AfDB approves $10 million for Exim Bank Tanzania

The Board of Directors of the African Development Bank Group (AfDB) recently approved a $10 million trade finance transaction guarantee facility for Exim Bank Tanzania Limited. This initiative aims to unlock and de-risk trade transactions by providing up to 100% guarantees to international confirming banks against non-payment risks.

This new facility will support up to $60 million in commercial transactions over a three-year period. It aims to:

• Strengthening access to essential imports for the Tanzanian private sector.
• Reduce Exim Bank's dependence on foreign currency collateral required by international banks.
• Free up resources for more productive lending to local businesses, particularly those active in intra-African and international trade.

Lamin Drammeh, Head of Trade Finance at the AfDB, highlighted the importance of this support: “Trade finance is essential to Africa’s economic development, as it facilitates domestic and international trade, stimulates economic growth and promotes regional integration.”

Small and medium-sized enterprises (SMEs) represent more than 90% of businesses in Tanzania and contribute a third of GDP. However, an annual trade finance gap of $1.3 billion hampers their development. Jaffari Matundu, Managing Director of Exim Bank Tanzania Limited, said the facility will remove barriers to cross-border trade while paving the way for new partnerships with global and regional financial institutions.

The guarantee facility will benefit several key sectors, including:

• Agriculture : Support for the import of fertilizers and agricultural equipment.
• Health : Facilitation of imports of pharmaceutical products.
• Energy and Industry : Strengthening industrial capacities through the import of essential goods.

Tanzanian commodity exports such as coffee, cashew nuts and cotton will also benefit from this initiative.

This project is aligned with the African Development Bank's Ten-Year Strategy 2024-2033 Tanzania's Country Strategy Paper 2021-2025 Vision 2025 , which focuses on creating a strong and competitive economy.

Mr. Drammeh concluded: “This partnership with Exim Bank Tanzania Limited demonstrates the African Development Bank Group’s commitment to closing the trade finance gap in Tanzania, enabling local businesses to compete globally and create more jobs across the country.”

Djami A.