The Eastern and Southern African Trade & Development Bank (TDB) has had growing working relationships with America’s foremost public and private sector financial institutions over a couple of decades. Starting in 1993, a TDB program to raise half a billion dollars through the issuance of commercial paper alongside Goldman Sachs Money Markets, L.P. and Merrill Lynch Money Market, Inc. was rated A-1+ by Standard & Poor’s. In 1996, the Export-Import Bank of the United States (EXIM) provided us with long-term funding, and remains one of our funding ecosystem’s most consistent and longest serving members.
More recently, as we gained investment- grade ratings and built up a solid track record of consistently rewarding inve2sted risk capital, other Fortune 500 financial institutions including Citi and Goldman Sachs have leveraged TDB’s risk capital to inject financing into our region’s attractive frontier markets. We have joined U.S.-led initiatives such as Power Africa and Prosper Africa, established cooperation with USAID and the U.S. Trade Development Agency, and allied with liked-minded members of the International Development Finance Club and the Finance in Common Initiative. Going forward, as we join partners in cultivating green shoots of recovery breaking through from COVID-19, I am quite encouraged by the opportunities across the region.
An ideal post-COVID commercial, development and financial engagement between the U.S. and Africa should, indeed, be based on trade, economic diversification, climate change, and of course, infrastructure. And TDB is in a strong position to grow its partnerships with American institutions for mutual and global benefit.
TDB is a fast-growing international DFI with an uncommon public-private capital structure and unique mandate to advance and fiance trade, infrastructure, agriculture, SMEs and other high impact development sectors in Africa. We have north of US$ 7 billion in assets under management and have both public and private sector shareholders from Africa, Asia, and Europe. We also enjoy long-standing cooperation and growing with the world’s top financial institutions, partnering to scale-up, speed up and synergize in driving impact.
Apart from the American institutions mentioned before, we also work with the African Development Bank, World Bank, China Development Bank, China EXIM, AFD of France, KfW of Germany, CDC of the UK, JBIC of Japan, as well as Standard Chartered Bank, International Commercial Bank of China, Commerzbank, Bank of Tokyo Mitsubishi and many other commercial banks in the Gulf region and within Africa.We serve some 22 African Member States mainly out of our operations hub in Nairobi, Kenya, and play a leading role in financing high priority projects in renewable energy, SMEs & healthcare, amongst several others.
TDB’s optimal blend of short and long-term financing makes us uniquely positioned to support the private sector, trade flows & commercial enterprises that meet immediate demand while planning and building sustainable, competitive economies of tomorrow. We have principal offices in Mauritius and Burundi and operational offices in several African countries.
Our hybrid public-private equity capital structure, world-class risk management complex, and agility to tailor innovative solutions are some of the virtues we have become known for in recent years.
Going forward, we are keen to expand our cooperation with other American institutional and impact investors as well as public development financiers like the United States International Development Finance Corporation (DFC). About half of our portfolio contributes to achieving sustainable development goals (SDGs), our financial flows are increasingly ‘Paris-aligned,’ and deliver on climate adaptation and mitigation imperatives. Already, the majority of the TDB power sector portfolio is renewable energy in the areas of wind and mini-hydros.
Challenges & Opportunities
As Africa starts the long recovery process from the health & economic shock of COVID-19, the continent is expected and likely to get back to the robust growth trajectory that had been underway over the past decade. One of the main reasons for optimism is the African Continental Free Trade Area (AfCFTA). The continental pact is a game changer and is the world’s largest free trade area by participating countries since the WTO was established in 1995. Projections indicate that by 2030, a fully integrated African market of 1.7 bn people shall have up to US$ 6.7 trillion in combined consumer and business spending. Our fast-growing and fast-urbanizing middle class and consumer spending capacity make Africa an increasingly attractive space for U.S. investment. Market entry into fast-paced and dynamic sectors like fintech, health, IT infrastructure and clean energy – the latter benefiting from some of the best solar and wind potential on the planet – should generate positive short and long-term results.
The Climate Agenda: Risk & Opportunity
Increasingly, climate change will inform the partnership between the international investment community and Africa over the next decade. As bankers and financiers, we are cognizant that climate risk is portfolio risk, with infrastructure investments increasingly imperiled by new and more violent weather events. The devastating 2019 Cyclone Idai that tore across Southern Africa, and more recent extraordinary cold freeze that caused untold disruption to power grids and livelihoods in America’s Midwest are two such examples.
On the other hand, as investors, we also recognize a fine line between risk and opportunity. And here, I speak of an opportunity to invest now in tomorrow’s resurgent, more resilient economy; a chance to lead a green, low carbon transition for 22 Member States, to put them in a more competitive global position for years to come. Because we are in this together, our solutions need to be collaborative as well.
An exciting opportunity to work with like-minded partners is at hand. With renewed commitment from the U.S. & the Biden-Harris Administration, ambitious and far-reaching agendas for climate action and green growth both at home and abroad are within reach. Equally, sustainable, long-term economic growth and recovery for Africa shall be spurred further along by recent & on-going infrastructure projects, notably in electrification and renewable energy. These projects are spread across several countries and ought to create a bountiful and reliable supply of energy. In turn, reliable energy should smooth the path for manufacturing and industrialization efforts.
The region has also seen the introduction of several mega railroad projects to interconnect several eastern African countries, such as Rwanda, Tanzania, Uganda, Burundi, Democratic Republic of Congo, as well as Djibouti and Ethiopia. The on-going construction of Kenya’s deep seaport at Lamu should also create a vital new trade corridor between Kenya, Ethiopia and South Sudan, while the long-awaited implementation of a peace pact between Ethiopia and Eritrea is expected to create a free trade zone between these two eastern African nations. Lifting sanctions on Sudan and Eritrea, alongside the partial lifting of sanctions on Somalia, should spur investor confidence in the region.
Embracing Trade & Development
After years of necessary focus on security and counter-terrorism, it is encouraging that U.S. Africa policy has begun expanding to embrace more trade and economic development objectives. This should create further opportunity to deepen the engagement of U.S. foreign direct investors, and also institutional investors in African financial institutions such as TDB. This past year of the COVID-19 pandemic has refocused our attention to shared opportunities and intertwined destinies. If we are guided by this renewed sense of focus and purpose, I have faith that there is a great deal of scope for more win-win cooperation with U.S. institutional investors and African diaspora in the U.S. for years to come.
About Admassu Tadesse
Admassu Tadesse is an international banker and economist specialized in trade and development finance with extensive experience at board and executive-levels globally and in Africa. He is currently the Group Managing Director and CEO of the Eastern and Southern African Trade & Development Bank Group (TDB). Since joining the Bank in 2012, Tadesse has spearheaded critical reforms that transformed TDB’s ownership, institutional framework and business model, establishing centers of excellence in risk, legal and treasury management and expanding the partnership network to grow assets from US$ 1 billion to over US$ 7 billion. TDB has 39 shareholders, including 22 Member States across eastern + southern Africa, & institutional shareholders such as the pension funds and insurance companies from countries such as Rwanda, Uganda, Mauritius and the Seychelles, in addition to the African Development Bank, People’s Bank of China, Denmark’s IFU, OFID, BADEA.
Over the past 8 years, the Bank has enjoyed credit rating upgrades, capital and funding have increased by over 400%, and is now one of the region’s leading financial institutions with a diverse workforce, of which over 40% are now women. TDB was recently awarded the Bank of the Year award at the 2020 Bankers’ Awards Ceremony.
Previously, Tadesse was Executive Vice President at the Development Bank of Southern Africa (DBSA), where he served for some 10 years, and was responsible for international finance and corporate strategy, amongst other tasks. Prior to this, he worked as a senior advisor and specialist with various funds and international organizations. His formative years were in the United States, graduating from a Maryland high school in 1987. In 1999, Tadesse joined forces with his philanthropist spouse, Anna Getaneh in the establishment of the Ethiopian Children’s Fund, a U.S. 501(c) 3 not-for-profit organization that has provided free education, vocational training, primary health care and nutrition support to over a thousand disadvantaged children in Ethiopia, including COVID-19 and HIV prevention community projects.
Admassu Tadesse is a recipient of several distinctions and awards, including Africa Business Leader of the Year by the Corporate Council of Africa. More recently, he was honored as the ‘African Banker of the Year’ top prize at the 2019 Bankers’ Awards Ceremony. He holds an MSc from London School of Economics, and an MBA from Wits Business School, and is an alumnus of Harvard Business School and Western University.