Afdb Approves $10M Trade Finance Guarantee To Exim Bank Tanzania To Support Smes And Local Corporates

(MENAFN- Caribbean News Global) AFRICA – The African Development Bank Group Board of Directors has approved a $10 million trade finance transaction guarantee facility for Exim Bank Tanzania Limited to unlock and de-risk trade deals.

The facility will provide up to 100 percent guarantees to international confirming banks against risks of non-payment. This support will release trade finance lines for Exim, expand access to essential imports, and strengthen Tanzania's private sector.

The new facility is expected to support up to $60 million in trade transactions over three years. The support will help Exim reduce its dependence on scarce foreign exchange collateral required by international banks, thus freeing resources for more productive lending to local businesses active in intra-African and international trade.

Supporting trade is a key priority of the African Development Bank, the head of trade finance, Lamin Drammeh said, following the approval.“Trade finance is essential for Africa's economic development, facilitating both domestic and international trade, boosting economic growth and promoting regional integration.”

Small and medium-sized enterprises (SMEs) make up over 90 percent of Tanzanian businesses and account for a third of GDP. However, a $1.3 billion annual trade finance gap limits progress and continues to hold them back.

“SMEs and corporates are vital engines of industrialisation, innovation, and job creation, and this facility will remove barriers to cross-border trade while opening doors for new partnerships with global and regional financial institutions,” Jaffari Matundu, chief executive officer of Exim Bank Tanzania Limited, said.

Key sectors such as agriculture, health, energy, and manufacturing will benefit by supporting the imports of essential goods such as fertilizer, pharmaceuticals, and farming equipment, as well as the export of Tanzanian commodities like coffee, cashew, and cotton.

Exim Bank is Tanzania's fourth-largest bank, with operations in Uganda, Djibouti, and Comoros. The facility will be implemented through agreements with Exim and participating confirming banks.

This project aligns with the African Development Bank's 2024-2033 Ten-Year Strategy, the 2021-2025 Tanzania Country Strategy Paper, which prioritises improved private sector business environment for job creation through improved private sector access to finance, and the government's Tanzania Vision 2025, which emphasises a strong, competitive economy.

“This partnership with Exim Bank Tanzania demonstrates the African Development Bank Group's commitment to reducing Tanzania's trade finance gap, empowering local businesses to compete globally and create more jobs across the country,” Drammeh said.

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