The facility consists of a €50 million Risk Participation Agreement between the institutions and a €20 million Trade Finance Line of Credit to expand access to trade finance for SMEs across the region. 

The Risk Participation Agreement will increase BOA’s capacity to provide support to local banks’ international operations, making up for a decrease in cooperation from foreign institutions, while the Trade Finance Line of Credit, targeted at SMEs in the pharmaceutical, transport, and agricultural sectors, is expected to boost regional trade.

“Together, in Morocco and across the continent, we are strengthening financial inclusion for small and medium-sized enterprises involved in foreign trade, to help them to operate more widely,” said Achraf Hassan Tarsim, head of the AfDB’s Morocco Office.

Overall, AfDB hopes the facility will boost trade by over €300 million over the next 3.5 years and increase access to trade finance in ‘transition states’, Africa’s most fragile economies. The trade finance gap is estimated to be up to €71 billion in Africa alone, with SMEs and small regional banks having the most difficulty accessing financing. 

The AfDB has been focusing on bridging this gap by partnering with regional banks, providing similar trade finance facilities to banks in Zimbabwe, Mozambique, and Ethiopia this year. They recently entered into similar agreements with banks in the Comoros, Kenya, and Angola to boost digitisation and diversification of local economies. 

The announcement comes days after AfDB, which celebrated its 60th anniversary in September, signed a landmark $600 million Regional Development Deal with USAID to boost development in the Sahel. 

It forms part of a wider effort by the development bank to support SMEs in the continent’s most vulnerable regions, supporting development through trade and private sector solutions.