AfDB backs $60 million trade-finance facility for Kenyan businesses

A Kenyan importer buying electrical equipment from overseas may have to pay the supplier before the goods are shipped. The money is tied up until the shipment arrives and the goods are sold. If local customers are also buying on credit, the importer could be waiting weeks for payment while trying to raise money for the next order.

The African Development Bank (AfDB) and Equity Bank Kenya have signed a $60 million trade-finance guarantee facility aimed at helping small and medium-sized enterprises (SMEs) and local companies access financing for imports and exports. Announced on 15 October 2026, the facility will provide guarantees of up to 100% against non-payment risk for confirming banks handling eligible letters of credit and similar trade-finance instruments issued by Equity Bank Kenya. 

The arrangement is intended to reduce the risk faced by banks supporting these transactions, allowing them to finance more trade deals involving Kenyan businesses.

Financing the gap between orders and payment

For businesses importing stock, the cost goes beyond paying the overseas supplier. Shipping, customs clearance, storage and local delivery all need to be covered before goods reach customers. A wholesaler may have regular buyers but still struggle to finance the next shipment because money from previous sales has not come in. Manufacturers face a similar problem when they need to buy raw materials before they can begin production.

Banks can provide trade finance to help businesses manage these transactions, but access is not always easy for smaller companies. Collateral requirements, the cost of financing and the risks associated with cross-border trade can make it harder for them to secure support. The AfDB facility is designed to address part of that problem by providing a guarantee to confirming banks, reducing their exposure to non-payment risk on eligible transactions.

How the guarantee works

A letter of credit is a bank-backed payment commitment used in international trade. It gives a supplier greater assurance that payment will be made if the agreed conditions are met. When a confirming bank agrees to support a letter of credit, it takes on a payment risk. The AfDB guarantee can cover up to 100% of the specified non-payment risk on eligible transactions, making it easier for confirming banks to work with Equity Bank Kenya on trade deals.

The facility does not mean Kenyan businesses will receive $60 million in grants or direct cash payments. It provides risk protection within trade-finance arrangements, with businesses still required to meet the relevant banking and transaction requirements.

What it means for SMEs

The facility is intended to help Kenyan businesses finance eligible imports and participate in regional and international trade. It could be relevant to companies buying equipment, importing production inputs or supplying goods to customers across borders. However, the practical benefit will depend on which transactions qualify and how businesses can access the financing. SMEs will need to understand the application requirements, associated fees and any collateral the bank may still require. The announcement does not specify how many smaller businesses are expected to benefit or how much financing will reach them.

A wider trade-finance shortage

The AfDB estimates that Africa's unmet demand for trade finance reached as much as $92 billion in 2024, with SMEs among the groups most affected. 

Limited access to trade finance can prevent businesses from fulfilling orders, importing essential inputs or expanding into new markets, even when they have customers ready to buy. The new facility adds to the bank's efforts to help African financial institutions support importers and exporters. It is also intended to support trade between African countries and the implementation of the African Continental Free Trade Area.

For Kenyan businesses, the key question is how the arrangement translates into access to financing. The eligibility rules, cost of borrowing and number of SMEs able to use the facility will help determine its impact on companies trying to grow their trade.