The AfDB grants a €229 million line of credit to FirstRand Bank to finance SMEs
The African Development Bank (AfDB) has granted a line of credit of $ 300 million (€229 million) to FirstRand Bank Limited to finance SME projects in local currencies across Africa.The African Development Bank (AfDB) has granted a line of credit of $ 300 million (€229 million) to FirstRand Bank Limited to finance SME projects in local currencies across Africa.
The line of credit will be drawn in multiple African currencies including the Nigerian Naira, the Kenyan Shilling, the Zambian Kwacha, the Ghanaian Cedi, the Mozambique Metical and the Tanzanian Shilling, said the AfDB in a statement.
This seven-year multi-currency line will be mobilized by the AfDB through the establishment of bond issuance programs in the domestic capital markets.
The development bank explained that it issued the line of credit in local currency because most African banks have a low intermediation capacity, which often forces them to resort to borrowing in international currencies - thus creating instability in their balance sheets.
"With this line of credit, the AfDB is introducing a new and innovative form of local currency financing. This structure can be replicated by other banks in Africa to gain access to funding in African currencies thereby reducing unnecessary currency mismatches and deepening the local capital markets", said Timothy Turner, Director of the AfDB’s Private Sector Department.
FirstRand Group Treasurer Andries du Toit added that this should contribute to SME growth, thus supporting the bank's expansion policy on the continent.