AfDB Partners with Bank of Africa Tanzania to Enhance Trade Finance, Boosting Intra-Africa Trade

Under this agreement, the African Development Bank will offer a guarantee of up to 100% to confirming banks against non-payment risks related to trade finance instruments such as letters of credit.

In a significant move to bolster intra-Africa trade and promote economic development, the African Development Bank (AfDB) and the Bank of Africa Tanzania (BOAT) have formalized a $7.5 million trade finance transaction guarantee facility. This agreement, signed on March 10, 2025, in Dar es Salaam, will provide a major boost to Tanzania’s trade finance sector, allowing local businesses to access improved financing options while strengthening their role in both regional and international markets.

Under this agreement, the African Development Bank will offer a guarantee of up to 100% to confirming banks against non-payment risks related to trade finance instruments such as letters of credit. These instruments are essential for facilitating international trade by providing assurances to sellers and buyers alike that transactions will be completed as agreed. The guarantee facility aims to help mitigate risks for confirming banks and enhance their willingness to work with the Bank of Africa Tanzania.

Patricia Laverley, the Bank’s Country Manager for Tanzania, highlighted the importance of the new facility during the signing event, emphasizing that Tanzania, with its growing import requirements, will particularly benefit from this partnership. The facility targets key sectors, including agriculture, trade, manufacturing, and energy, sectors that are essential for Tanzania’s overall economic growth. She noted that this collaboration will allow Bank of Africa Tanzania to play a more strategic role in expanding trade finance, both regionally and internationally.

“We recognize that trade finance is crucial to supporting businesses in Tanzania and across the region. This facility will not only help improve the access of small and medium-sized enterprises (SMEs) to finance but will also provide the tools needed to expand Tanzania’s participation in the global economy,” Laverley said.

The partnership will also support businesses that are engaged in the import sector, focusing on enhancing the liquidity and financial flexibility of SMEs and local corporates. By improving access to credit and reducing the risks associated with international transactions, this initiative aims to make Tanzania a more attractive destination for business and investment.

In his remarks, Hamza Cherkaoui, Deputy Managing Director of Bank of Africa Tanzania, expressed gratitude for the collaboration, noting that it will expand their confirmation network and increase access to a variety of top-tier confirming banks. “This partnership is a game-changer for us. It strengthens our capacity to support businesses by offering them seamless trade finance solutions, which are crucial in expanding trade and strengthening intra-Africa trade relations,” Cherkaoui stated.

The facility directly supports Tanzania’s Country Strategy Paper (CSP) 2021-2025, which aims to enhance the business environment for private sector growth and job creation. By providing enhanced access to trade finance, the facility will help stimulate economic activities and contribute to the country’s development vision, which seeks to build a resilient, globally competitive economy by 2025.

This new agreement also aligns with the African Development Bank’s broader strategic objectives, including promoting regional integration, boosting food security, and supporting the industrialization of Africa. By strengthening the trade finance infrastructure, the AfDB is reinforcing its commitment to the objectives of the African Continental Free Trade Area (AfCFTA), which seeks to create a single, unified market for goods and services across the continent.

The facility, designed to mitigate trade finance risks, will play a crucial role in enhancing Africa’s economic integration, particularly through encouraging cross-border trade. It supports the AfCFTA’s goal of reducing trade barriers and increasing intra-Africa trade, which is a key step toward ensuring Africa’s long-term economic self-sufficiency.

The African Development Bank’s partnership with Bank of Africa Tanzania also marks a milestone in its ongoing efforts to engage with the private sector in Tanzania and other African nations. By providing a financial safety net, the AfDB hopes to unlock the potential of private enterprises, enabling them to thrive and contribute to the broader regional economy.

With the increasing importance of trade and industry in Africa’s economic future, initiatives like the trade finance guarantee facility are crucial in making the continent more integrated and globally competitive. The partnership between AfDB and BOAT is just one of many efforts to foster economic development and regional cooperation that will ultimately help realize the vision of a prosperous, resilient Africa.

In conclusion, the new trade finance facility not only offers a significant opportunity for Tanzania but also sets a precedent for greater cooperation across African financial institutions. By supporting SMEs and enhancing trade finance, the partnership is expected to provide tangible benefits for Tanzania’s economy and contribute to the broader goals of African economic integration and development.