Press Release: African Banks Receive International Support

On 3rd July 2015, IFC together with Berne Union representatives from Italy, Germany, the U.S., the U.K. and China headed a workshop that is aimed at increasing the competitiveness of the banking sector in Africa. The presenters introduced the concept of export credit agencies (ECAs) and their products, which are typically used by international banks and companies to protect/insure their business risks abroad and to also obtain financing. This allows them to enter new markets and to be more competitive. International banks are therefore able to access longer-term financing and to have a bigger portfolio of clients.

In Africa, regulatory restrictions make it difficult for local banks to take advantage of these products. The Central Bank in most countries, for instance, do not recognize the guarantees provided by ECAs. If the Central Banks recognized these products, they would grant banks the ability to use much less capital to secure their loans. This would alleviate two of the main constraints faced by local banks – a shortage of capital and also the high cost of capital. Recently, there was a breakthrough, the DR Congo became the first country to recognize ECA products and it now grant up to 50% capital relief to banks which have ECA-backed transactions. The African Trade Insurance Agency (ATI) has been working with Central Banks and the banking sector to raise awareness about this issue.

With these tools in place, local banks could be able to compete for more and larger projects and it could lead to an additional $3 – 8 billion added to trade within the continent annually.

Please find the press release attached below:

IFC& BU Press Release_African Banks Receive International Support

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