The African Development Bank (AfDB) has announced a significant $230 million trade finance package for Access Bank Plc, aimed at strengthening trade finance activities and improving foreign exchange (FX) liquidity for small and medium-sized enterprises (SMEs) in Nigeria.
In a Project Summary Note released on Wednesday, AfDB outlined the structure and expected impact of the financing package, designed to address key challenges faced by Nigerian businesses, particularly SMEs. The funding will serve as a vital catalyst for economic growth, enhancing Nigeria’s trade ecosystem and facilitating the flow of critical resources for enterprises engaged in cross-border commerce.
The $230 million package is structured into two main components:
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Trade Finance Line of Credit (TFLoC) – $170 million: This facility, with a tenure of 3.5 years, is set to inject essential forex liquidity into the Nigerian economy. It will empower SMEs and corporate clients involved in trade to meet their financial obligations, thereby boosting the overall stability and efficiency of international trade operations.
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Transaction Guarantee (TG) – $60 million: This 3-year guarantee facility will enable Access Bank to serve as an Issuing Bank (IB) for trade transactions. AfDB will provide up to 100% risk coverage to Confirming Banks (CBs), helping to mitigate counterparty risks and increase confidence in cross-border trade, especially for SMEs.
The trade finance package is a direct response to the pressing challenges faced by Nigerian SMEs, particularly those reliant on imports for raw materials, machinery, and intermediate goods. Limited access to foreign exchange liquidity has been a long-standing issue, restricting these businesses’ ability to fully participate in global supply chains and international markets.
This initiative is fully aligned with Nigeria’s 2020-2024 Country Strategy Paper (CSP) and the AfDB’s Ten-Year Strategy (TYS) for 2024-2033, which emphasizes the importance of economic revitalization through enterprise development. The package also supports AfDB’s High 5s Agenda, particularly in the areas of ‘Feed Africa,’ ‘Integrate Africa,’ and ‘Industrialize Africa,’ by facilitating regional trade and strengthening local industries.
The trade finance facility’s implementation will be governed by two separate legal agreements that will detail fund disbursement, repayment terms, and ensure compliance with environmental and social regulations, guaranteeing that the project remains sustainable and beneficial for Nigeria’s economy.
This partnership is expected to significantly enhance Nigeria’s trade ecosystem, improve the financial standing of SMEs, and foster a more vibrant and integrated regional economy, positioning Nigeria as a key player in Africa’s trade and industrial sectors.
