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The African Development Bank (AfDB) has approved a US$20 million Trade Finance Transaction Guarantee for Access Bank Zambia Limited in a move expected to boost access to trade finance for small and medium enterprises (SMEs) across the country.
The facility, which marks the first partnership between the AfDB and Access Bank Zambia, reportedly forms part of the Bank’s broader Trade Finance Program that has supported more than $13.8 billion in trade volumes across 129 financial institutions on the continent since 2013.
According to the AfDB in a statement issued on Wednesday, the guarantee is expected to support up to $240 million in trade volumes over a five-year period, helping Zambian businesses participate more effectively in regional and international trade.
SMEs, which contribute about 70 percent of Zambia’s Gross Domestic Product (GDP) and account for 88 percent of employment, have continued to face limited access to affordable trade finance. Many businesses struggle to secure confirmed letters of credit needed to import essential goods and raw materials or access working capital.
African Development Bank Country Manager for Zambia, Raubil Olaniyi Durowoju, said the facility would help local businesses access regional and global markets.
“Trade finance is not an abstract financial instrument. It is what allows a smallholder farmer to import certified seed, or a local manufacturer to source components and export finished goods,” he said.
“By backing Access Bank Zambia with our AAA guarantee, we are giving Zambian businesses a seat at the table in regional and global trade, and that translates directly into jobs, incomes, and economic resilience,” Durowoju added.
The Transaction Guarantee will provide up to 100 percent risk cover to international confirming banks on trade finance instruments issued by Access Bank Zambia, effectively reducing risks associated with cross-border trade transactions.
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The facility is expected to improve access to letters of credit for importing agricultural inputs, manufactured goods, solar panels and other critical commodities, while also supporting export-oriented businesses seeking to expand into regional markets.
The AfDB noted that increased trade activity would also contribute to higher government revenue through import duties and corporate taxes.
The initiative also includes a gender-focused component aimed at supporting women-led enterprises.
The guarantee could be complemented by technical assistance under the African Development Bank’s Affirmative Finance Action for Women in Africa (AFAWA) initiative to help Access Bank Zambia strengthen gender-responsive lending practices.
Access Bank Zambia Managing Director, Iheanyi Nwogu, described the partnership as a major boost for the bank’s trade finance operations.
“Through this partnership, we will expand support for businesses accessing cross-border trade, deepening trade flows and contributing to Zambia’s long-term economic growth,” Mr. Nwogu added.
The facility is also expected to strengthen confidence among international confirming banks in Zambia-originated trade transactions, potentially attracting greater participation from global financial markets.
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