The African Development Bank (AfDB) and Bank of Africa Benin (BOA-Benin) have signed a 15 million euro (EUR 15 million - US$16.2 million) trade finance guarantee agreement in the Beninese capital, Cotonou.

This three-year facility aims to bolster BOA-Benin's capacity to support local businesses, particularly small and medium-sized enterprises (SMEs), by facilitating the importation of essential goods and equipment.

The AfDB will provide up to 100 per cent guarantees to confirming banks, thereby encouraging the issuance and external acceptance of trade finance instruments such as letters of credit (L/Cs) by BOA-Benin.

Targeted sectors

The facility focuses on supporting imports for agribusiness and light manufacturing sectors, as well as essential goods to meet immediate local demand.

The initiative is designed to benefit a broad spectrum of businesses, including those led by women, and prioritises projects with minimal climate risks and low greenhouse gas emissions.

Strategic alignment

This partnership aligns with the AfDB's Country Strategy Paper 2022-2026 for Benin, which emphasises agricultural transformation and industrial development to enhance food security, create high-value jobs, and build socioeconomic resilience.

It also supports Benin's National Development Plan 2018-2025, which focuses on increasing economic productivity and competitiveness.

Expected outcomes

The facility is anticipated to mobilise approximately EUR 45 million in trade over its duration, thereby strengthening BOA-Benin's trade finance services and contributing to the country's economic growth and industrialisation efforts.

By providing local businesses with improved access to international markets and supporting the country's broader economic development goals, this agreement marks a significant step in enhancing trade finance in Benin.

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