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The African Development Bank (AfDB) has entered into a €15 million guarantee agreement with Bank of Africa Benin (BOA-Benin) to strengthen trade finance activities and support Beninese enterprises, underscoring a shared commitment to the west African nation’s private sector.
The deal, signed on Monday in Cotonou, will provide guarantees of up to 100% to confirming banks for letters of credit and similar trade finance instruments issued by BOA-Benin, enabling local businesses to access crucial import financing more readily.
Under the three-year facility, BOA-Benin will be able to support imports of production machinery and telecommunications equipment essential for Benin’s industrialisation drive. The arrangement specifically targets climate-resilient projects with minimal greenhouse gas emissions, while prioritising support for small and medium-sized enterprises, including women-led businesses.
The facility will enable the AfDB to provide full guarantees to confirming banks, thereby facilitating trade finance confirmation for local businesses.
“The transaction guarantee facility will support imports of production machinery and telecommunications equipment needed to underpin Benin’s industrialisation process,” said Lamin Drammeh, head of trade finance at AfDB. The facility will particularly benefit agribusiness and light manufacturing sectors, though it will also facilitate imports of essential goods to meet short-term local demand.
The agreement aligns with the AfDB’s 2022-2026 country strategy for Benin.
During their first Government Action Program (PAG 2016–2021), the AfDB contributed to a relative improvement in the competitiveness of Benin’s economy through major projects in agriculture, transport, energy, water, and sanitation.
This initiative seeks to build on this progress but, as quoted in the AfDB’s Country Strategy Paper 2022-2026 with particular focus on:
(i) improving productivity and the efficiency of public investments;
(ii) developing the private sector;
(iii) reducing poverty and strengthening the inclusiveness of growth;
(iv) incorporating gender considerations in projects and reducing gender inequalities;
(v) accelerating project implementation.”
Robert Masumbuko, AfDB’s country manager for Benin, welcomed the partnership with BOA-Benin, describing it as a “long-standing trade finance player in the country”.
Abdel Mumin Zampalégré, managing director of BOA-Benin, said, “This partnership is fully in keeping with the Bank of Africa Group’s strategy, which identifies trade finance as one of the main focuses of its intervention strategy in Africa.”
