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Signing Ceremony between the African Development Bank and the Intercontinental Bank Plc of Nigeria for a Line of Credit of USD 100 million
Dakar – 13 May 2009- Dr. Mandla S.V. Gantsho, Vice President in charge of Infrastructure, Private Sector and Regional Integration of the African Development Bank Group (AfDB) and Dr. Ersatus Akingbola, CEO of Intercontinental Bank Plc.(ICB) signed today a loan agreement for a Line of Credit (LoC) of USD 100 million to support the Intercontinental Bank Plc. of Nigeria to finance small and medium sized enterprises (SMEs).
The LoC will be used for medium to long-term financing of SMEs in manufacturing, services, and natural-resource projects across Nigeria. These projects will ultimately enhance productive capacity and growth in the country.
This LoC is expected to strengthen the banking sector and have a strong, positive impact on Nigeria’s development. Projects financed by this LoC will (i) create employment in Nigeria’s construction industry, manufacturing, transport, tourism, services and the agribusiness sector; (ii) provide job opportunities in both rural and urban areas, (iii) enhance the transfer of technology and the development of local entrepreneurship and technical skills, (iv) increase the use of local raw materials produced in the rural areas, thus contributing to poverty alleviation; (v) develop critical infrastructure such as roads and energy distribution within Nigeria, (vi) contribute to the balance of payments through exports and (vii) improve the living standards of previously disadvantaged groups such as women and unskilled workers.
Vice President Gantsho underscored the importance of this LoC and stated that “Regional commercial Banks such as the Intercontinental Bank have an important role to play in accelerating Africa’s economic growth, social development and economic integration of our nations. The ADB is committed to supporting these institutions with comprehensive assistance such as the current Line of credit to Intercontinental Bank. We hope that this support will go a long way in strengthening the Intercontinental Bank and enhancing its impact of its operations in Nigeria”.
Dr. Akingbola stated that ‘this is the beginning of a mutually beneficial relationship between the AfDB and Intercontinental Bank Plc and it attests to the confidence international financial institutions have in our bank. We believe development will encourage Nigerian entrepreneurs with bankable projects to approach the bank for funding. This partnership will impact positively on small and medium scale businesses, generate employment, improve capacity utilization and act as a catalyst for economic recovery in Nigeria.’
Mr. Shehu Yahaya, Executive Director representing Nigeria, stated that this LoC will enable the non oil sector to play an important role in propelling growth and assist to cushion Nigeria from the effect of the economic crisis.
The project is well aligned with the Bank’s Country Strategy for Nigeria which is articulated around two pillars: improving the investment environment; and promoting policies that help the poor and advance gender equity. This investment is also consistent with the AfDB’s updated private sector operations strategy, which emphasizes SME development using financial intermediaries as development partners.
Through its role in the financial intermediation process, ICB with the help of this LoC will channel funding to deserving projects, thereby playing a critical role in accelerating growth and creating employment. With this LoC, ICB will be able to expand credit to productive sectors of the economy – in some instances, using new financial instruments that encourage further deepening of the financial sector. Priority will be given to high-growth profitable projects that are well managed, have excellent export earning potential, and a strong SME assistance component.