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British International Investment (BII), the UK’s Development Finance Institution and impact investor, today unveiled a $100 million finance facility with the Eastern and Southern African Trade and Development Bank (TDB).
This investment aims to bolster economic resilience in the region by enhancing essential trade finance activities, advancing agricultural development, and tackling pressing issues like food insecurity.
This facility will enable TDB to offer financial assistance to local businesses and financial entities in key African markets. These economies are grappling with a range of economic difficulties, such as currency depreciation, climbing inflation, debt burdens, and climate-related risks, further compounded by international economic strains, including the Russia-Ukraine conflict and the aftermath of COVID-19.
TDB plans to allocate this funding to support trade transactions, encompassing the import and export of goods, commodities, and vital services throughout the region.
This infusion of capital is key to surmounting trade barriers in Africa, like the withdrawal of international correspondent banks and the significant trade finance gap, estimated between $80-120 billion.
Enhanced access to trade finance will allow businesses to more actively participate in import and export operations, boosting cross-border trade, aiding in food security, and fostering job creation, economic growth, and resilience.
Moreover, the financing will assist local enterprises in acquiring crucial agricultural inputs, such as fertilisers, seeds, and machinery. By improving access to these essential resources, the aim is to bolster local production, augment agricultural productivity, support export sectors thus generating foreign exchange, and raise the standard of food products.
This initiative not only addresses immediate food security concerns but also enhances the agricultural sector’s capacity, global competitiveness, and economic contribution.
Over recent years, TDB has intensified its cooperation with financial institutions, acknowledging their crucial role in augmenting trade. This strategic alliance is fundamental to boosting the movement of goods and services, including through financial entities.
The transaction underscores the shared commitment of BII and TDB to empowering pivotal economic segments and the private sector, including SMEs, to foster inclusive growth across the continent.
Andrew Mitchell, Minister for Development and Africa, said, “This investment underscores the UK government’s commitment to supporting economic and agricultural development across Africa by empowering businesses, stimulating trade, and increasing the flow of essential goods and services. This funding will also help to lower trade barriers so that companies across the continent are better able to expand into overseas markets, access vital resources and tackle critical challenges such as food security.”
Ndaba Mpofu, Director and Head of Financial Services Debt at British International Investment, said, “Through this investment, BII is focusing its capital on offering strategic support to key financial institutions in countries we have a long-term commitment to. This facility with TDB aligns with our core mission to address the financing gaps in areas that help empower local businesses to drive inclusive growth, boost trade flows, and strengthen economic resilience.”
Admassu Tadesse, TDB Group President and Managing Director, said, “TDB Group has been playing an important role in the trade finance space, often working countercyclically to contribute to the security of supply of essential commodities in high priority sectors such as agriculture and healthcare. This is the fourth facility we are signing with BII and its predecessor. We are pleased to continue building this strategic partnership, and through this new facility, enhance efforts to address ongoing supply chain disruptions and forex shortages, and their impact on food security.”
