Abu Dhabi Exports Office (ADEX), the export finance arm of the Abu Dhabi Fund for Development, signed a $30 million trade finance agreement with the Eastern and Southern African Trade and Development Bank (TDB) to bolster trade between the UAE and the lender’s member states.
As part of the deal, ADEX will provide loans through the TDB to buyers and importers from the bank's member states for purchasing goods and services from the UAE, according to a statement from the Abu Dhabi Media Office on Monday.
The partnership is the first of its kind to be signed by ADEX with a foreign financial institution and is expected to support both exporters and importers as the global economy faces challenges due to the coronavirus pandemic.
“This is not only a difficult time for UAE exporters, but it is also a challenging time for their overseas buyers, particularly smaller importers who cannot access any direct credit facilities from export-financing institutions,” Saeed Al Dhaheri, acting director general of ADEX, said.
“Both are dealing with liquidity and cash flow issues, delayed supplier payments and limited access to financing. Through our partnership with TDB, we intend to provide a solution to these challenges that enables both the exporter and importer to fund mutually beneficial transactions quickly and easily,” Mr Al Dhaheri added.
Adex was set up last year by ADFD to help drive international trade by providing loans and guarantees to overseas buyers seeking to import goods and services from the UAE.
Earlier this year, ADFD allocated Dh735 million ($200m) to the Abu Dhabi Exports Office to spur economic diversification and boost exports.
The TDA is made up of 22 member countries from Eastern and Southern African states stretching from Egypt in the north to Zimbabwe in the south. It also counts a number of multilateral bodies as members including the Africa Reinsurance Corporation, the African Development Bank and the Opec Fund for Development.
Admassu Tadesse, TDB group managing director and chief executive said the trade between the UAE and Africa has doubled over the past five years, while it has grown about eight-fold in the past 15 years.
“The statistics signal a growing interest of businesses in the UAE and our region to build stronger trade relations.”
A cooperation agreement was also signed between both institutions to promote trade between the UAE and Africa. ADEX and TDB will explore possibilities of co-financing qualifying transactions and establishing additional lines of credit.
The UAE, the second-biggest Arab economy, has taken a number of steps to support local exporters during the coronavirus-induced slowdown.
Etihad Credit Insurance, the UAE's federal export credit agency, signed a deal last month with Emirates NBD to improve access to trade finance for exporters. ECI also signed an agreement with the African Trade Insurance Agency in March to improve insurance and financing capabilities to support trade growth between the UAE and Africa.