The African Development Bank (AfDB) has approved a $70 million risk-sharing agreement with Morocco’s Banque Centrale Populaire (BCP) to develop foreign trade.
This agreement, the second with BCP and part of a program entitled “50/50 risk-sharing agreement for Morocco’s Banque Centrale Populaire “, said an AfDB statement, takes place in a context of tightening capital adequacy and compliance standards on the continent.
This has led international banks to reduce the levels of their commitments and the number of their correspondents in Africa, stressed the same source, noting that this agreement will enable BCP to respond to this problem by supporting the continent’s local banks, faced with a decline in financing and confirmation lines with their correspondents.
The agreement is meant to strengthen the capacity of African banks and their small and medium-sized enterprise (SME) customers by consolidating relationships of trust between the players in the African banking system, in order to speed up the development of regional and international foreign trade.
It also intends to help SMEs operating in several African countries gain access to trade finance instruments.
According to the same source, the direct beneficiaries are African issuing banks, whose trade financing activity is constrained by the lack of trade confirmation lines made available by international confirming banks.
The indirect beneficiaries are local African SMEs and businesses that rely on issuing banks to honor their trade finance commitments.
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