Finance institution the African Development Bank Group (AfDB) has approved two financial facilities for South Africa-based Standard Bank Group to support economic development in Africa.

The first is a $200-million trade finance risk participation agreement (RPA) for Standard Bank of South Africa (SBSA) and the second a R3.6-billion investment in a social bond issued by the Standard Bank Group (SBG).

The partnership is expected to bolster SBG’s capital, increase support for small and medium-sized enterprises (SMEs) in South Africa and expand trade across the African continent .

The social bond will be listed on the JSE and proceeds will go to support SME lending initiatives under the SBG’s Sustainable Finance Framework.

The RPA is expected to enable the scale up of trade finance support to local banks and enhance trade finance capabilities across the continent, including in low-income countries and transition States.

It is intended that this would help to alleviate trade financing constraints for businesses and reduce the trade finance gap on the continent while promoting intra-African trade.

“This partnership between the AfDB and SBG exemplifies our commitment to driving sustainable economic growth in Africa.

“By supporting SMEs and fostering inclusive financial solutions, we are taking significant steps towards achieving our vision of a prosperous continent where every individual has the opportunity to thrive,” says AfDB private sector, Infrastructure and industrialisation VP Solomon Quaynor.

SBG deputy CEO Kenny Fihla hailed the AfDB as a strategic partner.

“Structuring the funding as a social bond highlights the importance of the group’s social impact and aligns with the continued support of our existing strategy within our Business and Commercial Banking division to drive financial inclusion through lending to SMEs in our biggest market, South Africa,” he says.

Fihla, who is also CEO of SBSA, explained that the RPA facility would enhance the organisation’s trade finance capabilities and contribute towards the group’s strategic objective of bridging the trade finance gap in Africa. “This will ultimately reduce trade financing constraints for local African banks and promote intra-African trade,” he avers.