Impact investor for Africa and South Asia CDC Group has announced the signing of a $100-million trade finance loan agreement with financial services provider Absa Bank.
The fresh injection of finance will be deployed by Absa and its affiliates in 12 countries to support trade transactions undertaken by local businesses, African small and medium-sized enterprises (SMEs) and entrepreneurs.
Trade finance plays a key role in Absa’s strategy to become a leading pan-African bank. The investment will enable trade finance lending to Absa Group subsidiaries in Botswana, Ghana, Kenya, Mozambique, Tanzania, Uganda and Zambia, as well as other non-subsidiary correspondent banks across Africa.
This direct loan follows a recent agreement by CDC to provide a $75-million trade finance facility to Absa.
The combined sum of $175-million is CDC’s largest trade finance commitment in Africa.
CDC’s dual capital commitment with Absa comes at a critical time for African businesses, particularly for SMEs that have suffered owing to the decrease in the flow of hard currency to African banks over recent years. This can often prevent companies from taking advantage of opportunities to grow, secure export opportunities and increase employment.