Vienna, Austria, June 4, 2020 – The OPEC Fund for International Development (the OPEC Fund) has signed a US$50 million unfunded risk-sharing agreement with the Eastern and Southern African Trade and Development Bank (TDB) to improve access to trade finance in Eastern and Southern Africa.
TDB is a major provider of trade finance for its member states; it plays a critical role in addressing trade finance shortages and forex challenges in the region. It has succeeded in mitigating fuel shortages, securing the sourcing of strategic commodities, and facilitating greater intra and inter-African trade and regional integration, and in turn, socio-economic progress.
Via this agreement, the OPEC Fund and TDB will together support sustainable development in the region by working with partner financial institutions to fund the trade of commodities vital to the socio-economic progress of its economies. This is especially important during periods of crisis, such as the current Covid-19 pandemic, which has brought about new liquidity needs and other challenges.
“We are pleased to work with our strategic partners at TDB once more in support of Sustainable Development Goals (SDGs) in Africa,”
said OPEC Fund Director-General Dr. Abdulhamid Alkhalifa
“Improving access to finance for businesses supports SDG 8 on inclusive and sustainable economic growth and decent work for all. This is especially important in sub-Saharan Africa, where the number of people living in extreme poverty is still high. This agreement with TDB also ultimately supports progress toward SDG 1 on ending poverty and SDG 2 on ending hunger.”
TDB President and Chief Executive Admassu Tadesse said:
“With this agreement, we are delighted to elevate our partnership yet again with the OPEC Fund, one of our valued institutional shareholders since 2018. In the past five years, TDB’s trade finance portfolio has grown two-fold to US$3.3bn thanks to our growing partnerships with like-minded financial institutions such as the OPEC Fund, with which we continue to extend access to affordable finance to advance trade and sustainable development impact”.
The risk-sharing transaction builds on a cooperation agreement signed between the OPEC Fund and TDB in the last quarter of 2019, which supports the institutions as they work together to promote the socio-economic development of the private sector in beneficiary countries. In 2018, the OPEC Fund signed a loan agreement of US$60 million with TDB to support international trade in the Bank’s member states, for a total of close to US$250 million in financing between both institutions over the past 10 years. Also in 2018, the OPEC Fund invested US$20 million in TDB’s capital stock, providing a platform for the Bank to enhance its financing of trade and infrastructure in Eastern and Southern Africa.
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Africa is central to the OPEC Fund’s development operations. At the end of January 2020, the organization’s cumulative approvals to the continent across all its financing mechanisms amounted to nearly US$11.7 bn. Of this sum, more than US$4 billion was approved under the institution’s Private Sector and Trade Finance facilities. This represents more than one-half of total Private Sector and Trade Finance facility approvals.
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