Boosting Nigerian Trade: Africa Development Bank and FSDH Merchant Bank Support SMEs and Corporates

The African Development Bank, in collaboration with FSDH Merchant Bank, has recently formalised a Trade Finance Facility Agreement totalling $20 million to offer support to small- and medium-sized enterprises (SMEs) in Nigeria’s industrial and manufacturing sectors. This agreement encompasses a $15 million Trade Finance Line of Credit to bolster SMEs and indigenous corporates, as well as a $5 million Transaction Guarantee to facilitate the confirmation of FSDH’s trade finance transactions.

Within this new arrangement, the African Development Bank will provide a guarantee of up to 100% of non-payment risks from letters of credit and similar trade finance instruments issued by FSDH. This serves to immensely benefit local import and export businesses in Nigeria. It is anticipated that over the next three years, this facility will facilitate over $200 million of trade finance transactions across multiple sectors, including agriculture, manufacturing, and energy.

Lamin Barrow, Director General of the African Development Bank’s Nigeria Country Department, has underscored the Bank’s dedication to bridging Nigeria’s trade finance gap by collaborating with strategic partners like FSDH to deliver essential support to SMEs. He has emphasized the significance of the Trade Finance Program established by the Bank in 2013, the goal of which is to provide liquidity and risk mitigation support to financial institutions in Africa for the benefit of SME and local corporate importers and exporters.

Bukola Smith, Managing Director/CEO of FSDH, has expressed her gratitude to the African Development Bank for providing the facility, whilst also pledging to prioritise the disbursement of funds to women-owned businesses. This initiative forms part of the Bank’s efforts to promote diversity and inclusivity in business and finance. Smith has also articulated the commitment to utilising the funds to expand their business and meet the needs of their clients, particularly women-owned enterprises.

It is noteworthy that this is not the first instance in which the African Development Bank has partnered with FSDH Merchant Bank. Back in 2016, the Bank extended a $50 million Trade Finance Line of Credit to FSDH, which proved beneficial in supporting 60 beneficiaries for over 370 trade transactions valued at $375 million.

The aforementioned figures underscore the substantial financial gap in trade finance within Nigeria. The African Development Bank’s active portfolio in Nigeria, comprised of 48 operations valued at $4.4 billion, attests to the bank’s commitment to supporting both the public and private sector in the country.

This new agreement represents a step in the right direction towards enhancing trade and aiding the growth of the Nigerian economy. By providing financial assistance to SMEs and corporate businesses, the African Development Bank and FSDH Merchant Bank are not only fostering economic development, but also creating opportunities for local businesses to prosper and thrive.