Abidjan, 7 October 2022 (TDI): A $15 million trade finance line of credit and a $10 million transaction guarantee have been approved for FSDH Merchant Bank by the board of Directors of the African Development Bank Group (AfDB) in Nigeria.
The line of credit will be used by FSDH to lend money to Nigerian small businesses. By providing small & medium-sized firms (SMEs) in the industrial sector with financial resources, the $25 million package would aid in closing the trade finance gap in Nigeria.
The Bank will also guarantee up to 100% of the non-payment risks associated with letters of credit and comparable trade finance instruments issued by FSDH.
This will make it possible to verify trade transactions started by FSDH, which will be advantageous for regional import and export companies.
The AfDB’s Director General for Nigeria, Lamin Barrow, said “The availability of trade finance instruments to drive post-pandemic economic recovery efforts cannot be overemphasized.
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Hence, the Bank’s financing will help eligible Nigerian SMEs to take advantage of existing and emerging opportunities in the domestic and regional markets.”
The African Development Bank assessed the continent’s trade finance imbalance at $82 billion. SMEs and other domestic businesses found it more challenging to obtain trade financing than multinational corporations and sizable local corporations.
Barrow pointed out that the Covid-19 outbreak and other circumstances had prompted international banks to scale back or end their correspondent banking arrangements in Africa.
The Director for Financial Sector Development of AfDB, Stefan Nalletamby, said, “We are excited about finalizing this facility with FSDH as having the Bank as a partner will aid FSDH in scaling up its trade finance offerings in Nigeria to help meet the ever-increasing trade finance gap.”
“This partnership is expected to catalyze more than $200 million value of trade finance transactions across multi-sectors such as agriculture, manufacturing, and energy over the next 3.5 years.” He added.
