Proparco addresses financial gap in agricultural trade
Proparco announces partnerships to advance trade finance for agricultural value chains across Africa. (Image source: Proparco)
With an aim to fill a multi-billion dollars financing gap in agricultural trade, Proparco has launched the Africa AgriTrade Coalition during the Africa Forward Summit
The financial provider has united 16 influential institutions to advance trade finance for agricultural value chains across Africa. The combined balance sheet currently stands at US$430bn, with signatories including AFG Holding, Banque El Amana, Banque Mauritanienne de l'Investissement, Banque pour le Commerce et l'Industrie, BPER Banca, Co-operative Bank of Kenya, Coris Holding, CRDB Bank, Ecobank Transnational Incorporated, Equity Group Holdings, KCB Bank, The Mauritius Commercial Bank Ltd, NSIA Holding Financière, Qatar National Bank, UBCI, and Union de Banques Arabes et Françaises.
A marked financing gap in Africa's agricultural trade is affecting multiple sectors from cocoa and cashew in West Africa to cereals and fertilisers in East Africa and in Central Africa, and maize, soy and sugar in Southern Africa. If narrowed even by a small part, it can result to freeing hundreds of millions of dollars in additional financing. This will reflect significantly on market access, employment, supply chain resilience and the security of food supply chains.
With current geopolitical tensions disrupting supply chains globally, the move comes at an apt time to support the financing of agricultural markets. The coalition can significantly strengthen cooperation between partner banks to diversify risk sharing across key agricultural corridors. Proparco will be leveraging its extensive experience in trade finance and guarantee mechanisms, aiding partner institutions in cofinancing, advancing risk-sharing tools, and by connecting banks to help generate more transactions.
The development aligns with the strategies of African Continental Free Trade Area (AfCFTA) for regional integration and the advancement of intra-African agricultural trade.
Following the signature of the declaration of intent, Proparco and its partners will move into an implementation phase starting in June, focused on identifying and structuring initial transactions, strengthening interbank collaboration and building a pipeline of operations.
The first transactions will see initiation as soon as in coming months, enabling solid financing flows across selected value chains, before the platform sees expansion over time as more institutions participate and collaboration deepens.