VTB Bank (Europe) has signed an agreement to participate in the African Export-Import Bank's (Afreximbank's) Trade Confirmation Guarantee Programme (TCGP).

The agreement responds to the increasing amount of trade and investment between Russia and African countries.

L/C arrangements

Under the TCGP, Afreximbank takes direct risk on African banks by confirming letters of credit (L/Cs) issued by them on behalf of African importers.

The agreement allows VTB to use a wide range of Afreximbank trade finance products for expanding the commercial bank's activities in Africa and contributing to the strengthening of VTB's clients' positions with African counterparties.

Russia and Africa

Executive vice president, business development and corporate banking, at Afreximbank, Amr Kamel, said the agreement will enable Afreximbank to strengthen its support for Russian entities seeking to do business in Africa.

The African continent continues to gain more importance for Russian trade. Bilateral trade between Russia and Africa exceeded US$20 billion in 2018, an increase of 17 per cent compared with 2017.

L/C offerings

Afreximbank provides L/C confirmation under its Line of Credit Programme to creditworthy African and non-African banks active in African trade finance.

The bank's Reimbursement Guarantee meanwhile covers the payment risk of African and non-African banks under L/Cs or other acceptable trade debt instruments.

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