As an Africa-focused multilateral organization aimed at promoting economic development, part of AFC’s mandate (derived out of its Establishment document) is to facilitate African trade. AFC facilitates African trade by leveraging two key strengths: a) a strong USD balance sheet for deployment against credit worth obligors (both financing institutions and non-financial institutions (Corporates)) and, b) an investment grade rating against which AFC can offer payment guarantees to create / raise trade finance capacity for African financial institutions and non-financial institutions. Facility tenors up to 7 years are supported.
Financial Institutions & Trade activities are classified under 3 categories:
- Trade Finance Support Program (TFSP) – this is targeted at African financial institutions. AFC and a Commercial Bank (African or Non-African) share in the insolvency/credit risk of a single or multiple (portfolio of) African FIs with regards to trade finance related obligations of the African FI(s).
- Line of Credit Program (LCP) – AFC provides financing support (both funded and unfunded) directly to suitable African Financial Institutions. LCP financing is availed on a bilateral / co-investment / syndicated basis. Examples include; on-lending facilities.
- Commodity Trade Finance Program (CTFP) – AFC supports the trade finance requirements of eligible Corporate obligors, or a portfolio of obligors. The financing might be on a bilateral or syndicated basis, or via a risk participation with another (originating) Commercial Bank or DFI.
Arrangement & Syndication: no limit
AFC hold: USD 10MM – USD 100MM
Financial Institutions, Agric commodities & Agro-processing.
- All standard short-term Trade Finance funded and unfunded structures
- Syndicated Term financing for Financial Institutions
In line with its core mandate of helping Africa to bridge its infrastructure deficit through the development of and investment in critical infrastructure projects, AFC plays a critical role in facilitating trade in Africa. Through the development of key infrastructure, AFC supports the integration of value chains across the continent and in so doing supports the growth of intra-African trade, a key objective of the recently signed and ratified African Continental Free Trade Agreement.
In the wake of the global financial crisis of 2008, the trade finance capacity in emerging markets (especially in Africa) reduced considerably as a result changing regulatory landscapes in Europe and America, which caused foreign-based commercial banks to reduce their risk appetite for Africa. As a pan-African institution with two strong pillars in the form of an investment grade rating and a strong USD balance sheet, AFC plays its part to raise trade finance capacity for both FIs and Corporates in Africa, hence promoting economic development.
In addition to its balance sheet strength and strong rating, AFC also applies flexible structuring and a pan-African reach to support trade and development in Africa.