AfDB plans $230m trade finance package for Access Bank Nigeria
The African Development Bank (AfDB) is set to offer a $230 million trade finance package to Access Bank Plc, designed to enhance trade finance activities and provide foreign exchange (FX) liquidity to small and medium-sized enterprises (SMEs) in Nigeria.
The details of this initiative were revealed in a Project Summary Note on Wednesday, which outlined the facility’s structure and the anticipated impact on Nigeria’s trade ecosystem.
The financing package consists of two key components: A $170 million Trade Finance Line of Credit (TFLoC), with a 3.5-year tenure, aimed at providing critical FX liquidity to SMEs and corporate clients engaged in trade; A $60 million Transaction Guarantee (TG), with a three-year tenure, which will enable Access Bank to act as an Issuing Bank (IB), while AfDB offers up to 100 percent risk coverage to Confirming Banks (CBs) involved in trade transactions.
The AfDB’s trade finance package is expected to help address the trade finance gap for Nigerian businesses, ensuring they can meet their obligations and maintain access to international financial markets and global supply chains. Given that many Nigerian SMEs rely on imports for raw materials, equipment, and intermediate goods, access to FX liquidity is crucial for their ongoing operations.
The Project Summary Note underscores that the initiative aligns with Nigeria’s 2020-2024 Country Strategy Paper (CSP) and the AfDB’s Ten-Year Strategy (TYS) for 2024-2033. Specifically, it focuses on economic revitalisation through enterprise development. The package also supports AfDB’s High 5s Agenda, notably its goals to ‘Feed Africa,’ ‘Integrate Africa,’ and ‘Industrialise Africa’ by fostering regional trade and strengthening local industries.
The trade finance facility will be implemented through two distinct legal agreements that will govern the disbursement of funds, repayment terms, and compliance with environmental and social standards.
The document notes that Central Bank of Nigeria (CBN) approval will be required before any disbursements can occur, making this approval a condition precedent for the financing package.
The Transaction Guarantee (TG) component will be executed under an Issuing Bank Agreement between AfDB and Access Bank, which will establish specific eligibility criteria for trade transactions. The Private Sector and Industrial Development Finance (PIFD) department at AfDB will manage the approval process for individual trade finance guarantees.
The $230 million package is expected to yield substantial economic and social benefits, including: Supporting Nigeria’s private sector by addressing trade finance challenges; Promoting women-led businesses, as part of the facility’s funds will be allocated to women-owned SMEs (WSMEs) engaged in trade finance.
Facilitating access to essential goods such as agricultural inputs, food products, and capital goods, particularly during times of dollar liquidity shortages.
Access Bank Plc, one of Nigeria’s leading banks, plays a significant role in the financial sector, with subsidiaries in 15 African countries and operations in France, the United Kingdom, and the United Arab Emirates. The bank also has representative offices in China, Lebanon, and India, positioning it as a key player in global trade facilitation.
The AfDB’s planned $230 million trade finance package for Access Bank Nigeria is a major initiative aimed at tackling forex liquidity constraints and bolstering trade finance in the country.
