Absa, a leading Pan-African financial institution, has secured a $150 million funding facility from British International Investment (BII) plc to help close Africa’s substantial trade finance gap. This financing aligns with Absa’s strategic mission to promote sustainable economic growth across the continent, with a primary focus on trade finance support that can stimulate the growth of small and midsize enterprises (SMEs), particularly those founded by women and youth engaged in both intra-African and global trade.
BII: A Key Partner in African Development
BII, the UK’s Development Finance Institution, is an impact investor focused on nurturing sustainable and inclusive economies by providing “patient capital”—financing designed to support long-term growth and resilience. As part of its strategic partnership with Absa, BII is committed to helping reduce the trade finance gap in Africa, which is estimated between $100 billion and $120 billion. BII’s involvement in this facility underscores its commitment to sustainable and inclusive economic development in emerging markets, particularly those in Africa where financial support for SMEs and underserved groups remains essential
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Addressing Africa’s Trade Finance Gap
The facility from BII is intended to provide Absa with liquidity specifically allocated to trade transactions, expanding access to essential goods like food and supporting various trade products that are in high demand. Mosa Tshabalala, Absa’s head of FI Trade Sales (International), emphasized the importance of this initiative, explaining that the partnership allows Absa to channel funds across its chosen markets, working alongside DFIs, insurance companies, export credit agencies (ECAs), and institutional investors. Through these partnerships, Absa can support customers’ growth ambitions by providing necessary trade finance and contributing to the success of initiatives like the African Continental Free Trade Area (AfCFTA), which aims to facilitate seamless trade across Africa
Focusing on Sustainable Growth and Inclusivity
A significant portion of the funds is earmarked for supporting SMEs, especially those with ties to underserved groups. This includes young and female entrepreneurs whose participation in trade is crucial for broader economic inclusivity. This objective aligns with Absa’s broader goal of securing R100 billion in sustainability-related transactions by 2025. By prioritizing SMEs, Absa aims to foster sustainable growth and help close the gender gap in finance, encouraging more African women to participate in trade and access essential capital for expansion
Absa’s Vision for Africa’s Economic Ecosystem
Charles Russon, Absa’s interim group CEO, highlighted the bank’s extensive presence and global reach, emphasizing Absa’s role in facilitating capital flow and driving sustainable growth in Africa’s economic landscape. By leveraging its expertise in cross-border finance, Absa aims to create more opportunities for African businesses to scale and compete on an international level, strengthening the continent’s overall economic ecosystem.
A History of Collaboration and Proven Impact
The $150 million facility builds on a long-standing relationship between Absa and BII that has supported over $1 billion in trade volumes since 2019. Their combined efforts proved essential during the COVID-19 pandemic, a time when trade liquidity across Africa was severely strained. This collaboration has yielded substantial benefits in key African markets, including Ghana, Nigeria, Kenya, Uganda, Tanzania, and Mozambique, where trade volumes have grown through targeted investments in trade liquidity.
Anneliese Dodds, the UK’s Development Minister, praised the partnership’s impact, citing its role in addressing the critical trade financing gap. Admir Imami, BII’s head of Trade & Supply Chain Finance, echoed this sentiment, noting the shared commitment to enhancing trade access for African businesses and improving the continent’s vital goods flow, including food. The shared ambition of Absa and BII is to contribute to Africa’s economic resilience and growth by enabling trade access for underserved communities, including SMEs and women-led businesses
Conclusion: A Significant Step Toward Trade Finance Accessibility
Absa’s $150 million facility from BII represents a critical advancement in bridging Africa’s trade finance gap. With an emphasis on sustainable funding and inclusivity, the partnership aims to boost trade volumes across the continent, supporting economic development goals outlined by initiatives such as AfCFTA. As Absa and BII continue to expand their impact through similar partnerships, they are set to play a crucial role in helping African businesses navigate the challenges of a globalized economy, creating new opportunities and facilitating growth across the continent.
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