The African Development Bank (AfDB) and the Bank of Africa Tanzania (BOAT) have signed a US$7.5 million trade finance transaction guarantee facility (TGF) to boost trade finance activities at the Tanzanian bank.

Under this facility, AfDB will provide a guarantee of up to 100 per cent to confirming banks against non-payment risks arising from letters of credit (L/Cs) and similar trade finance instruments issued by BOAT.

SMEs and AfCFTA

The facility will support small and medium-sized enterprises (SMEs) and local corporates engaged in the import sector.

It also aligns with efforts to bolster intra-Africa trade, contributing directly to the objectives of the African Continental Free Trade Area (AfCFTA).

Priority sectors

The facility aims to aid Tanzania's priority sectors such as agriculture, manufacturing, and energy and support trade by enabling BOAT to play a more strategic role in the regional and international market.

The new TGF also supports Tanzania's Country Strategy paper 2021-25, which focuses on enhancing the private sector business environment for job creation. It also aligns with the country's development vision, which aims to build a strong and resilient economy capable of competing globally.

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