The Working Capital Guarantee Programme (WORKAP) assists African exporters, Small and Medium- sizedEnterprises (SMEs) and businesses involved in the supply chain to gain access to working capital finance. It can be both pre- and post-shipment in respect of specific export contracts, raw material acquisition, contract financing, among others. Under the programme, we provide guarantees to lenders to cover the credit risks associated with export working capital facilities and trade debt instruments up to 3 years.
The Bank offers three types of guarantees under the Working Capital Guarantee Programme (WORKAP):
- Working Capital Guarantee;
- Supply Chain Finance Guarantee; and
- Note Purchase Cover.
Working Capital Guarantee
The Afreximbank Working Capital Guarantee is a partial guarantee for the financial institution against the credit risks associated with working capital facilities for exporters, suppliers, Small and Medium-sized Enterprises (SMEs) involved in trade activities among others.
- Commercial risk such as supplier counterparty risk; and
- Risk that the financial institution does not receive payment on or before the due date of payment of an amount due under the working capital facility.
Supply Chain Finance Guarantee
The Supply Chain Financing facility is a guarantee in favour of a supplier, or its financial institution, against payment risks associated with extended payment terms granted to a buyer (known as ‘trading on open account basis’).
Counterparty risk in a situation where the seller (supplier), or its financial institution, does not receive payment on the due date.
Note Purchase Cover
The Note Purchase Cover product is a guarantee on trade debt papers partially or fully to enable their tradability (usually in the form of aval, possibly also by means of a transferable demand guarantee).
With this facility, the Bank can provide guarantees on trade debt papers partially or fully to enable their tradability. For instance, an exporter or supplier holding promissory notes, or a tradable instrument, from a buyer as payment for exported goods can raise funds by selling these notes and thereby transform a credit transaction into a cash transaction. This Guarantee covers the risk of non-payment of the notes. In such a case, the beneficiary of the guarantee is the bank that buys the promissory notes from the exporter.
Commercial risk and political risk.