CDC Group, the UK's development finance institution (DFI), is expanding its trade finance offerings in Africa to help close the continent's trade finance gap.

The support primarily seeks to improve access to open account financing and complements other DFI initiatives targeted specifically at making letters of credit (L/Cs) more available.


CDC, which is entirely financed by the British government, has announced a US$100 million trade finance loan with South Africa's Absa Bank and a US$75 million risk-sharing facility with the Eastern and Southern African Trade and Development Bank (TDB).

The fresh injection of finance at Absa will be deployed by the bank and its affiliates in 12 countries to support trade transactions undertaken by local businesses, African small- and medium-sized enterprises and entrepreneurs.

Country beneficiaries

The investment will enable trade finance lending to Absa Group subsidiaries in Botswana, Ghana, Kenya, Mozambique, Tanzania, Uganda and Zambia, as well as other non-subsidiary correspondent banks across Africa.

This direct loan follows a recent agreement by CDC to provide a US$75 million trade finance facility to Absa. The combined sum of US$175 million is CDC's largest trade finance commitment in Africa.

Improved L/C access

CDC's support for Absa - formerly known as Barclays Africa Group, and originally Amalgamated Banks of South Africa - follows the African Development Bank's recent signing of an unfunded US$250 million Risk Participation Agreement facility with Absa that should improve access to L/Cs for companies in key strategic sectors (DC World News, 6 January 2020).

The risk sharing facility with TDB aims to enable the bank to increase trade flows by up to US$420 million over the next three years in the markets in which it operates.

TDB is a multilateral specialist bank with a mandate to foster regional economic integration and sustainable development, notably financing and facilitating trade flows to, from and within Africa.

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