AfDB approves $230m for Access Bank to boost FX for Nigerian SME

Agency Report

The African Development Bank (AfDB) has announced plans to provide a $230 million trade finance package to Access Bank Plc, aimed at bolstering trade finance activities and enhancing foreign exchange (FX) liquidity for small and medium-sized enterprises (SMEs) in Nigeria.

This development was detailed in a Project Summary Note released on Wednesday, outlining the structure and expected impact of the facility on Nigeria’s trade ecosystem.

The financing package is structured into two primary components: Trade Finance Line of Credit (TFLoC) – $170 million: This facility, with a 3.5-year tenure, is designed to inject much-needed forex liquidity into the Nigerian economy, enabling SMEs and corporate clients engaged in trade to meet their financial obligations effectively.

There is also the Transaction Guarantee (TG) – $60 million which is a 3-year guarantee facility that will enable Access Bank to act as an Issuing Bank (IB), with AfDB providing up to 100 per cent risk coverage to Confirming Banks (CBs) for trade transactions.

This arrangement aims to enhance trust and efficiency in cross-border trade by mitigating counterparty risks.

The trade finance package seeks to address critical challenges facing Nigerian businesses, particularly SMEs that rely heavily on imports for raw materials, machinery, and intermediate goods.

Access to forex liquidity remains a significant hurdle for many enterprises, limiting their ability to engage in international trade and participate in global supply chains.

According to the Project Summary Note, this initiative aligns with Nigeria’s 2020-2024 Country Strategy Paper (CSP) and AfDB’s Ten-Year Strategy (TYS) for 2024-2033, which emphasizes economic revitalization through enterprise development. Additionally, the package 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 implementation of the trade finance facility will be governed by two separate legal agreements, detailing fund disbursement, repayment terms, and compliance with environmental and social regulations.