AfDB approves €50m Trade Finance Risk Participation Partnership with Societe Generale to support African banks, SMEs

The Board of Directors of the African Development Bank Group (https://www.AfDB.org/) approved on Wednesday, July 13, a €50 million partnership for an unfunded risk-sharing facility with Societe Generale to further support trade finance activities in Africa. The facility will help reduce Africa’s trade finance gap by improving Societe Generale’s risk-bearing capacity by up to fifty percent, allowing it to provide higher confirmation limits to local issuing banks on the continent.

The parties will share the risk of default on a portfolio of eligible commercial transactions originated by African issuing banks and indemnified by Societe Generale. The beneficiaries of this mechanism will be the issuing banks in Africa that will benefit from additional support from international banks to grow their trade finance business, as well as small and medium-sized enterprises (SMEs) and domestic companies that depend on these banks. issuers to meet their trade finance. commitments

Stefan Nalletamby, Director of Financial Sector Development at the African Development Bank, said the partnership with Societe Generale will help support African small businesses and local corporations involved in international trade.

“The facility aligns well with the acute market demand for trade finance in Africa in agriculture, transportation, construction, healthcare and manufacturing. It is also consistent with the top 5 strategic priorities of the African Development Bank, specifically Industrialize Africa, Integrate Africa and Feed Africa. The Bank’s Financial Sector Development Strategy promotes increased access to finance for small businesses and the widening and deepening of African financial markets,” said Nalletamby. “When fully utilized, the Partnership will support 40 local issuing banks operating in 16 African countries and is anticipated to catalyze approximately €600 million in commercial transactions over a 3-year period.”

African Development Bank Deputy General Manager for West Africa, Joseph Ribeiro, said: “We are pleased with this partnership with Société Générale as it offers the flexible use of AfDB Group’s strong AAA-rated risk-taking capabilities to increase access to trade finance on the continent, and more specifically, to support access to finance for small and medium-sized enterprises and local businesses operating in fragile states.”

Pierre-Antoine Barreault, Global Head of Trade Finance for Commodities at Societe Generale, added: “With a presence in 19 countries, Societe Generale is a leading international bank in Africa, providing multidimensional support to African SMEs and companies, with the aim of contribute responsibly and sustainably to the development of the continent. This partnership with AfDB is critical for Societe Generale to enhance its capabilities to help our customers and local economic actors obtain vital food and energy products.”