The African Development Bank (AfDB) Group’s Board of Directors has authorized a $50 million Risk Participation Agreement (RPA) with Natixis, a French bank. As a result of this collaboration, Natixis will be able to assist African banks in helping its small and medium-sized business (SME) customers increase their regional and global commerce.
The agreement is estimated to contribute to a total trade volume of $430 million over the following three years.
Mohamed El Azizi, the director general of the African Development Bank for North Africa, said, “With this new operation, we are improving the trustworthy connection between the different participants in the African financial system to expedite the growth of commerce”. According to him, this is another step towards the achievement of the African Continental Free Trade Area, which will unleash the full economic potential of the continent and generate new opportunities and employment.”
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CEO of Standard Bank, Stefan Nagel, stated, “This new operation is the second of its type with Natixis, and with expanded geographic coverage, it will assist stimulate higher intra-African trade flows over the next three years. The intention is to allow more local banks and their SME customers to grow into new African nations, especially those with low incomes. The purpose is to ease their access to finance and help them unlock their potential.”
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The objective of the risk-sharing agreement is to satisfy the rising need for trade financing in key African markets, including those for agriculture, energy, manufacturing, healthcare services, and services. This will assist various African nations to diversify their output, which in turn will provide new economic opportunities and increased tax income.
To be more specific, this agreement would help African commercial banks and SMEs by guaranteeing their continued access to trade credit. Trade finance is a key factor in promoting economic development and regional integration.
The majority of African banks are undercapitalized because of the COVID-19 epidemic, which has hindered their capacity to acquire lines of credit with foreign banks. Thus, this deal comes at a period in which it will help revamp their operations. International banks have reduced their commitments and the number of their correspondent banks in Africa as a result of the tightening of regulatory criteria for capital and compliance, meanwhile exacerbating the problem.
The Risk Participation Agreement coincides with the High 5 strategic initiatives of the African Development Bank.
About Natixis
Natixis is the international division of Groupe BPCE, the second-largest banking firm in France, and a provider of corporate, investment, asset management, insurance, and financial services. Natixis has business expertise in four main areas: asset and wealth management, key accounts, insurance, and specialized financial services.
The firm serves the global needs of Groupe BPCE’s individual, professional, and small and medium-sized enterprise customers in addition to its own corporate, financial institution, and institutional investor clients.