AfDB and Equity Bank Sign $60m Guarantee Deal to Expand Trade Finance in Kenya

Under the facility, the African Development Bank Group will provide guarantees covering up to 100% of the non-payment risk faced by confirming banks on eligible letters of credit and similar trade finance instruments issued by Equity Bank Kenya.

Kenyan businesses seeking finance for imports and cross-border trade are set to receive additional support through a $60 million agreement between the African Development Bank Group and Equity Bank Kenya Limited. The Trade Finance Transaction Guarantee Facility will expand access to trade finance for small and medium-sized enterprises and local corporates.

The agreement addresses a financing problem that can prevent businesses from completing trade deals even when commercial opportunities exist. By covering the risk of non-payment on eligible transactions, the facility is expected to give banks greater confidence to support trade originating through Equity Bank Kenya.

Guarantees to Help More Trade Transactions Go Ahead

Under the facility, the African Development Bank Group will provide guarantees covering up to 100% of the non-payment risk faced by confirming banks on eligible letters of credit and similar trade finance instruments issued by Equity Bank Kenya.

Letters of credit help buyers and sellers conduct business by providing a bank-backed payment commitment, subject to agreed conditions. Confirming banks add their own payment undertaking, taking on a risk that can influence their willingness to support a transaction.

The guarantee facility will reduce that exposure, increasing confirming banks' capacity to handle eligible transactions from Equity Bank Kenya. For Kenyan businesses, the expected benefit is better access to financing for eligible imports and stronger opportunities to participate in regional and international trade.

Combining Financial Backing With Local Business Knowledge

The agreement was signed at a ceremony in Nairobi on 1 October, where African Development Bank Group Director General for East Africa Alex Mubiru described access to finance as a barrier for enterprises ready to trade.

"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.

"By combining the African Development Bank's risk-bearing capacity with Equity Bank's local reach and knowledge, this facility can turn shared risk into expanded opportunity for Kenyan businesses."

The arrangement brings together the development bank's ability to absorb risk and Equity Bank Kenya's relationships with local businesses. Its success will depend on translating that backing into support for eligible transactions, giving enterprises more room to buy goods and build trading relationships across borders.

Supporting African Trade Amid a $92 Billion Financing Gap

Africa's unmet demand for trade finance was estimated in 2024 to be as much as $92 billion, with small and medium-sized enterprises among the businesses most affected. That shortfall leaves many companies without the financial support needed to pursue trade opportunities.

The Kenya facility forms part of the African Development Bank Group's broader use of guarantees and funded facilities to help African financial institutions expand their support for importers and exporters.

The agreement is also expected to support trade between African countries and the implementation of the African Continental Free Trade Area. Greater access to trade finance can help businesses make practical use of regional market opportunities by securing the financial backing required to complete transactions.