The African Development Bank Group’s Board of Directors has approved a $10 million trade finance guarantee facility for Exim Bank Tanzania Limited to unlock and de-risk trade transactions. The facility will provide up to 100 percent guarantees to international confirming banks against the risk of non-payment, enabling Exim Bank to expand access to essential imports and strengthen Tanzania’s private sector.
The facility is expected to support up to $60 million in trade transactions over the next three years. It will reduce Exim Bank’s reliance on scarce foreign exchange collateral required by international banks, freeing resources for productive lending to local businesses engaged in both intra-African and international trade.
Lamin Drammeh, Head of Trade Finance at the African Development Bank, emphasized that supporting trade is a key priority, noting that trade finance is crucial for Africa’s economic development, facilitating domestic and international commerce, promoting regional integration, and boosting economic growth.
Small and medium-sized enterprises, which comprise over 90 percent of Tanzanian businesses and contribute a third of the country’s GDP, face a $1.3 billion annual trade finance gap that limits their growth. Jaffari Matundu, CEO of Exim Bank Tanzania, highlighted that SMEs and corporates are vital for industrialization, innovation, and job creation, and that this facility will remove barriers to cross-border trade while fostering partnerships with regional and global financial institutions.
Key sectors such as agriculture, health, energy, and manufacturing are expected to benefit from the facility. It will support imports of essential goods like fertilizer, pharmaceuticals, and farming equipment, as well as exports of Tanzanian commodities such as coffee, cashew, and cotton.
Exim Bank, Tanzania’s fourth-largest bank with operations in Uganda, Djibouti, and Comoros, will implement the facility through agreements with participating confirming banks. The project aligns with the African Development Bank’s 2024–2033 Ten-Year Strategy, Tanzania’s 2021–2025 Country Strategy Paper prioritizing private sector access to finance, and the government’s Tanzania Vision 2025, which aims for a strong and competitive economy.
Lamin Drammeh noted that this partnership demonstrates the African Development Bank Group’s commitment to reducing Tanzania’s trade finance gap, empowering local businesses to compete globally, and creating more jobs across the country.
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