Emmanuel OchayiThe African Development Bank (AfDB) has forged an agreement with FSDH Merchant Bank, signing a $20 million Trade Finance Facility aimed at bolstering support for small- and medium-sized enterprises (SMEs) within Nigeria’s industrial and manufacturing sectors.
The deal comprises a $15 million Trade Finance Line of Credit designated to bolster SMEs and local corporations, along with an additional $5 million Transaction Guarantee meant to reinforce FSDH’s trade finance transactions.
Join our WhatsApp ChannelThis collaboration ensures AfDB’s guarantee of up to 100% of non-payment risks associated with letters of credit and similar trade finance instruments issued by FSDH.
Lamin Barrow, the African Development Bank’s Director General for Nigeria Country Department, emphasized the significance of this partnership.
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He stated, “The arrangement signifies the Bank Group’s commitment to bridging Nigeria’s trade finance gap, collaborating with key partners like FSDH to offer crucial support to SMEs.”
Barrow further explained, “The establishment of a dedicated Trade Finance Program in 2013 was aimed at addressing challenges such as insufficient correspondent banking lines of credit and inadequate access to foreign exchange, hindering Nigerian banks from fulfilling trade finance requests from their clients.”
Highlighting the potential impact of the $20 million facility, Barrow estimated that it could catalyze more than $200 million of trade finance transactions over the next three years, benefiting various sectors including agriculture, manufacturing, and energy.
Bukola Smith, Managing Director/CEO of FSDH, expressed gratitude to the AfDB for the support, highlighting the focus on women-owned businesses in fund distribution.
She affirmed, “This financing will be utilized effectively to fuel our growth and cater to the needs of our clients, particularly women-owned enterprises.”
The collaboration between AfDB and FSDH Merchant Bank traces back to a previous $50 million Trade Finance Line of Credit extended in 2016.
This earlier support impacted critical sectors such as energy, agri-business, and health, facilitating over 370 trade transactions valued at $375 million.
The AfDB estimates Africa’s annual trade finance at $81 billion, with a notable gap in Nigeria amounting to $7 billion, particularly affecting SMEs and domestic firms in accessing trade finance.
The AfDB’s active portfolio in Nigeria encompasses 48 operations valued at $4.4 billion, supporting both public and private sector initiatives, signalling a continued commitment to the country’s development and economic growth.
Emmanuel Ochayi is a journalist. He is a graduate of the University of Lagos, School of first choice and the nations pride. Emmanuel is keen on exploring writing angles in different areas, including Business, climate change, politics, Education, and others.
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