Italy’s export credit agency Sace has agreed to cover a €100mn facility for the Eastern and Southern African Trade and Development Bank (TDB) in a bid to drive Italian trade flows and business in the region.

Under the deal, announced last week, Sace is extending an 80% guarantee for a syndicated loan from Citi and SMBC.

The transaction marks the first time a financial institution has secured cover under the Italian export credit agency’s Sace Push programme, an untied offering typically aimed at large, foreign buyers of Italian goods.

The facility will provide TDB with long-term funding and boost its lending capacity in various sectors, including renewable energy, agriculture and manufacturing.

The deal is also expected to encourage the involvement of Italian companies in projects across the African development finance institution’s member states.

“The Sace Push Facility aims to facilitate Italian procurement by involving TDB’s borrowers in matchmaking events with Italian suppliers and encouraging participation in bidding and tendering for services and products,” TDB says.

In the past two years, Sace’s Push programme has been tapped by the world’s biggest traders, including Trafigura, Vitol, Gunvor and Olam. Yet this latest deal indicates the Italian agency is also opening the product to lenders.

“This is a landmark transaction as it is the first Push facility offered to a multilateral development bank,” says Michal Ron, chief international business officer of Sace, in a statement.

The Sace-backed deal “will leverage opportunities and connect Italian and African companies in key sectors like renewable energy, agribusiness, manufacturing, health and transports”, Ron says.

SMBC and Citi are acting as mandated lead arrangers, while SMBC is bookrunner and Sace agent.

“We are committed to unlocking economic growth and progress and this facility supports both Italian value chains and economic development across Africa,” says Richard Hodder, global head of export and agency finance at Citi.

The transaction follows the Italian parliament’s approval of a plan – known as Piano Mattei – in January that seeks to encourage investment across the African continent and so reduce migration to Europe.

According to Sace’s Ron, the deal is “fully in line” with the strategic objectives of Italy’s Piano Mattei.

TDB provides various forms of trade finance including letters of credit, working capital and structured commodity finance, as well as longer-term project and infrastructure finance solutions. It is a key provider of trade finance in 25 markets across Sub-Saharan Africa, where access to such funding is often scarce. According to the African Development Bank, the continent’s trade finance gap was estimated to be US$81.8bn in 2019 and has likely grown since.

In recent months, TDB secured a US$100mn facility from the British International Investment to help finance the import and export of key commodities, as well as other goods and services.

In March, the World Bank’s Multilateral Investment Guarantee Agency renewed €349mn in cover for a Standard Chartered-led loan to TDB that will also be used to finance trade transactions.