The African Development Bank (AfDB) has approved a $40 million transaction guarantee facility to support Dashen Bank’s trade finance activities in Ethiopia. This facility aims to assist Small and Medium Sized Enterprises (SMEs) and local businesses with their import and export financing needs and promote intra-Africa trade, aligning with the African Continental Free Trade Area (AfCFTA) agenda.
The AfDB will provide a guarantee of up to 100% to confirming banks for non-payment risks associated with Letters of Credit and other trade finance instruments issued by Dashen Bank.
Nnenna Nwabufo, AfDB’s Director General for East Africa, emphasized the importance of trade finance for economic growth and cross-border trade in emerging markets. Dashen Bank CEO Asfaw Alemu expressed gratitude for the approval, stating that the guarantee will enhance their trade services and support Ethiopia’s SMEs, particularly in agriculture and manufacturing.
The AfDB’s Transaction Guarantee Product offers non-payment risk coverage to confirming banks for trade finance transactions from eligible African banks, especially in low-income countries.
