Trade Finance: AfDB Expands Network to GHIB

 The partnership operates through the transaction guarantee instrument, a non-financial device designed to neutralize the risk of non-payment of letters of credit issued by local banks on the continent. The initiative aims to curb financial exclusion suffered by border markets, which are penalized by the scarcity of international credit lines essential for supplying regional economies.

Institutional statistics estimate the trade finance deficit in Africa to be between $100 billion and $120 billion per year. To alleviate credit tightening, the AfDB's mechanism guarantees up to 100% of the default risk for confirming banks, with a contractual approval period of 48 hours. Since the initial launch of the trade finance support program in 2013, the multilateral institution's global portfolio has secured a transaction volume valued at $13.8 billion, relying on an interconnected network of 129 financial intermediaries. Although the nominal value of the commitment concluded with GHIB has not been disclosed, similar interventions have shown intervention envelopes ranging from $10 million to $20 million per approved line.

The expansion of the counterparty network primarily targets low-income economic zones such as Liberia, Sierra Leone, Guinea, and The Gambia. The financial hubs of West Africa are suffering from the gradual withdrawal of major Western banking groups, such as HSBC, Citi, or Standard Chartered, which have restricted their correspondent banking operations over the past decade for profitability reasons due to compliance constraints. GHIB's positioning, established on the London financial market, offers a precious technical relay to facilitate merchandise flows. The activation of guarantees proves fundamental to supporting the operational deployment of the African Continental Free Trade Area (AfCFTA), whose growth remains dependent on the availability of internationally accepted financial instruments.

Bernardo