The French Development Agency (AFD) has recently signed a partnership with the Trade and Development Bank (TDB) of Eastern and Southern Africa, a commercial bank owned by the member states of the Common Market for Eastern and Southern Africa (COMESA), the World Bank and China. The agreement is for a $150 million line of credit to finance sustainable infrastructure in East Africa.
The French Development Agency (AFD) and the Trade and Development Bank (TDB) of Eastern and Southern Africa will work together in the future. The two development banks have just signed an agreement to open a 150 million dollar line of credit to finance the construction of sustainable infrastructure in East Africa.
The agreement was initialed by Admassu Tadesse, Chairman and CEO of the TDB and Ghislain de Valon, Director of AFD in Kenya. According to the French bank, the objective of the line of credit is to strengthen the Trade Development Bank in its role as a leading regional bank for climate finance in the region it serves (East Africa). The funding will also increase the TDB’s supply of climate finance, contributing directly to the achievement of the objectives set out in the National Climate Change (NCC) Mitigation and Adaptation contributions of TDB member countries.
Financing Renewable Energy
“The biggest part of the line of credit (80%) will be dedicated to financing eligible climate projects, in line with the streamlined principles agreed by the International Development Finance Club (IDFC) and the Multilateral Development Banks (MDBs), i.e. projects that promote efforts to reduce or limit greenhouse gas (GHG) emissions or improve GHG sequestration, or that support adaptation projects and sectoral activities,” says AFD.
The other part of the line of credit (20%) is intended to allow “more flexibility to the MDBs’ long-term resource needs” for project financing. AFD also specifies that it will allow the financing of projects compatible with the 2015 Paris Climate Agreement and contributing to sustainable development goals (SDGs) in other sectors such as telecommunications, health or education.
The opening of the USD 150 million line of credit comes at a time when the Trade Development Bank is stepping up its investments on the African continent. More specifically, the Bank is financing infrastructure for the production of electricity from renewable sources. In December 2019, for example, the TDB partnered with the European Investment Bank (EIB) to open a $120 million line of credit to finance renewable energy projects by small and medium-sized enterprises (SMEs) in East Africa.