The African Development Bank Group (AfDB) has approved a Sh7.74 billion ($60 million) trade finance guarantee to Equity Bank Kenya. This strategic approval marks a pivotal step in addressing a critical bottleneck for local businesses, aiming to inject vitality into the nation’s import sector and fortify the foundations of intra-African commerce.
This facility will enable Equity Bank to offer robust guarantees, covering up to 100% of the risk to international confirming banks. This security blanket specifically addresses non-payment risks associated with Letters of Credit and similar instruments issued by Equity Bank within Kenya.
By substantially de-risking these transactions, the facility unlocks a crucial pipeline for import finance, directly targeting the often-overlooked engine of the economy: small- and medium-sized enterprises (SMEs) and domestic corporations. For these businesses, which have historically grappled with prohibitive costs and stringent requirements for trade financing, the initiative promises a new era of accessibility and affordability.
According to Moses Nyabanda, Managing Director of Equity Bank Kenya, this is pivotal, especially for SMEs who face persistent and significant barriers in securing affordable trade finance.
“The African Development Bank’s support strengthens Equity Bank’s capacity to unlock growth opportunities for local enterprises by enhancing their ability to trade with confidence, manage risk, and sustain their operations,” Nyabanda said.
Beyond its immediate impact on Kenyan enterprises, the facility carries a profound continental significance. It is deliberately engineered to catalyze cross-border trade within Africa, thereby providing tangible, financial muscle to the visionary African Continental Free Trade Area (AfCFTA) agenda. Facilitating smoother and more secure trade transactions, it directly contributes to weaving a tighter, more resilient economic fabric across the region.
According to Lamin Drammeh, Manager of the African Development Bank’s Trade Finance Division, supporting African trade remains a paramount priority.
“Trade finance is essential for Africa’s economic development, facilitating both domestic and international trade, boosting economic growth, and promoting regional integration. We are delighted to work with Equity Bank, a strong partner with extensive knowledge and network in the country, on a shared ambition of supporting the region’s trade,” Lamin said.
Ultimately, reducing the trade finance gap empowers local businesses to participate more fully in both domestic and international markets, driving inclusive growth and bringing the ambitious goals of the AfCFTA firmly within reach.
