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AfDB Approves $15 Million Trade Finance Facility to Boost Zimbabwe's Economy

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Olalekan Adigun
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AfDB Approves $15 Million Trade Finance Facility to Boost Zimbabwe's Economy

In a landmark move, the African Development Bank Group's (AfDB) Board of Directors has approved a USD 15 million Trade Finance Transaction Guarantee facility for NMB Bank, a commercial bank in Zimbabwe known for its support to small and medium-sized enterprises (SMEs). The decision, made on 30 November 2023, promises to be a significant shot in the arm for Zimbabwe's economy.

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Facility to Bolster Trade in Zimbabwe

The trade finance transaction guarantee facility, an initiative that offers a 100% guarantee to international confirming banks against non-payment risks in trade finance transactions, is set to be a boon for SMEs and local businesses, especially those in agri-business and trade distribution sectors. This strategic tool is anticipated to reduce Zimbabwe's trade finance gap significantly.

Projected Impact and Benefits

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The facility's impact is projected to be sizeable. It is expected to facilitate over USD 100 million in trade volumes by 2026, thereby playing a key role in bridging the trade finance gap in Africa. The facility is also poised to enhance access to financial services and foster intra-Africa trade, particularly within Zimbabwe, the Southern African Development Community (SADC), and other African regions.

Supporting SMEs and Local Enterprises

Moono Mupotola, the Zimbabwe Country Manager for AfDB, emphasized the difficulties SMEs and domestic firms face in securing trade finance compared to larger corporations. She sees the transaction guarantee facility as a strategic intervention to strengthen NMB Bank's correspondent banking relations and reduce Zimbabwe's trade finance gap. Lamin Drammeh, AfDB's Head of Trade Finance, echoed this sentiment, stating that the facility resonates with the bank's objectives of supporting SMEs, women-owned businesses, farmers, and local enterprises across Africa, thereby facilitating their integration into regional and global value chains.

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