The East African Development Bank (EADB) is one of several development banks worldwide to recognise that trade finance programmes, often involving letters of credit (L/Cs), can be very useful tools for integrating emerging economies in global markets.

The bank has, therefore, included trade finance as one of its six priority areas for its 2006-10 programme, but it does not consider it to be one of the most important areas for focus.

Priorities

The bank has chosen housing finance, venture capital and asset leasing as its three top priority areas according to bank officials.

At a regional summit held last April in Arusha, Tanzania the bank had identified six priority areas. The three not chosen as a priority areas are infrastructure development, equity financing and trade finance.

Resource limitations

The bank says it cannot go ahead on all six areas in one go because of resource limitations.

In 2005 the bank issued L/Cs for US$9.9 million in its trade finance programme.

Global L/C networks

Several development banks have adopted L/C-based trade finance programmes pioneered by the European Bank for Reconstruction and Development, which launched in 1999 its Trade Facilitation Programme.

Development banks in Asia and the Americas followed suit and last year the International Finance Corporation's US$500 million Global Trade Finance Programme started its operations (DC World News, 19 October 2005).

This article represents the views of the author and not necessarily those of the ICC or any of the other partners in DC-PRO.