ABSA Bank Ltd

Economic enabler: This facility will enable our partner bank Absa to extend more trade finance to companies via African financial institutions to support goods imports. Given the global macro environment, including USD shortages and inflation, it is difficult to pay for imported, USD-denominated inputs for production, capital goods and maintenance.

Alpha and non-Powerhouse Beta markets in Africa. Expected to include Tanzania, Mozambique, Zambia, Cote d'Ivoire, Madagascar, Malawi, Rwanda, Zimbabwe and Rwanda.

Given the variance of industries in which the businesses operate, for characteristics of people who ultimately benefit from the enabled trades, we assume mass market characteristics and demographics of the respective geographies.

It is not possible to state the number of people who will be reached, so we use the scale of the facilities and enabled trade as a proxy.

Based on assumptions related to average tenor and utilisation, we anticipate that the $150 million trade risk sharing facility will enable over $200 million in additional trade volumes per year.

Depth: This is difficult to estimate without having line of sight to the characteristics of the businesses and consumers reached. But we can presume that depth of impact will increase in Alpha and small Beta markets where poverty rates are higher and firms have less access to trade finance.

Financial additionality: Capital is not offered in sufficient quantity, in particular due to the sizeable trade finance gap in Africa as well as the bank's difficulty to source sufficient short-term USD funding for its growing trade book.

Evidence Risk

Visibility on the impact on ultimate borrowers depends on Absa and the local banks’ ability to provide data on underlying borrowers. Absa provides data on underlying trades financed through the facility, including information on country, sector and a description of goods. We mostly rely on theory, evidence and macro trade data to understand the indirect impact of trade on capital markets, economies and people.

External Risk

There may be a risk that there is not enough demand and/or that other constraints are hindering the impact on trade to occur, e.g. logistical, economic, policy.