Trade Development Bank

East Africa,Africa Financial services

The Eastern and Southern Africa Trade and Development Bank – TDB Bank – is a regional development bank headquartered in Burundi. It has offices in Nairobi, Harare, and Ebene. Its aim is to facilitate economic growth, trade and regional integration through its role as a financial intermediary providing trade and project finance in 17 countries across East and Southern Africa. It invests in a range of sectors, including agriculture, trade, industry, infrastructure, energy and tourism and provides a range of financial products and services across both the private and public sectors.

  • Active
  • Exited

We are invested in Trade Development Bank through Ninety One Africa Credit Opportunities Fund (Investec), which is managed by Investec Asset Management.

We do not hold direct relationships with the companies that investment funds invest in. Instead, we hold relationships directly with the fund. When investing through investment funds, CDC takes an active role as a limited partner to the fund, working with the fund manager to ensure best practices, including in environment, social and governance matters, and investment management oversight.

For further information on the fund, the fund manager, and the expected impact of the fund’s investment, click here.

Key facts

Status:
Active
Region

Since 2012, we’ve only invested in Africa and South Asia. Investments outside these regions are from our pre-2012 portfolio.

:
Africa, East Africa
Sector

We have seven priority sectors. However, we continue to invest outside these sectors, largely in the most challenging regions, as new investment supporting any sector helps to underpin the private sector, and create jobs and livelihoods for people.

:
Financial services
Website:
https://www.tdbgroup.org/
Investment type

We provide capital in three broad ways: direct equity, debt, and intermediated equity (principally through investment funds).

:
Intermediated investment
Fund:
Ninety One Africa Credit Opportunities Fund (Investec)
Fund Manager:
Investec Asset Management
Start date

For direct investments, this is the date CDC committed capital to the business or project.

For funds, this is the date that CDC committed capital to the fund.

For underlying fund investments, this is the date that the fund invested capital into the business.e

:
June 2015
Domicile

This is the investee company’s place of incorporation; or a fund’s jurisdiction.

:
Burundi

Our investment

The loan will support TDB in addressing the short-term financing needs of its clients during a challenging time given the context of COVID-19. Our funding will support private sector corporates in countries with challenging investment climates with working capital and will benefit the import and export of agricultural products and essential commodities as economies emerge from the COVID-19 crisis.

Impact

Sustained and potentially improved economic opportunities (SDG 8.1, 8.5).

How?

Economic enabler: This facility will allow the Trade Development Bank (TDB) to provide short-term (less than two years) trade finance products (e.g. pre-/post-shipment loans, import finance facilities) to corporates in Africa. The corporates will mostly be existing private sector clients requiring renewal or top-up loans, but may expand to new borrowers as economies emerge from the COVID-19 crisis. Increased credit will enable corporates to continue to import/export strategic inputs, agricultural or commodity goods. This will sustain and potentially increase business operations.

Stakeholder Geography Characteristics
Employees, suppliers, customers

Pan-Africa; 99 per cent exposure to category ‘A’ and ‘B’ countries in the trade finance portfolio.

Given diversity of sectors, employee/suppliers will be low and high-skilled. Key sectors include infrastructure, energy, agribusiness and banking; The characteristics of corporates reached are assumed to be large as TDB extends direct ticket lines to these businesses ($10 – 50 million).

Scale Depth/Duration

The trade finance portfolio is expected to grow by approximately 15 per cent year-on-year. Based on an illustrative pipeline, CDC’s loan is expected to support four to six facilities depending on the tenor of the underlying loan. (Projections have been adjusted to reflect the COVID-19 market context.)

  • Duration: Impact is connected to loan book growth and will occur over two years or the lifecycle of the facility.
  • Depth: Limited visibility on depth. The World Bank recently adjusted growth projections for Africa from 2.4 per cent in 2019 to -2.1 to -5.1 per cent in 2020. As a result, impact is expected to be deeper in a context of increasing unemployment and lower access to goods/services). Countries with smaller/less developed capital markets ex. A & B countries, will feel the effects of COVID-19 more acutely than more developed markets.
Grid Score Contribution

3.0-3.6 (range provided based on June ’20 exposure in trade finance portfolio)

To help us direct our investments, we use a tool called the Development Impact Grid. The Grid scores every investment we plan out of a score of four, based on two factors: the difficulty of investing in the country and whether investment in that sector will lead to jobs.

Financial: The commercial market does not offer capital in sufficient quantities to meet companies' plans / needs. which is exacerbated by increasing retrenchment of capital during COVID-19.

Risk
  • Alignment: Risk relating to use of proceeds include: (i) using the facility to refinance facilities; (ii) expressed preference for a longer tenor. Mitigation: the use of proceeds is contractually limited to short-term lines (less than two years) excluding refinanced facilities. Visibility on incremental/new growth is limited to reporting on the use of our facility but CDC will also monitor overall growth of TDB’s portfolio (bi-annual reporting).
  • Alignment: Risk relating to TDB’s reach as the bank services (i) sovereign clients and has an (ii) oil and gas exposure. Mitigation: (i) is mitigated to a certain extent by limiting use of proceeds to private sector clients; (ii) ensuring that the facility is aligned with our Climate Change Policy. The majority are petroleum imports to category ‘A’ and ‘B’ countries which TDB recognises as strategic commodities to these countries.
    • Evidence: Visibility on the businesses served and ultimate impact on employees/customers depends on the bank’s ability to provide data. Mitigation: Data will be provided by the bank to the extent possible to better understand the impact that we are having.

Expected impact

Much of Eastern and Southern Africa suffers from a lack of basic infrastructure and reliable energy supplies. This severely limits business activity, particularly in rural areas.

Our investment will enable TDB to increase its infrastructure support throughout the region and provide longer-term funding to businesses and projects.

This includes providing finance to support vital trade and infrastructure projects – from hydro-electric power in Uganda to telecomms in Zanzibar.

TDB will also provide technical assistance and advice to clients setting up trade-related projects, particularly to support regional and cross-border trade.

Environmental and social aspects

We are supporting TDB to take steps towards building and integrating climate change considerations as part of the bank's operations. We also continue to work closely with TDB to improve its existing environmental, social and governance, and human resources / safeguarding policies.

Key facts

Status:
Active
Region

Since 2012, we’ve only invested in Africa and South Asia. Investments outside these regions are from our pre-2012 portfolio.

:
Africa, East Africa
Sector

We have seven priority sectors. However, we continue to invest outside these sectors, largely in the most challenging regions, as new investment supporting any sector helps to underpin the private sector, and create jobs and livelihoods for people.

:
Financial services
Website:
https://www.tdbgroup.org/
Investment type

We provide capital in three broad ways: direct equity, debt, and intermediated equity (principally through investment funds).

:
Direct Debt
Start date

For direct investments, this is the date CDC committed capital to the business or project.

For funds, this is the date that CDC committed capital to the fund.

For underlying fund investments, this is the date that the fund invested capital into the business.e

:
June 2016
Amount

For direct investments, this is the total amount that CDC has committed to the business or project (it may be a combination of equity and debt).

For funds, this is the total amount that CDC has committed to the fund.

:
$275m
Domicile

This is the investee company’s place of incorporation; or a fund’s jurisdiction.

:
Burundi

CDC is becoming British International Investment