CDB grants €100m to BOAD to support trade finance
The envelope will finance BOAD's direct lending activities to businesses in the region.The China Development Bank (CDB) is to allocate a €100 million credit to the West African Development Bank (BOAD) to help finance its direct lending activities to the commercial sector.
The cooperation between the two institutions started in November 2004, when the People's Republic of China entered the capital of BOAD .
Since then, the institution has launched several initiatives with the CDB, including the signing of a credit agreement of €60 million in 2011, also dedicated to financing
the commercial sector.
According to estimates from the African Development Bank’s recent report on trade finance in Africa, the value of unmet demand for bank-intermediated trade finance stands between $110 (€101 million) and $120 billion.
However, adds the report, trade finance is essential for international trade. This financial intermediation helps firms to manage risks inherent in international transactions, improve their liquidity and enable them to optimally invest to enhance their growth.
African banks face numerous constraints in meeting the demand for trade finance. The report
reveals that the main constraints are limited US dollar availability and insufficient limits with confirming banks for confirming letters of credit.