The African Export-Import Bank (Afreximbank) is spending US$1bn to fund the launch of an initiative designed to grow intra-Africa trade and increase SME access to finance.
The African Trade and Distribution Company (ATDC) is a partnership between Afreximbank, Arise Integrated Industrial Platforms (Arise IIP) and the African Continental Free Trade Area (AfCFTA) Secretariat.
The ATDC will focus on expanding access to regional and global markets for smallholder farmers and SMEs by providing financing, warehousing, logistics, regulatory advice and prospecting.
Anish Jain, chief executive of Arise’s parent company Equitane, tells GTR that every transaction the company undertakes will be unique, with solutions developed individually for each SME.
Jain says Afreximbank’s funds have yet to be fully allocated, but a substantial amount is expected to enter a revolving fund for trade finance lending.
The company plans to initially focus operations on companies in West and Central Africa before expanding to the rest of the continent.
ATDC will also distribute processed goods and raw materials from Arise’s industrial zones, which are currently active in Gabon, Togo and Benin. These zones focus on improving Africa’s export market by turning African raw materials into finished goods, a key concern for AfCFTA member states.
The trade finance gap in Africa – measured as the difference between demand and supply for financing facilities across the continent – stands at around US$81bn per year, according to a 2023 estimate by the African Development Bank (AfDB).
SMEs are particularly vulnerable to being denied financing due to poor credit scores or a lack of reliable financial information.
This is one of several recent schemes to improve African SMEs’ access to trade finance. Last month alone the AfDB provided US$15mn to Zimbabwe’s First Capital Bank to support SMEs and women-owned businesses and the International Finance Corporation issued a US$140mn guarantee facility to African lender Ecobank to allow them to provide trade finance for SMEs on the continent.
