is positioning itself to strengthen its role in regional and international trade after the African Development Bank approved a $20 million Trade Finance Transaction Guarantee for Access Bank Zambia, a move expected to significantly expand access to trade finance for small and medium sized enterprises across the country.
The financing package, approved by the African Development Bank’s Board of Directors, marks the first transaction between the continental lender and Access Bank Zambia. The facility forms part of the Bank’s wider Trade Finance Program, which since 2013 has supported more than $13.8 billion in trade volumes across 129 financial institutions throughout Africa.
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For Zambia, however, the significance of the agreement extends far beyond financial figures. The facility is expected to unlock as much as $240 million in trade activity over its five year duration, providing crucial support for Zambian businesses that have historically struggled to participate competitively in regional and global markets because of limited access to affordable trade finance.
Small and medium sized enterprises remain central to Zambia’s economy, contributing approximately 70 percent of national GDP and accounting for nearly 88 percent of employment. Yet despite their economic importance, many Zambian SMEs continue facing severe financing constraints, particularly when attempting to secure letters of credit and other instruments necessary for importing goods or expanding exports.
Without access to reliable trade finance, many businesses are unable to import agricultural inputs, industrial equipment, solar technology, fast moving consumer goods and manufacturing components essential for growth. Others struggle to free working capital tied up in collateral requirements imposed by international financial institutions.
According to estimates cited by the African Development Bank, Africa’s overall trade finance gap currently stands between $100 billion and $120 billion annually, with SMEs carrying the heaviest burden of exclusion from formal financial systems.
For Zambia, reducing that gap has become increasingly important as the country attempts to strengthen industrial productivity, improve export competitiveness and accelerate economic diversification.
Raubil Olaniyi Durowoju, the African Development Bank’s Country Manager for Zambia, described trade finance as one of the most practical and immediate tools for strengthening productive sectors of the economy.
“Trade finance is not an abstract financial instrument,” Durowoju said. “It is what allows a smallholder farmer to import certified seed, or a local manufacturer to source components and export finished goods. By backing Access Bank Zambia with our AAA guarantee, we are giving Zambian businesses a seat at the table in regional and global trade, and that translates directly into jobs, incomes and economic resilience.”
Under the agreement, the African Development Bank’s guarantee will provide up to 100 percent risk coverage to international confirming banks on trade finance instruments issued by Access Bank Zambia. By reducing the perceived risks attached to Zambia originated trade transactions, the facility is expected to enable the bank to significantly scale up its trade finance operations without the collateral pressures that have traditionally constrained lending capacity.
For Zambian businesses, the implications are substantial. The facility is expected to improve access to letters of credit for the importation of agricultural inputs, manufactured goods, machinery, renewable energy equipment and consumer products critical to the country’s productive economy. Export oriented businesses are also expected to benefit from improved support as they seek to expand into regional and international markets.
Beyond the direct commercial impact, policymakers also expect the initiative to strengthen public revenue generation by increasing import duties, expanding corporate tax contributions and stimulating broader business activity across multiple sectors of the economy.
The agreement also carries a significant gender inclusion component. Women across Zambia remain disproportionately represented in subsistence agriculture, informal trading activities and agricultural value chains, sectors that are often among the most financially excluded when it comes to trade finance access. To address this imbalance, the guarantee may be complemented by technical assistance from the African Development Bank’s Affirmative Finance Action for Women in Africa initiative, commonly known as AFAWA.
The program is expected to support Access Bank Zambia in integrating stronger gender focused lending frameworks into its financing operations while allocating part of the guaranteed trade portfolio toward women led enterprises.
For many analysts, the move reflects a broader recognition that strengthening women owned businesses is increasingly essential to Zambia’s long term economic expansion, particularly in agriculture and cross border trade sectors where women play a dominant role but often lack access to formal financing mechanisms.
Access Bank Zambia’s Managing Director, Iheanyi Nwogu, described the partnership as an important milestone for the bank’s trade finance strategy and Zambia’s broader economic trajectory.
“Trade finance is a cornerstone of Access Bank Zambia’s business, and the African Development Bank’s AAA rated guarantee will be instrumental in accelerating growth within this segment,” Nwogu said. “Through this partnership, we will expand support for businesses accessing cross border trade, deepening trade flows and contributing to Zambia’s long term economic growth.”
The agreement also sends a broader signal to international financial markets regarding Zambia’s trade potential.By backing Zambia originated trade instruments with the African Development Bank’s AAA rated guarantee structure, the facility is expected to strengthen confidence among international confirming banks and encourage greater participation in financing transactions linked to Zambian businesses.
At a time when many African economies are seeking to reduce dependence on commodity exports while strengthening regional integration under the African Continental Free Trade Area, Zambia’s latest trade finance initiative reflects the growing importance of financial infrastructure in supporting economic transformation.For Zambia, the challenge now will be ensuring that increased financing access translates into measurable expansion in productive capacity, export competitiveness and long term business resilience, particularly among the small and medium sized enterprises that continue to form the backbone of the national economy.