Finnfund

Many developing countries have inadequate facilities for export financing. Small enterprises find it particularly hard to get finance from the local market. Nor are foreign banks often ready to finance local exporters or financial institutions, especially in the poorest developing countries. This was the rationale for establishing the African Export-Import Bank, which finances African exporters.

The developing countries also have a problem in the underdeveloped structure of the products they export and of their export markets. Additionally exporting is often concentrated on items with a low value-added, raw materials and primary agricultural products. These factors add up to export earnings that are low and very volatile in reaction to raw material prices and market conditions.

Loans for African enterprises

The African Export-Import Bank, headquartered in Cairo, Egypt, was founded in 1993 to redress these problems. The initiative to establish it came mostly from the African Development Bank. African governments, central banks and other local financial institutions are its majority shareholders.

Lending by the African Export-Import bank is targeted at African exporters, either directly or via local financial institutions. The bank can also finance trade between African countries. At the end of 2003, its loan portfolio was 483 million U.S. dollars.

In 2002 the bank also initiated a special Export Development Finance Programme, aimed specifically at supporting exports of African manufactured products.

Finances and future on a stable footing

During its first ten years of operation, the African Export-Import bank has purposefully expanded its operations. At the same time it has been able to maintain a healthy financial status, with a positive result every year; for example no credit defaults were realised in the first four years of operation and at the moment, bad and doubtful debt as a percent of total loans is below three percent. This is particularly significant in a challenging environment like Africa, which has experienced financial and political crises during this period.

In 2000 the bank began borrowing from the international loan market. Its stable development and healthy balance sheet has allowed it to borrow successfully on the interbank loan market. Maturities have become longer and credit terms have improved which is a mark of the growing confidence of lenders towards the bank.

Finnfund has participated in several of the African Export-Import Bank’s syndicated loans in 2000-2002. As a natural sequel to this cooperation the bank and Finnfund signed a bilateral agreement in October, 2004 for three years’ revolving credit of five million U.S. dollars, which contributes to the bank’s funding.


For more details please contact Mr Jyrki Halttunen +358 9 3484 3318, email firstname.lastname@finnfund.fi