The Export-Import Bank of Korea (KEXIM) has signed a relending facility agreement with the Trade & Development Bank (TDB) of eastern and southern Africa, and is raising a separate relending threshold with five African banks, boosting prospects that Korean business links could expand on the continent from a fairly small base.

Signed on Tuesday (July 14), the TDB agreement set a relending limit of $100 million and will connect KEXIM with an agency that has assets of more than $6 billion and 39 shareholders across Africa. TDB, a multilateral development bank established in 1985 to promote trade, will be able to offer loans to importers of Korean products in Africa.  

KEXIM has also lifted the relending limit on its agreement with five African banks, including TDB and the African Export-Import Bank, to $700 million. Korea and 22 TDB member states, including Kenya and Tanzania, hope to enhance business  activity through the deal. 

“Africa is a market with high growth potential, as it has a population of 1.3 billion, abundant natural resources and young consumers,” KEXIM CEO Bang Moon-kyu said. “We are expecting an increase in demand for major consumer goods like automobiles and home appliances, as well as in agriculture, transportation, infrastructure and healthcare sectors.”

South Korea’s exports and investment in Africa amounted to $6.3 billion and $500 million respectively in 2019, lower than most other markets, but they are expected to rise once the African Continental Free Trade Area (AfCFTA) is fully operational. AfCFTA is a free trade area that was created by 54 of the 55 African Union nations through the African Continental Free Trade Agreement, but it has not yet made any major decisions due to the Covid-19 pandemic. 

KEXIM will open a web seminar about relending on July 30 to help African companies increase imports of Korean goods. (Reporting by Hyewon Chang)