The African Development Bank Group (AfDB) has approved a $60 million Trade Finance Transaction Guarantee (TFTG) facility for Equity Bank Kenya.
This is aimed at expanding access to trade finance for small and medium-sized enterprises (SMEs), strengthening regional trade flows, and supporting the implementation of the African Continental Free Trade Area (AfCFTA).
The facility enables Equity Bank to fully guarantee payment obligations to confirming banks when it issues trade finance instruments such as letters of credit and other documentary trade products.
This significantly reduces the risk borne by international and regional banks, encouraging them to confirm transactions for Kenyan importers and exporters.
Supporting AfCFTA and Regional Integration
The AfDB has positioned trade finance as a strategic pillar of Africa’s economic development agenda, particularly as the continent seeks to diversify exports, strengthen value chains, and reduce dependence on external markets.
“Supporting trade in Africa is a key priority at the African Development Bank. Trade finance is essential for Africa’s economic development, facilitating both domestic and international trade, boosting economic growth, and promoting regional integration,” Lamin Drammeh, Trade Finance Division Manager, African Development Bank.
“We are delighted to work with Equity Bank, a strong partner with extensive knowledge and network in the country, on a shared ambition of supporting the region’s trade.”
Trade finance remains one of the most critical yet constrained areas of financial services in Africa, particularly for SMEs, which often lack the balance sheets or credit histories required to secure trade-related funding.
By providing a guarantee that covers the risk of non-payment by Kenyan counterparties, the AfDB facility improves the confidence of correspondent banks and lowers the cost and complexity of cross-border trade.
The financing will support import and export transactions for Kenyan SMEs and local corporates, while also facilitating greater levels of intra-African trade, a central objective of the AfCFTA, which seeks to create a single continental market for goods and services.
Timely Support for Kenyan SMEs
For Equity Bank, the facility comes at a critical moment for Kenyan businesses, many of which continue to struggle with limited access to affordable trade finance amid tightening global financial conditions.
Moses Nyabanda, Managing Director of Equity Bank (Kenya) Limited, said the guarantee would strengthen the bank’s ability to serve SMEs and local corporates engaged in import and export activities.
“The African Development Bank’s support strengthens Equity Bank’s capacity to unlock growth opportunities for local enterprises by enhancing their ability to trade with confidence, manage risk, and sustain their operations,” Nyabanda said.
“With this guarantee, Equity Bank will expand access to essential trade finance instruments, enabling importers to transact smoothly and securely,” he added.
Strengthening the Financial Infrastructure for Trade
Beyond individual transactions, the facility reflects a broader effort by multilateral development institutions to strengthen Africa’s financial infrastructure for trade, reduce the continent’s trade finance gap, and integrate African firms into regional and global value chains.
As the AfCFTA gains momentum, access to reliable, affordable trade finance will be a decisive factor in determining whether African SMEs can compete effectively across borders.
With the $60 million guarantee now in place, Equity Bank is positioned to play a larger role in supporting Kenya’s trading sector, helping businesses manage risk, improve liquidity, and participate more actively in Africa’s evolving single market.
Talking Points
It is significant that the African Development Bank is using a guarantee structure rather than direct lending, which tackles one of the biggest bottlenecks in African trade, the perceived risk that discourages banks from supporting cross-border transactions.
This single intervention alone can unlock far more than $60 million in actual trade flows, because it restores confidence among correspondent banks and reduces the cost of doing business for Kenyan importers and exporters.
At Techparley, we see this as an important step towards building the financial infrastructure required for the African Continental Free Trade Area to move from policy to practice.
By enabling Equity Bank to issue trade finance instruments with stronger backing, the facility directly supports small and medium-sized enterprises that are often excluded from international trade due to limited collateral, credit history, or scale.
However, the effectiveness of the facility will also depend on how well it aligns with customs processes, logistics infrastructure, and regional payment systems, which remain friction points for intra-African trade.
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