RABAT, July 29 (Xinhua) -- The African Development Bank (AfDB) has approved a 70-million-U.S. dollar risk-sharing agreement for Morocco's Banque Centrale Populaire (BCP) to support international trade, Morocco's official news agency MAP reported Friday.
The agreement aims to strengthen the capacity of African banks and their small and medium-sized enterprise (SME) clients by fostering trust between the players in the African banking system, so as to accelerate the growth of regional and international trade, according to the report.
It also intends to help SMEs gain access to trade finance instruments in several African countries, it added.
The agreement is expected to directly benefit issuing banks in Africa, whose trade financing activity is limited by the lack of sufficient confirmation lines offered by international banks, it noted.
The risk-sharing agreement, known as the Risk Participation Agreement, is an arrangement under which the AfDB and a commercial bank share the default risk on a portfolio of trade finance transactions. The agreement gives regional and international commercial banks partial cover for their trade finance operations in Africa, with the AfDB usually taking up to 50 percent share of the risk.
