- Forms a key pillar of CDC’s response to COVID-19
- Brings total trade finance commitments with Absa to US$ 250 million
- Financial backing to support supply chains in vital food & agriculture and healthcare sectors
CDC Group, the UK’s development finance institution and impact investor, has today announced an additional US$75 million commitment to its existing trade finance facility with Absa Bank. The investment will provide systemic liquidity across CDC’s African markets and enable local banks to sustain the availability of trade finance, supporting supply chains during the COVID-19 crisis.
The pandemic has put significant pressure on African banks as international banks continue to “de-risk”, withdraw from the continent and reduce their correspondent banking relationships in developing economies. In the context of broad outflows of capital from Africa, counter-cyclical commitments from development finance institutions are critical to mitigating these pressures and maintaining trade flows.
CDC’s partnership with Absa includes an innovative mechanism to boost trade finance funding to some of Africa’s most vulnerable countries. Trade finance transactions in sectors that are critical to serving people’s basic needs during the crisis – food & agriculture and health – will also benefit from preferential terms. The commitment will help maintain consumer access to a wide range of goods and services and allow businesses to continue operating by enabling them to import vital equipment and goods.
Today’s announcement strengthens CDC’s relationship with Absa and builds on two existing trade finance facility announced in October 2019.
Admir Imami, Director, Head of Trade & Supply Chain Finance, CDC:
“CDC remains committed to closing Africa’s trade finance gap of US$110 billion to US$120 billion. By scaling up our trade finance agreements in Africa, we can protect vital supply chains that make a tangible impact on everyday lives. Our commitment will also provide a lifeline to many businesses dependent on imports. By investing in them today, we can ensure they are well positioned to weather the crisis and contribute to the continent’s economic recovery.”
George Wilson, Head of Institutional Trade, Absa: “Absa has made a commitment to supporting entrepreneurs and business owners on the continent. With traditional global supply chains being disrupted, this transaction allows us to re-imagine the continent as a trade destination and capacitate businesses to allow them to create jobs and drive economic activity.”
Africa’s trade finance deficit is estimated by the International Chamber of Commerce to represent about 25 per cent of the demand for trade finance in Africa. CDC and Absa are playing a key role in bridging this gap by supporting local financial institutions to expand financing to businesses and sustain supply chains across the continent.
Since 2015, CDC has guaranteed US $3.3 billion, resulting in US $12.5 billion of trade across its markets of Africa and South Asia.
ENDS
Notes to Editors
Media Contact:
CDC: Toyosi Adebayo / M. +44 (0) 7880 372 305 / press@bii.co.uk
About CDC
- CDC Group is the UK’s first impact investor with over 70 years of experience of successfully supporting the sustainable, long-term growth of businesses in South Asia and Africa.
- CDC is a leading player in the fight against climate change and a UK champion of the UN’s Sustainable Development Goals – the global blueprint to achieve a better and more sustainable future for us all.
- The company has investments in over 1,200 businesses in emerging economies and a total portfolio value of £5.8bn. This year CDC will invest over $1.5bn in companies in Africa and Asia with a focus on fighting climate change, empowering women and creating new jobs and opportunities for millions of people.
- CDC is funded by the UK government and all proceeds from its investments are reinvested to improve the lives of millions of people in Africa and South Asia.
- CDC’s expertise makes it the perfect partner for private investors looking to devote capital to making a measurable environmental and social impact in countries most in need of investment.
About Absa
Absa Group Limited (‘Absa Group’) is listed on the Johannesburg Stock Exchange and is the parent company of one of Africa’s largest diversified financial services groups.
Absa Group, through its worldwide affiliates and subsidiaries (collectively referred to as “The Group”), offers an integrated set of products and services across personal and business banking, corporate and investment banking, wealth and investment management and insurance.
The Group has a presence in 12 countries in Africa, with approximately 42 000 employees.
The Group’s registered head office is in Johannesburg, South Africa, and it owns majority stakes in banks in Botswana, Ghana, Kenya, Mauritius, Mozambique, Seychelles, South Africa (Absa Bank Limited), Tanzania (Absa Tanzania and National Bank of Commerce), Uganda and Zambia. The Group also has representative offices in Namibia, Nigeria, London and New York as well as insurance operations in Botswana, Kenya, Mozambique, South Africa, Tanzania and Zambia.
For further information about Absa Group Limited, please visit www.absa.africa
