AfDB renews RPA for trade finance with SMBC Europe
The African Development Bank has approved a $200 million Trade Finance Risk participation agreement with Sumitomo Mitsui Banking Corporation Europe.
The RPA, replacing an earlier one that expired in late 2019, will incorporate $100 million each of unfunded and funded risk participation to strengten African trade finance, particularly in the agriculture, energy, manufacturing, and construction sectors, and will expand intra-African trade. The recently expired RPA covered solely unfunded risk participation.
Under terms of the agreement, the AfDB will extend a three-year funded and unfunded RPA limit up to $200 million that SMBCE will match, to a total limit of $400 million, in support of a portfolio of eligible trade finance instruments originating from 45 local and regional African banks active in about 17 Regional Member Countries.
In addition to providing liquidity, AfDB will leverage its AAA credit rating to offer SMBCE risk-cover to underwrite trade transactions by the African banks.
