Business & Economy

AfDB teams up with Santander on RPA

afdbThe African Development Bank (AfDB) has signed an unfunded $40million risk participation agreement (RPA) with Santander to help issuing banks in Africa expand their trade finance operations. Through the facility, Santander will match AfDB’s undertaking in every transaction it provides. The facility is expected to support more than $480million of trade in Africa over a three-year period.
This is the AfDB’s first RPA with a Spanish bank. ‘The facility will help address critical market demand for trade finance in Africa by providing support for trade in vital economic sectors such as agriculture and manufacturing. It will also foster financial sector development and regional integration, and contribute to government revenue generation,’ says a statement issued by the development bank. Most African banks are small and therefore find it difficult to obtain adequate trade finance facilities from international confirming banks to support African importers and exporters. AfDB’s additionality lies in the use of its “AAA” rating to give greater comfort to Santander to take more risk on local banks in Africa and provide them increased trade finance facilities.

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