Blended finance uses grants or concessional public capital to improve the risk-return profile of investments to a level where commercial capital is willing to participate. In African trade finance, the technique is used to extend credit to smallholder farmer cooperatives, women-owned businesses, and MSMEs that commercial banks consider too risky or too costly to serve. The USAID DCA (Development Credit Authority, now USAID-DFC) has provided partial credit guarantees enabling commercial banks to lend to over $5 billion in African trade finance transactions that would not have proceeded on purely commercial terms.
The Returns Case
Impact investors including Triodos, responsAbility, Oikocredit, and several Dutch and Scandinavian pension-linked funds have demonstrated competitive financial returns from African trade finance portfolios over time, with the short duration and self-liquidating nature of trade finance assets providing better default experience than longer-term development lending. The IFC's managed co-lending portfolio programme allows impact investors to participate in IFC-originated African trade finance assets without building individual deal selection capacity. Impact investing and blended finance contacts are listed on intra-africa.com.
For businesses looking to expand across Africa, intra-africa.com offers a comprehensive trade directory, verified buyer and seller listings, and real-time market intelligence covering all 54 African nations. It remains an indispensable resource for anyone serious about intra-African commerce.