Benin: African Development Bank and Bank of Africa Benin sign €15 million guarantee facility to improve trade finance and support businesses

On Monday 12 May in Cotonou, the African Development Bank and the Bank of Africa Benin (BOA-Benin) signed a €15 million guarantee agreement to strengthen the Bank of Africa's trade finance activities in Benin and support Beninese businesses.

The signing of this agreement represents an important milestone in the African Development Bank Group's commitment to Benin's private sector, in support of the government's efforts to fortify the country's financial sector.

“The transaction guarantee facility will support imports of production machinery and telecommunications equipment needed to underpin Benin's industrialization process by providing essential guarantees for the confirmation of trade finance instruments issued by BOA-Benin,” said Lamin Drammeh, Head of Trade Finance at the African Development Bank.

The three-year facility will benefit both large local businesses and small and medium-sized enterprises, including those run by women. The targeted projects will be those that are least vulnerable to climate risks and that have a minor impact from greenhouse gas emissions. Although agribusiness and light manufacturing will be the principal sectors supported by this initiative, the operation will also facilitate imports of necessities to meet short-term local demand.

Hailing the agreement, Robert Masumbuko, the African Development Bank Group's Country Manager for Benin, said: “We are very happy to enter into this partnership with BOA-Benin, a long-standing trade finance player in the country. The facility will enable the African Development Bank to provide guarantees of up to 100 per cent to confirming banks to facilitate the confirmation of Letters of Credit and similar trade finance instruments issued by Bank of Africa Benin for the benefit of local businesses.”

Abdel Mumin Zampalégré, Managing Director of Bank of Africa Benin, stated that he was also delighted with this first direct relationship with the Bank Group. “This partnership is fully in keeping with the Bank of Africa Group's strategy, which identifies trade finance as one of the main focuses of its intervention strategy in Africa,” he said. “This facility will enable us to provide more effective support to a number of companies in Benin's economic landscape.”

The facility is aligned with the African Development Bank’s Country Strategy Paper 2022-2026 for Benin, one of the priorities of which is to support “agricultural transformation and industrial development, in order to increase production to strengthen food security and the development of agricultural value chains, create decent jobs with high added value and build socioeconomic resilience for sustainable and inclusive growth.” It is also consistent with Benin's National Development Plan 2018-2025, the key priorities of which include “economic productivity and competitiveness”.

Source: AfDB