UK development finance institution and impact investor CDC Group has announced a $50-million trade finance facility for Ecobank International (EBI), a Paris-based member of the Ecobank Group.
This marks the CDC’s first partnership with the EBI, with the commitment aimed at providing systemic liquidity to underserved markets and crucial trade finance support to local banks and businesses across Africa.
This CDC facility will support the continent’s economic recovery and is expected to generate between $70-million and $140-million in additional trade yearly.
The investment will also enhance the import of essential goods, commodities and capital equipment, while also helping to expand access to goods and services in general.
The EBI is an ideal partner to boost the CDC’s impact across Africa and help strengthen financial support for the local banks and businesses it serves, the CDC said in a statement on July 15.
With the Ecobank Group’s extensive footprint and operations across 33 countries on the continent, the facility will broaden economic opportunities and inclusive growth, particularly in markets such as Togo, Burkina Faso and Chad.
The trade finance risk-sharing facility will meet the liquidity needs of local African banks at a crucial time, especially with the economic impact of the pandemic.
By committing capital to address these shortfalls, the CDC is taking on additional risk and providing further credit support and trade finance lines to local banks, protecting commerce across the continent.
The facility contributes to the United Nations Sustainable Development Goals (SDGs) on zero hunger (SDG 2) and decent work and economic growth (SDG 8).
CDC Group trade and supply chain finance head Admir Imami said the institution’s partnership with Ecobank presents an opportunity for the CDC to provide trade support where it is most needed.
“Keeping trade flowing across the continent is a key objective in the CDC’s Covid-19 response and we are thrilled that our patient capital can support businesses that are at the centre of economic activities in our markets.”
He added that the CDC remained committed to playing its part in closing the trade finance gap in Africa, by helping to facilitate business and job growth and building resilience for the long term.
On the other hand, Ecobank group corporate and investment banking executive Akin Dada said the bank’s partnership with the CDC came at a crucial time in Africa’s history, with much-needed recovery from the challenges of Covid-19 and the immense trade and investment opportunities being created by the African Continental Free Trade Area.
“We welcome the opportunity to work with development finance institutions such as the CDC to help realise Africa’s potential and sustainably drive its economic development.”
The partnership will also allow EBI to provide further support for African trade, said EBI MD Jean Erwin, who added that, during the challenging Covid-19 environment, this represented "an important step in increasing Ecobank’s trade capacity and better serving its clients in Africa”.