AfDB approves a financial package of USD 200 million for the Nigerian Export-Import Bank
On May 26th, the Board of Directors of the African Development Bank (AfDB) Group approved a sovereign guaranteed Program, in the amount of USD 200 million, to the Nigerian Export-Import Bank (NEXIM) for financing export-oriented Small and Medium-sized Enterprises (SMEs) in Nigeria. The funds for the Program will be channeled through NEXIM by way of a multi-tranche Line of Credit. A portion of the proceeds of the Program will be used to pay for Technical Assistance for capacity building at both NEXIM and the SMEs.
The SME sector represents a strategic pillar for Nigeria’s quest to modernize and improve its economy, while diversifying away from heavy dependence on the oil industry. According to the Nigerian Federal Office of Statistics, SMEs account for 97% of all businesses in Nigeria, contributing 50% of employment and output in the non-oil sector. This compares unfavorably with many peers, reflecting a relative underperformance of the SME sector in Nigeria. One of the major impediments to SME growth and development is limited access to bank credit. The proposed Program will contribute to fill this gap at a time when the banking crisis in Nigeria has exacerbated the difficulty of SMEs in accessing bank financing.
This Program will contribute to mobilize significant financial resources for Nigeria’s export-oriented SMEs operating in various sectors of the economy ultimately contributing to economic development, employment opportunities, foreign exchange and regional trade integration. Reportedly, NEXIM seeks important economic development achievements, including approximately 55,000 new jobs for its SME clients, USD 1.6 billion in foreign exchange and an overall contribution of almost 7% to non-oil exports, including a 10% share in ECOWAS exports.
This Program aligns with the renewed Federal Government of Nigeria’s strategy to revitalize the economy by developing its SME sector, in particular its export-oriented subsector. It is also well aligned with the AfDB’s priority areas as it will enhance SME access to finance, therefore contributing to their growth and development; contribute to financial sector development; promote sustainable economic growth in Nigeria; promote trade and regional and integration; and support capacity building in the financial and productive sectors, therefore enhancing productivity and competitiveness.
In sum, this Program is expected to generate significant additional lending to export-oriented SMEs at a time when commercial banks are notably reluctant to finance this important sector of the economy.
AfDB’s intervention would complement the efforts of the Federal Government of Nigeria to support SMEs. The technical assistance will contribute to build NEXIM’s capacity and to enhance the bankability of SMEs.