Amidst the Covid-19 crisis, World Bank IDA approves a record long-term USD 415 million project financing facility with a credit line blended with technical assistance for TDB.
Nairobi, 30 June 2020 – The Eastern and Southern African Trade and Development Bank (TDB) is delighted to announce the approval of a ground-breaking USD 415 million Regional Infrastructure Finance Facility (RIFF) project by the World Bank’s International Development Association (IDA). The facility comprises a 19-year Scale-Up Facility (SUF) credit line of USD 400 million, and a 38-year USD 15 million concessional technical assistance credit. This is the first time the World Bank’s IDA is extending such a facility to a regional development bank, alongside another debut MIGA-backed trade finance facility that was also just concluded with TDB.
Thanks to the facility, TDB will scale-up its financing of long-term infrastructure projects, particularly in the area of renewable energy, including among other targets, renewable generation and mini grids for industrial and commercial enterprises pursuing the electrification of nearby communities. Likewise, access to debt financing will be provided to SMEs, the backbone of the region’s economies, primarily targeting renewable energy SMEs which have been particularly hard hit by the Covid-19 pandemic. Special focus will be placed on projects which can create jobs, as well as increase cross-border trade and investment, and new technologies.
Furthermore, the technical assistance credit will serve to enhance TDB’s capacity in areas including environmental and social management, project preparation and portfolio management. As well, it will support the institutional strengthening of the Trade and Development Fund (TDF), a newly created sister institution which will undertake activities of educational nature and support non-commercial activities in TDB member states.
As part of the broader arrangement, the Secretariat of the Common Market for Eastern and Southern Africa (COMESA Secretariat) will be the recipient of a USD 10 million technical assistance grant, geared at supporting the private infrastructure finance enabling environment, in particular for the region’s off-grid energy market.
The need for long-term infrastructure finance has been further exacerbated during these disrupted times. Indeed, along with supply chains disruptions, risk perception and aversion have risen, and available liquidity from financial institutions has become more short-term. For the more vulnerable small and medium enterprises – which contribute up to 40% of emerging economies’ GDPs, and 70% of all employment – this support from IDA will go a long way to ensure that they continue contributing to the sustainable socio-economic development of the region and of its peoples.
The proceeds of these credits will be deployed alongside a first-of-its-kind 10-year loan covered with a EUR 359 MIGA guarantee geared at trade finance, to support TDB’s access to commercial bank financing at longer tenors and better rates, thereby enabling the Bank to step-up its operations in some of its member states, which would normally not have been eligible for an equivalent cover.
“We are delighted to establish this ground-breaking new partnership with the World Bank Group – now effectively one of our major strategic funding partners – to advance both regional integration and private sector development in the COMESA and broader Eastern and Southern Africa region”,
comments Admassu Tadesse, TDB President and Chief Executive.
“It is no doubt further demonstration of the World Bank’s growing commitment to Africa in this brave new age of the AfCTA. With stronger winds beneath our wings, we can look forward to more vigorously push headfirst the SDG and Africa 2063 Agendas, and more efficiently respond to the difficult circumstances brought about by the Covid-19 crisis.”
With over USD 800 million in new long-term funding and guarantees, the foundations upon which TDB is deploying its trade and project finance will be strengthened even further, and its triple bottom line impact, bolstered.