The African Development Bank (AfDB) has approved a US$40 million trade finance package in favour of Bank One of Mauritius.

The financial package comprises a US$25 million risk participation agreement and a US$15 million transaction guarantee.

Regional issuing banks

Under the transaction guarantee facility, AfDB will provide up to a 100 per cent guarantee to participating banks for the non-payment risk arising from the confirmation of letters of credit (L/Cs) and similar trade finance instruments issued by Bank One.

The risk participation agreement meanwhile will provide up to 50 per cent guarantee cover on a portfolio basis to support trade finance transactions originated by issuing banks in regional member countries.

Targeted support

This financial support is expected to help Bank One increase its capacity to support the trade finance needs of key sectors, including small- and medium-sized enterprises and local corporates in Mauritius and across the continent.

The support for Bank One follows the announcement a few days ago of a similar US$10 million trade finance transaction guarantee facility for Banco Fomento de Angolas (DC World News, 23 December 2022).

This article represents the views of the author and not necessarily those of the ICC or Coastline Solutions.