The Board of Directors of African development bank Group Has approved a risk-free loan in the sum of $50m to a French bank to expand support for African banks and small medium enterprise across African region.

The agreement is expected to help achievement of a cumulative trade volume of $430 million over the next three years

“With this new operation, we are strengthening the trusting relationship between the various players in the African banking system in order to accelerate the development of trade,” said Mohamed El Azizi, Director General of the African Development Bank for North Africa. He added: “This is another step towards the realization of the African Continental Free Trade Area which will unleash the full growth potential of the continent and create new opportunities and jobs.”

“This new operation, the second of its kind with Natixis, and with broader geographic coverage, will help catalyze greater intra-African trade flows over the next three years. The ambition is to help more local banks and their SME clients to expand into new African countries, particularly those with low incomes. The aim is to facilitate their access to financing and help them unleash their potential. This is in the service of greater regional integration,” said Stefan Nalletamby, Director of the African Bank’s Financial Sector Development Department.

The risk-sharing agreement is intended to meet the growing demand from African markets for trade finance in vital economic sectors ­such as agribusiness, energy, manufacturing, health, and services. It will also help diversify production, creating jobs and additional tax revenues for several African countries.

Specifically, this agreement will support African commercial banks and SMEs by ensuring stable access to trade finance, an important driver of economic growth and regional integration.

This agreement comes at a time when the majority of African banks are poorly capitalized, as a result of the COVID-19 pandemic, which has impacted their ability to access lines of credit with international banks. This difficulty has been exacerbated by the tightening of regulatory standards for capital and compliance, which has led international banks to reduce their commitments and the number of their correspondent banks in Africa.

The Risk Participation Agreement aligns with the African Development Bank’s High 5 strategic priorities.

Natixis service bank is the international corporate, investment, asset management, insurance and financial services bank of Groupe BPCE, the second largest banking group in France. Natixis has business expertise in four areas in particular: asset and wealth management, key accounts, insurance and specialized financial services. Natixis supports its own corporate clients, financial institutions and institutional investors, as well as the individual, professional and SME clients of Groupe BPCE, throughout the world.