13 October 2023, Africa: The Eastern and Southern African Trade and Development Bank (TDB), the Multilateral Investment Guarantee Agency (MIGA) and OCP Group have signed a Memorandum of Understanding (MoU) today, during the World Bank Group and International Monetary Fund Annual Meetings, to enhance collaboration in addressing agriculture and food security challenges in Africa.
Specifically, the three parties have agreed to identify suitable areas for deploying MIGA’s risk mitigation instruments. They have expressed willingness to collaborate in trade finance transactions, using MIGA’s guarantees for the importation of strategic commodities including fertilizers in Africa.
This collaboration aims to enhance food security, promote employment and farmers’ livelihoods, secure their access to international markets, bolster productivity, and increase foreign exchange availability and earnings by facilitating the export of commercial crops.
This MoU follows a first-of-its-kind credit enhancement facility signed in 2020 between MIGA and TDB via which MIGA provided a 10-year guarantee for commercial bank financing extended to TDB with longer tenors and lower interest rates. This facility has so far succeeded in supporting transactions worth over USD 300 million in TDB member states, making it possible for their corporates, financial institutions, and public sector to import commodities which are vital to their food and energy security, foreign exchange earnings, employment, and tax revenues.
The MoU further strengthens TDB’s long-standing relationship with OCP Group, thanks to which, USD 2 billion of fertilizer imports from Morocco were facilitated into the TDB region over the past six years.
Among several milestones, TDB and OCP Group collaboratively executed the first-ever intra- Africa trade finance transaction using blockchain technology. In 2022 alone, three-quarters of the USD 700 million in transactions OCP Group and TDB completed together were realized using this technology, resulting in important savings in terms of time, costs and carbon footprint.
The parties expect to enhance their cooperation in promoting stable and sustainable economic growth and further economic and trade cooperation in Africa.
Admassu Tadesse, TDB Group President Emeritus and Managing Director said: “With this MoU, we are expanding our strategic partnerships with both MIGA and OCP Group, with whom we have successfully rolled-out pioneering and impactful trade finance solutions. We look forward to doing more together to promote intra-African trade, and help our region better source the essential commodities it needs to safeguard socio-economic development, especially during this complex period marked by severe global shocks and macroeconomic challenges.”
Hiroshi Matano, Executive Vice President of MIGA said: “Food security is a high priority for MIGA, and we look forward to working more closely with TDB and OCP, our long-standing partners, to help support food security challenges as well as access to trade finance in Africa by providing de-risking solutions to the exporter and a regional development bank. MIGA is eager to expand partnerships to support economic advancement in emerging markets.”
Mostafa Terrab, Chairman and CEO of OCP Group said: “OCP is actively supporting African farmers through the reliable supply of cost-effective crop nutrients, tailored to boost yields based on specific crops, soils and local conditions. This agreement with TDB and MIGA builds on our successful track record of co-operation in promoting food security, enhancing the livelihoods of farmers and fostering sustainable rural development across Africa.”
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