CDC Group, the UK’s publicly owned impact investor, has closed a $100m trade finance risk sharing facility with Societe Generale.

The facility will support Societe Generale to increase the limits that it currently provides to local banks and extend limits to new banks in Africa, particularly focusing on Francophone West Africa.

Admir Imami, Director of Trade and Supply Chain Finance at CDC Group said: “Societe Generale is a leading international bank with a positive commitment to Africa.  Our partnership is a significant step closer to narrowing the trade finance gap in the region. This commitment will stimulate trade and supply chain efficiency in Africa by supporting banks and smaller financial institutions in providing capital and increasing credit that businesses need for their continued growth.”

“We know our capital will ultimately help business owners sustain company growth and create further jobs for those in their communities.”

This first partnership between CDC and Societe Generale is critical in addressing the lack of commercial capital, at a time when there is limited access to international capital for local companies and importers.

This commitment will therefore strengthen Societe Generale’s ability to provide critical funding to local importers of essential foodstuffs and resources – to help companies through the current economic crisis and to support job creation in Africa.

In addition, several trades facilitated by CDC’s capital will support food and agricultural value chains, which are key priorities in CDC’s COVID-19 response.

 This partnership promotes the United Nations’ Sustainable Development Goals (SDGs) by supporting economic opportunities and growth, as well as contributing to an increase in jobs as importers increase their distribution networks.

This will improve and increase efficiency throughout supply chains, enabling expanded access to commodities for households at more competitive prices (SDG 8). By supporting increased trade activity, this facility helps to promote sustainable industrialisation by contributing to a country’s employment and GDP (SDG 9).

Africa’s trade finance deficit is estimated by the International Chamber of Commerce at $110bn to $120bn – representing about 25% of the demand for trade finance in Africa.

CDC and Societe Generale are playing a key role in bridging this gap by supporting local financial institutions to expand financing to businesses across Africa.

Pierre-Antoine Barreault, Global Head of Trade Finance at Societe Generale, said: “As a long-standing banking partner of the African continent, operating locally in 19 countries, Societe Generale through this partnership with CDC is reaffirming its commitment for Africa and asserting its drive to support economies, private customers and corporate clients. This new sustainable growth initiative is part of the Bank’s “Grow with Africa” program which aims to foster positive transformation across the continent.”