The African Development Bank Group (AfDB) and Habib Bank AG Zurich Kenya have signed a bank agreement to expand the network of international banks supporting trade transactions originated by African financial institutions. The agreement was signed on 2 October at AfDB’s East Africa regional office and is being implemented under AfDB’s Trade Finance Transaction Guarantee Program.
Under the arrangement, Habib Bank will provide transaction-by-transaction guarantees covering up to 100% of the non-payment risk it assumes on eligible trade finance transactions. These transactions must be originated by African issuing banks that AfDB has approved, with the guarantees designed to strengthen Habib Bank’s ability to confirm letters of credit and similar trade instruments issued by African banks.
Background: A Trade Finance gap for African firms
The AfDB said the partnership aligns with its efforts to work through strong local financial institutions to narrow Africa’s trade finance gap. In its 2025 Trade Finance Report, AfDB estimated the gap at as much as $92 billion in 2024, noting that small and medium-sized enterprises (SMEs) are among the most affected businesses when trade financing is constrained.
Trade finance shortfalls can reduce the availability of instruments such as letters of credit, which are widely used to mitigate counterparty risk in cross-border transactions. AfDB linked the need for additional guarantees to cases where correspondent banking limits or risk perceptions can hinder otherwise viable trade.
The Agreement and How it Works
AfDB said the new agreement is intended to expand the chain of confirmation for eligible trade transactions, helping Habib Bank confirm instruments issued by African banks. The guarantees cover the non-payment risk that Habib Bank assumes, transaction by transaction, up to the stated coverage level, for transactions AfDB has approved under its trade finance guarantee framework.
Statements from AfDB and Habib Bank
At the signing ceremony, AfDB Director General for East Africa Alex Mubiru said, “Trade moves on goods, services and finance, but it also moves on confidence. By providing guarantees against eligible non-payment risk, this partnership will give Habib Bank greater confidence to support transactions originated by African banks. That can open more trade opportunities for businesses across the continent.”
Habib Bank AG Zurich Kenya Chief Executive Officer Asim Basharullah said, “Africa remains one of the world’s most dynamic growth markets, and trade is central to unlocking its potential,” adding that Habib Bank’s international network positions it to support commercial flows between Africa and the rest of the world. He also said the agreement “reflects a shared commitment to expanding access to trade finance, enabling businesses to grow and accelerating sustainable economic development across the continent.”
AfDB’s Head of Trade Finance, Lamin Drammeh, said the addition of Habib Bank AG Zurich to AfDB’s network of confirming banks strengthens the financial connections African institutions need to serve importers and exporters.
Broader relevance: jobs, supply chains and resilience through finance
By targeting the availability of trade finance—especially for transactions involving SMEs—the partnership connects to wider development priorities including sustainable economic development and regional integration. When trade finance is more accessible and predictable, businesses can more reliably plan procurement, production and distribution, strengthening local supply chains that are central to longer-term economic resilience.
Key Details
Initiative or programme: Trade Finance Transaction Guarantee Program
Lead organization: African Development Bank Group (AfDB)
Partners: Habib Bank AG Zurich Kenya
Funding amount: Not specified
Geographic focus: Africa (trade transactions originated by African issuing banks approved by AfDB); agreement signed at AfDB’s East Africa regional office
Target groups: Eligible African issuing banks and the businesses using trade finance instruments they originate; SMEs identified as heavily affected by the trade finance gapDuration or timeline: Agreement signed on 2 October (year not specified in the excerpt); no end date provided
Expected reach or outcomes: Transaction-by-transaction guarantees to strengthen confirmation of letters of credit and similar instruments; support intra-African trade and potentially widen Africa–international market trade where correspondent banking constraints exist
Why This Matters
AfDB’s partnership with Habib Bank AG Zurich Kenya highlights how international banks can be brought into trade finance assurance arrangements through confirmation guarantees—an approach directly relevant to development practitioners working on private sector and market-access programming. With AfDB estimating a trade finance gap of up to $92 billion in 2024 and identifying SMEs as among the most affected, the agreement signals continued emphasis on reducing financing bottlenecks that can limit jobs and business growth.
For NGOs and civil society organizations supporting enterprise development, trade facilitation, and livelihoods, the announcement underscores the importance of finance-side constraints in shaping community-level outcomes. It also suggests potential entry points for local stakeholders: helping SMEs and producer organizations interface with issuing banks that can originate eligible transactions under AfDB’s framework.