AfDB Approves $10M Guarantee Facility to Boost Tanzania’s Trade Finance

The African Development Bank Group (AfDB) has approved a $10 million trade finance transaction guarantee facility for Exim Bank Tanzania Limited, a move aimed at unlocking and de-risking trade deals while supporting the growth of Tanzania’s private sector.

De-Risking Trade and Expanding Access

Under the facility, the AfDB will provide up to 100 percent guarantees to international confirming banks against the risk of non-payment. This measure is expected to ease liquidity constraints, strengthen Exim’s trade finance capacity, and encourage global banks to extend more trade lines to Tanzania.

The new guarantee is projected to support up to $60 million in trade transactions over the next three years, significantly boosting cross-border commerce. By reducing Exim’s dependence on costly foreign exchange collateral, the initiative will free resources for productive lending to local businesses engaged in both intra-African and international trade.

Closing Tanzania’s Trade Finance Gap

The facility comes at a critical time for Tanzania’s economy. Small and medium-sized enterprises (SMEs) represent over 90% of Tanzanian businesses and contribute roughly a third of GDP. Yet, SMEs face major financing hurdles due to an estimated $1.3 billion annual trade finance gap.

Lamin Drammeh, AfDB’s Head of Trade Finance, underscored the importance of the initiative:

“Trade finance is essential for Africa’s economic development, facilitating both domestic and international trade, boosting economic growth, and promoting regional integration.”

Supporting Key Sectors and Essential Imports

The facility will channel financing to vital sectors such as agriculture, health, energy, and manufacturing. It will also facilitate the import of fertilizers, pharmaceuticals, and farming equipment, as well as the export of major Tanzanian commodities like coffee, cashew nuts, and cotton.

Exim Bank Tanzania’s CEO Jaffari Matundu stressed the transformative potential of the partnership:

“SMEs and corporates are vital engines of industrialization, innovation, and job creation. This facility will remove barriers to cross-border trade while opening doors for new partnerships with global and regional financial institutions.”

Exim Bank’s Regional Footprint

Exim Bank is Tanzania’s fourth largest financial institution, with operations in Uganda, Djibouti, and Comoros. The guarantee facility will be operationalized through agreements with Exim and participating confirming banks, reinforcing the bank’s capacity to finance businesses across multiple jurisdictions.

Alignment with National and Regional Strategies

The AfDB emphasized that the project is fully aligned with its Ten-Year Strategy (2024–2033), which prioritizes private sector development and financial inclusion, as well as the 2021–2025 Tanzania Country Strategy Paper, which focuses on creating jobs through improved access to finance.

It also supports Tanzania’s Vision 2025, which seeks to build a competitive, diversified economy driven by industrialization, trade, and private sector participation.

Drammeh reaffirmed the AfDB’s long-term commitment:

“This partnership with Exim Bank Tanzania demonstrates the African Development Bank Group’s commitment to reducing Tanzania’s trade finance gap, empowering local businesses to compete globally and create more jobs across the country.”

Looking Ahead

By bridging critical financing gaps, the AfDB-Exim Bank partnership is expected to enhance Tanzania’s trade competitiveness, strengthen its export base, and stimulate job creation. With SMEs as the backbone of the economy, improved trade finance will be key to driving growth, fostering regional integration, and supporting Tanzania’s long-term vision of becoming a middle-income, industrialized nation by 2025.