BII, Ghana Bank in $50m partnership to plug Africa trade finance gap

The agreement is focused on boosting foreign exchange liquidity in West African economies, which is crucial for the import of key goods.

British International Investment (BII), the UK’s development finance institution and impact investor, and Ghana International Bank (GHIB) announced a $50m (€47.4m) partnership aimed at easing trade flows of essential goods and services for businesses in Sierra Leone, Liberia, The Gambia, Benin, DRC, Rwanda, and Tanzania.

The $50m trade facility will allow the Ghanaian bank to support local businesses with the import of commodities and equipment they need to sustain and grow their firms, as well as exports. It also addresses a general lack of appetite among traditional lenders to provide credit to frontier markets in Africa, due a perceived high risk and comparatively lower volumes, both parties said.

“We will work to make this deal a success, as it will open the way for more liquidity injections into the market,” said Dean Adansi, CEO of GHIB.

Liquidity injections

Africa’s annual trade finance deficit is estimated to be around $81.8bn according to the African Development Bank (AfDB). Small and medium-sized businesses, which are the backbone of most African economies, have historically been affected the most by a lack of access to finance, the AfDB said in a 2023 report.

According to Adansi, GHIB research found that each dollar of trade unlocks about $1.30 into the economies of the West African markets it is active in.

“Trade remains a key driver of growth for African economies, especially in frontier markets like Sierra Leone, Liberia and The Gambia. Enhancing the flow of trade credit and financial intermediation to these markets will ensure access to essential goods and services, which in turn drives sustainable and inclusive economic growth,” said Kwabena Asante-Poku, country director for Ghana at BII.

Ray Collins, UK minister for Africa, said that Africa’s trade financing gap is “one of the continent’s most pressing challenges and access to this funding will enable local businesses to trade more with the world, including the UK.”