CDC Group, the UK’s development finance institution and impact investor, has announced a new two-year revolving US$50 million trade finance loan facility to Absa bank.
The loan forms part of CDC’s response to COVID-19 and follows an additional US$75 million investment made in July, into its existing facility with the bank.
The investments form part of the ‘Strengthen’ pillar of CDC’s COVID-19 response and will provide systemic liquidity to banks across Africa, supporting them to provide trade finance and helping to maintain the stability of supply chains during the crisis.
The pandemic has put significant pressure on African banks as international banks continue to withdraw from the continent and reduce their correspondent banking relationships in developing economies. Counter-cyclical commitments from development finance institutions like CDC are critical to mitigating the lack of capital and maintaining trade flows.
This latest commitment advances CDC’s goal to help bridge the gap in Africa’s trade finance deficit – estimated by the International Chamber of Commerce to represent about 25 percent of the demand for trade finance in Africa.
In addition to strengthening the response to COVID-19 across Africa, CDC’s latest commitment to Absa contributes to the United Nations’ Sustainable Development Goals (SDGs) on Zero Hunger (SDG 2), and Decent Work And Economic Growth (SDG 8).
Original source: CDC