AfDB Approves $50M Trade Finance Guarantee to Boost SME Trade via Awash Bank

The African Development Bank Group (AfDB) has approved a $50 million Trade Finance Transaction Guarantee Facility for Awash Bank S.C., one of Ethiopia’s largest and most influential private financial institutions. The facility is designed to boost Ethiopia’s access to international trade finance, particularly for Small and Medium Enterprises (SMEs) and local corporates, by reducing the perceived credit risk for global banks and increasing cross-border trade volumes.

The facility will support the confirmation of Letters of Credit (LCs) and other trade finance instruments issued by Awash Bank. By providing a guarantee of up to 100% to confirming banks, the AfDB aims to catalyze critical import activities, improve access to hard currency, and ease liquidity challenges currently faced by Ethiopian businesses, many of which are navigating economic uncertainty, inflationary pressures, and a constrained financial sector.

Bridging the Trade Finance Gap in Ethiopia

Trade finance—the financial instruments and products that facilitate international trade—is essential for enabling commerce, but remains severely underprovided in many emerging markets. According to the International Chamber of Commerce (ICC), the global trade finance gap reached $2.5 trillion in 2022, disproportionately affecting African SMEs.

In Ethiopia, that gap is particularly acute due to foreign exchange limitations and risk aversion among global banks. This new AfDB-backed guarantee is designed to help unlock capital for viable Ethiopian enterprises, making them more competitive regionally and globally.

“The Trade Finance Transaction Guarantee facility approved to our bank by the African Development Bank will ease the burden of arranging cash collateral with banks,” said Tsehay Shiferaw, CEO of Awash Bank. “It will improve our liquidity and enable us to support more trade customers, especially SMEs, while enhancing our trade relationships with international and African confirming banks.”

Supporting AfCFTA and Africa’s Economic Integration

The initiative is also aligned with the broader goals of the African Continental Free Trade Area (AfCFTA), which seeks to boost intra-African trade by 50% by 2030. As the agreement gains traction, access to affordable, reliable trade finance will be critical to unlocking the full potential of the continent’s $3.4 trillion market.

By improving Awash Bank’s ability to issue and confirm trade finance instruments, the AfDB facility strengthens Ethiopia’s role in regional trade. It also facilitates greater participation of Ethiopian businesses in the AfCFTA framework, expanding opportunities for cross-border supply chains and reducing Africa’s reliance on external markets.

“Supporting trade in Africa is a key priority at the African Development Bank,” said Lamin Drammeh, AfDB Head of Trade Finance. “Trade finance is an important driver of economic growth and is critical for cross-border trade, particularly in emerging markets. We are delighted to work with Awash, a strong partner with extensive knowledge and network in Ethiopia, on a shared ambition to support the region’s trade.”

About Awash Bank: A Strategic Local Partner

Established in 1994, Awash Bank S.C. is a pioneer in Ethiopia’s private banking sector, with a strong nationwide footprint, more than 700 branches, and an expanding base of corporate and retail customers. The bank has grown significantly in both assets and profitability over the past decade and is recognized for its commitment to digital innovation and financial inclusion.

Awash is also well-positioned to serve as a local trade finance enabler, given its extensive client network, deep market knowledge, and relationships with regional and global banks. This partnership with AfDB provides the institution with additional technical and financial capacity to deepen its role in facilitating international commerce.

“We look forward to further strengthening our partnership with the African Development Bank and benefiting from its resources and technical expertise,” Shiferaw added. “This collaboration represents a vital opportunity for our clients and the broader Ethiopian business community.”

AfDB’s Broader Commitment to Trade and Development Finance

This facility is part of the AfDB’s broader Trade Finance Program (TFP), which seeks to:

• Enhance trade finance access for African financial institutions and corporates

• Mitigate credit risk for international confirming banks

• Promote intra-African trade and regional integration

• Support private sector development, particularly for SMEs

The AfDB has already partnered with dozens of African banks to issue guarantees, trade loans, and capacity-building support across the continent. These efforts are transformational in nature, aimed at unlocking billions of dollars in private sector-led economic activity.

By targeting Ethiopia—a country with a growing industrial base, large population, and key geographic location in East Africa—the Bank reaffirms its commitment to inclusive and sustainable economic growth in high-potential but underserved markets.