AfDB approves $60 million trade facility for Equity Bank to support SMEs

At a Glance

The African Development Bank Group has approved a $60 million trade finance facility for Equity Bank Kenya, stepping up support for small and medium-sized enterprises as access to credit remains strained across East Africa. 

For many Kenyan businesses, especially import-dependent SMEs, higher global prices, currency swings and tighter lending conditions have made it harder to finance day-to-day trade.

Letters of credit and other trade instruments have become more expensive or difficult to secure, slowing business activity and weighing on growth. 

The AfDB-backed facility is designed to ease some of that pressure. By strengthening Equity Bank’s ability to support trade transactions, the lender can help businesses keep goods moving, manage payment risks and maintain relationships with overseas suppliers. 

The move also reflects broader concerns among policymakers and development lenders about Africa’s persistent trade finance gap, which disproportionately affects smaller firms that lack long credit histories or collateral.

How the facility works 

The facility is structured as a Trade Finance Transaction Guarantee.

Under the arrangement, Equity Bank can fully guarantee payments to international and regional confirming banks when it issues trade finance instruments on behalf of its customers. 

That guarantee reduces the risk for foreign banks if a Kenyan importer is unable to settle a transaction.

In practical terms, it makes it easier and cheaper for SMEs to access letters of credit and similar tools needed to import raw materials, machinery and finished goods. 

Most of the funding will support import trade finance for SMEs and local corporations in Kenya.

The AfDB said the facility will also help encourage intra-African trade, aligning with the goals of the African Continental Free Trade Area, which seeks to lower barriers and expand commerce across the continent.

Supporting businesses and supply chains 

“Supporting trade in Africa is a core priority for the African Development Bank,” said Lamin Drammeh, the bank’s trade finance division manager.

He said trade finance plays a central role in economic development and regional integration, adding that Equity Bank’s local reach positions it well to channel support to smaller firms. 

Equity Bank Kenya Managing Director Moses Nyabanda said the guarantee comes at a difficult time for many businesses struggling to secure affordable financing.

He said the facility strengthens the bank’s capacity to help clients manage risk and continue trading despite challenging conditions. 

“With this support, Equity Bank will expand access to essential trade finance instruments, enabling importers to transact smoothly and securely,” Nyabanda said. 

The transaction highlights the AfDB’s wider strategy of working with regional lenders to narrow Africa’s trade finance gap and support the flow of goods that underpin jobs, supply chains and economic activity across borders.