The African Development Bank Group (AfDB) and Equity Bank Kenya have signed a $60 million trade finance guarantee facility to help Kenyan businesses access financing for imports and expand their participation in regional and international trade.
The agreement is expected to benefit small and medium-sized enterprises (SMEs) and local companies that often struggle to secure the financial backing needed to purchase goods from overseas suppliers or complete cross-border transactions.
Under the arrangement, the AfDB will provide guarantees of up to 100% against non-payment risks on eligible letters of credit and similar trade finance instruments issued by Equity Bank Kenya. The guarantees are intended to give international and regional banks greater confidence to support transactions initiated by the Kenyan lender.
In simple terms, the arrangement reduces the risk faced by banks financing trade transactions, making it easier for Kenyan businesses to access the financial services they need to buy goods, source raw materials and participate in export markets.
Speaking at the signing ceremony in Nairobi, AfDB Director General for East Africa Alex Mubiru said African businesses needed better access to financing to translate their entrepreneurial potential into trade opportunities.
“Africa does not suffer from a shortage of enterprise. Too often, it suffers from a shortage of financing that allows enterprises to trade,” Mubiru said.
He added that combining the development bank’s capacity to absorb risk with Equity Bank’s local market knowledge could open up more opportunities for businesses.
The agreement comes amid a persistent shortage of trade finance across Africa. The AfDB estimated that unmet demand stood at between $74 billion and $92 billion in 2024, with smaller businesses among the hardest hit.
African Banks That Have Benefited from Such Arrangements
The Equity Bank deal is not an isolated initiative. The AfDB has been expanding its trade finance guarantee programme through partnerships with banks across different African markets.
In November 2024, the bank approved a €5 million guarantee facility for Ecobank Centrafrique to support local businesses and SMEs in the Central African Republic. That same month, it approved a $4 million guarantee for Access Bank Sierra Leone, targeting businesses involved in importing essential goods and other trade activities.
In February 2024, the AfDB also approved a $150 million regional risk-sharing facility with the Eastern and Southern African Trade and Development Bank (TDB) to support trade transactions involving eligible banks across the COMESA region.
These initiatives use different structures but share a common objective: reducing the risks that prevent banks from financing otherwise viable trade transactions.
For Kenya, the latest agreement could help businesses overcome some of the financing barriers that limit their ability to source products and compete across borders. It also supports the ambitions of the African Continental Free Trade Area (AfCFTA), which seeks to deepen trade between African countries.
However, the facility is a guarantee rather than a direct cash injection into businesses. Its ultimate impact will depend on how effectively Equity Bank deploys the facility, the transactions that qualify and whether the improved risk protection translates into more accessible trade financing for businesses.