specifies the same source on its website.
CIB is the corporate and investment bank of the Crédit Agricole group, the 10th largest banking group in the world by the size of its balance sheet in 2021. It offers its customers, large companies and institutions, a range of products and services in the capital markets, investment banking, structured finance, commercial banking and international trade.
The purpose of the signed risk-sharing agreement is “to encourage African banks and their clientele, made up of small and medium-sized enterprises (SMEs), to become more involved in regional and international trade. Objective: to support a volume of commercial transactions of 450 million dollars (cumulative value) over the next three years”explains the AfDB.
The risk participation agreement aims to meet the growing demand from African markets for trade finance in vital economic sectors, namely agribusiness, energy, manufacturing, health and services, adds the press release.
Moreover, he encourages “productive diversification in several African states, capable of generating more jobs and tax revenue”. More specifically, continues the same source, by guaranteeing commercial banks as well as African SMEs stable access to financing for their foreign trade operations, this agreement encourages economic growth and regional integration.
It occurs in a context where “the majority of African banks have low capitalization, further weakened by the repercussions of the Covid-19 pandemic, which limits their ability to access lines of credit from international banks”notes the AfDB, according to the APS which takes up the information.
A difficulty that has only been accentuated, with the tightening of regulatory requirements in terms of capital and compliance, which has led international banks to reduce their commitments and the number of their correspondents in Africa.
The risk participation agreement is in line with the five main priorities of the bank, these “High 5s” which aim to establish the conditions for strong, sustainable and inclusive growth on the continent, underlines the institution. African finance.
