The African Development Bank (AfDB) Group approved a €50 million unfunded risk-sharing facility with Societe Generale.

The facility, intended to drive trade finance across Africa by supporting small and medium enterprises (SMEs), as well as the local banks that service them, comes as part of a collaboration between AfDB and Societe Generale. 

The new partnership aims to reduce the continent’s trade finance gap by leveraging the AfDB’s AAA rating to increase the risk capacity among financiers and ultimately facilitate more transactions for SMEs.

Stefan Nalletamby, director for financial sector development at the AfDB, said, “The facility aligns well with the acute market demand for trade finance in Africa in agriculture, transport, construction, health, and manufacturing. 

“It is also consistent with the AfDB’s strategic priorities to industrialise, integrate, and feed Africa.”

Once fully utilised, analysts expect the facility to support 40 issuing local banks across 16 African countries. 

The €50 million facility is also predicted to spark a further €600 million of trade transactions over a three-year period.

Pierre-Antoine Barreault, global head of trade finance for commodities at Societe Generale, said, “With a presence in 19 countries, Societe Generale…provides multidimensional support for SMEs and African companies, aiming at contributing in a responsible and sustainable way to the continent’s development.” 

The partnership will benefit many businesses and help provide an economic boost, particularly for those based in fragile states.

Joseph Ribeiro, deputy director general for West Africa at AfDB, said, “This partnership with Societe Generale… [will] increase access to trade finance on the continent, and…support access to finance for small and medium enterprises and local enterprises operating in fragile states.”