The African Development Bank and Family Bank have signed a $10 million trade finance line of credit to expand access to foreign currency and financing for Kenyan businesses, particularly small and medium-sized enterprises, the bank said on Monday.

The facility will support Family Bank’s trade finance activities and provide foreign currency for businesses in sectors including manufacturing, agriculture, healthcare, renewable energy and general commerce, according to Family Bank.

The financing is also expected to support women-owned businesses and help Kenyan companies meet import financing needs.

The agreement comes as businesses across Africa continue to face difficulties accessing trade finance, with smaller companies often facing greater constraints than large corporations.

“The signing is timely and significant, as it will ease the pressure on exporters, importers in Kenya, help unlock new opportunities for sustainable economic activity and ultimately reduce Africa’s trade finance gap,” said Lamin Drammeh, the African Development Bank’s head of trade finance.

The African Development Bank, also known as AfDB, estimates Africa’s trade finance gap at more than $74 billion, according to Family Bank’s statement.

The Family Bank $10 million trade finance facility will provide foreign currency to help finance transactions involving Kenyan importers and exporters.

Family Bank said the funding would target small and medium-sized enterprises and local corporations operating in manufacturing, agriculture, health and renewable energy, among other sectors.

The facility is intended to help businesses strengthen their supply chains and expand productive capacity, while supporting trade within Africa.

Alex Mubiru, AfDB director general for the East Africa region, said the agreement reaffirmed the development bank’s commitment to supporting local businesses and strengthening Kenya’s financial ecosystem.

He said addressing trade finance gaps in agriculture, manufacturing, energy and general commerce would expand access to financing for Kenya’s growing import requirements.

The facility will also support intra-African trade and the implementation of the African Continental Free Trade Area, or AfCFTA, which seeks to increase trade among African countries.

Family Bank Chief Executive Officer Nancy Njau said the financing would increase the lender’s capacity to provide funding to micro, small and medium-sized enterprises.

“This facility strengthens our capacity to scale up lending to MSMEs, which form over 80 percent of our customer base, while addressing financing gaps that continue to constrain business growth,” Njau said.

She said the bank would focus on ensuring that the financing creates opportunities for businesses and supports inclusive economic growth.

The emphasis on smaller businesses reflects their importance to Family Bank’s customer base and the wider Kenyan economy. Access to foreign currency and short-term trade finance can be particularly important for companies that rely on imported goods, equipment or raw materials.

The latest Family Bank $10 million trade finance agreement follows an earlier AfDB financing package for the Kenyan lender.

In March 2023, the African Development Bank’s board approved a $30 million Trade and SME Finance Facility for Family Bank. The package comprised up to $10 million for short-term trade finance, a further $10 million transaction guarantee facility and up to $10 million for medium-term financing for small and medium-sized enterprises.

The 2023 package was designed to support trade finance, regional integration and financing for businesses in sectors including health, renewable energy and agriculture, as well as women-owned businesses.

The African Development Bank said at the time that smaller businesses and domestic firms generally face greater difficulty accessing trade finance than multinational corporations and large local companies.

The development bank’s 2023 annual report subsequently listed Family Bank’s Trade and SME Finance Facility among its operations supporting industrialisation in Africa.

The latest signing therefore provides a further channel for trade financing through Family Bank, with the new line specifically focused on supporting trade finance activities in Kenya.

The latest agreement also comes as African governments and financial institutions seek to increase intra-African commerce.

AfCFTA is intended to create a larger single market for goods and services across the continent and reduce barriers to trade between African economies.

Family Bank said the new facility would help deepen value chains and diversify Kenya’s productive capacity.

The Family Bank $10 million trade finance facility is also expected to support companies in sectors that are important to Kenya’s economic activity, including agriculture, manufacturing, healthcare and renewable energy.