The facility seeks to improve trade liquidity within Africa, especially for women and youth-run businesses, building on Absa’s extensive network of financial services operations across the continent.
British International Investment (BII), the UK development finance institution, said it was providing a $150m (€139m) facility for Africa-focused financial services group Absa, ringfenced to finance trade transactions with a focus on sustainable funding on the continent.
Among sectors to be supported via the facility are small and medium-sized enterprises (SMEs) founded by young people and women involved in intra-African and global trade. Johannesburg-based Absa said the facility aligned with its goal of concluding Rand 100bn (€5.22bn) in sustainability-related transactions by 2025.
Absa has had a partnership with BII since 2019, designed to facilitate trade in line with the objectives of the African Continental Free Trade Area agreement. Through a series of trade finance facilities, the partnership has sought to improve trade liquidity in countries such as Ghana, Nigeria, Kenya, Uganda, Tanzania, and Mozambique. It has supported more than $1bn in trade volumes during a period that has included the COVID-19 pandemic, which significantly constrained trade liquidity in Africa, according to the organisations.
The new facility, which was signed on the sidelines of October’s World Bank annual meetings, is also intended to enable Absa to extend liquidity to clients more widely on the continent and support trade products in high demand.
Mosa Tshabalala, head of FI Trade Sales (International), Risk Distribution, and Syndication at Absa CIB, said the group sought to find solutions for its customers that would address Africa’s trade finance gap, which some organisations have estimated could be as wide as $120bn. He said Absa would continue to seek partnerships with DFIs, insurance companies, commercial banks, export credit agencies and institutional investors to improve market access and fund its customers’ growth ambitions.
Targeting sustainable growth
Charles Russon, Absa’s interim group CEO, said the group’s wide presence across the continent and its global reach meant it could facilitate the flow of capital and trade finance that African businesses need to scale and compete internationally.
“By leveraging our cross-border expertise and strategic partnerships, we are driving sustainable growth and creating new opportunities in emerging markets, contributing to the broader development of Africa’s economic ecosystem,” he said.
Absa Group provides products and services covering personal and business banking, corporate and investment banking, wealth and investment management and insurance. It owns majority holdings in banks in Botswana, Ghana, Kenya, Mauritius, Mozambique, Seychelles, South Africa, Tanzania, Uganda and Zambia. It has insurance operations in Botswana, Kenya, Mozambique, South Africa and Zambia.
The transaction is the latest of a steady stream of investments and financings by BII in Africa, announced over recent years that have built on the institution’s role in developing the global impact investment market – a role discussed by the institution’s outgoing CEO Nick O’Donohoe in an interview with Impact Investor in September.
BII transactions in Africa over the last few months include, among others, a £30m commitment for the Democratic Republic of the Congo’s first deepwater port, co-financing of an FMO-arranged $295m syndicated loan for Nigeria’s Access Bank to support SMEs and a $10m loan to NMB Bank Zimbabwe to back agricultural exports from that country.
