AfDB approves $10m facility to boost Tanzania’s trade finance
The facility is expected to unlock $60m in trade over three years, easing access to imports and supporting Tanzanian SMEs.
The African Development Bank Group(AfDB) has approved a $10 million trade finance guarantee facility for Exim Bank Tanzania Limited to help unlock and de-risk trade transactions in the country.
The support will provide guarantees of up to 100% to international confirming banks against risks of non-payment. This is expected to free up trade finance lines for Exim Bank and widen access to key imports while also strengthening the private sector in Tanzania. Over the next three years, the facility is expected to back trade transactions worth up to $60 million.
With this new arrangement, Exim Bank will rely less on foreign exchange collateral, which has often been difficult to secure from international banks. This will allow the bank to direct more resources towards productive lending for businesses involved in both intra-African and global trade.
According to Lamin Drammeh, Head of Trade Finance at the African Development Bank, trade finance is essential for Africa’s development as it drives both domestic and international trade, boosts growth, and supports regional integration.
Tanzania’s small and medium-sized enterprises, which represent more than 90% of businesses and contribute about one-third of the country’s GDP, have been heavily affected by a trade finance gap of $1.3 billion every year. This gap has limited their growth and ability to participate in cross-border trade.
Exim Bank Tanzania’s Chief Executive Officer, Jaffari Matundu, said that the facility would help remove barriers faced by SMEs and corporates, while also creating opportunities for new partnerships with financial institutions across the region and beyond.
Key industries such as agriculture, health, energy, and manufacturing are expected to benefit from the move. Imports of essential goods like fertiliser, pharmaceuticals, and farming equipment will be supported, while exports of important Tanzanian commodities including coffee, cashew, and cotton will also gain a boost.
Exim Bank, Tanzania’s fourth largest bank, also operates in Uganda, Djibouti, and Comoros. The facility will be carried out through agreements between Exim Bank and participating confirming banks.
The initiative is closely aligned with the African Development Bank’s 2024-2033 Ten-Year Strategy, the 2021-2025 Tanzania Country Strategy Paper, and the government’s Tanzania Vision 2025. All three place strong emphasis on improving private sector access to finance in order to create jobs and build a competitive economy.
Drammeh added that the partnership with Exim Bank Tanzania highlights the Bank’s commitment to reducing the country’s trade finance gap and empowering local businesses to compete globally while generating more employment opportunities.
