The Board of Directors of the African Development Bank Group (AfDB) has approved a 15-million-dollar trade finance line of credit and 10 million dollars transaction guarantee for FSDH Merchant Bank.
This is contained in a statement by Chukwuemeka Ezekiel in the AfDB Group, Nigeria Country Department on Wednesday.
According to the statement, FSDH will use the line of credit to provide loans to local enterprises in Nigeria.
The 25-million-dollar package would help to reduce the trade finance gap in Nigeria by making financial resources available to small and medium-sized enterprises (SMEs) in the industrial sector.
The bank’s Director-General for Nigeria, Lamin Barrow said the availability of trade finance instruments to drive post-pandemic economic recovery efforts could not be overemphasised.
“Hence, the bank’s financing will help eligible Nigerian SMEs to take advantage of existing and emerging opportunities in the domestic and regional markets,” he said.
Barrow said the COVID-19 pandemic and other factors had led global banks to reduce their correspondent banking relationships in Africa or to exit completely.
Furthermore, the AfDB’s Director for Financial Sector Development, Stefan Nalletamby said the bank was excited about finalising the facility with FSDH.
“We are excited about finalising 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 catalyse more than 200 million dollars value of trade finance transactions across multi-sectors such as agriculture, manufacturing, and energy over the next 3.5 years,” Barrow added.
The bank guaranteed up to 100 per cent of non-payment risks arising from letters of credit and similar trade finance instruments issued by FSDH under the guarantee portion.
This would allow confirmation of trade transactions originated by FSDH, benefiting local import and export businesses.
Overall, the facility would catalyse more than 200 million dollars of trade finance transactions across multi-sectors, including agriculture, manufacturing, and energy over the next three years.
Also, the facility aligned with the AfDB’s Financial Sector Development Policy and Strategy to deepen Africa’s financial systems.
It further aligned with two of the Bank’s High five strategic priorities which were “Feed Africa”, and “Industrialise Africa”.