The African Development Bank (AfDB) is facilitating a $230 million trade finance package to Access Bank Plc to support small and medium-sized enterprises (SMEs) in Nigeria, the financial institution has said.
AfDB said the funding was a strategic investment aimed at providing Nigerian SMEs with better access to foreign exchange (forex), supporting trade, and ensuring financial stability.
The $230 million package consists of two key components – $170 million Trade Finance Line of Credit (TFLoC), a three and a half-year loan designed to provide businesses with much-needed forex liquidity, by helping Nigerian SMEs pay for essential imports and keep their operations running smoothly; and $60 million Transaction Guarantee (TG), a three-year guarantee that will protect confirming banks from the risk of non-payment on trade finance transactions.
This will enable Access Bank to offer more trade finance options to businesses without worrying about payment defaults.
The funds will be managed through separate agreements to ensure transparency and accountability: The TFLoC agreement will outline how the funds can be used, repayment conditions, and reporting requirements. It will also include environmental and social responsibility guidelines.
The Issuing Bank agreement for the TG facility will establish the responsibilities of AfDB and Access Bank, and define which transactions qualify for guarantees and how approvals will be granted.
Before funds are disbursed, the Central Bank of Nigeria (CBN) must approve the project, ensuring it complies with local forex regulations.
The funding is expected to bring several benefits to Nigeria’s economy, including: Growth of SMEs; Support for Women Entrepreneurs; and Improved Access to Imports.
