State-owned development finance institution the China Development Bank (CDB) on August 29 signed a development-focused agreement to provide private banking company the African Export-Import Bank (Afreximbank) with a $400-million term loan facility to support the financing of small and medium-sized enterprises (SMEs) across Africa.
The agreement, signed by CDB president Tan Jiong and Afreximbank president and chairperson Professor Benedict Oramah at the Afreximbank headquarters in Cairo provides for Afreximbank to deploy the facility to support African SMEs involved in extra- and intra-African trade and those engaged in the productive sectors in Afreximbank member States.
According to the agreement, the facility, which has a seven-year tenor, will be deployed either directly to eligible African SMEs that meet Afreximbank’s requirements or indirectly through local financial intermediaries.
Speaking after the signing, Oramah pointed out that African SMEs continued to struggle to access adequate and affordable financing for growing their businesses and said that the CDB facility would help increase the level of financing available to them.
He added that since Afreximbank was receiving the facility as medium- to long-term funding at relatively affordable pricing, the bank would transfer the financial advantage in pricing and tenor to the end beneficiaries.
“This facility further strengthens the strategic partnership we have developed with the CDB over the last six years, which has seen CDB make three previous interventions in support of our work at Afreximbank.
“It will also enable our two institutions to achieve our respective mandates and developmental outcomes, which include job creation, increased economic activity and increased extra-African trade with China,” Oramah said.