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Tunis–18 February 2009- The Board of Directors of the African Development Bank Group (AfDB) approved a US$ 100-million Line of Credit (LoC) to support Nigeria’s Intercontinental Bank Plc. in financing small and medium-sized enterprises (SMEs).
The LoC will be used for medium- to long-term financing for SMEs in manufacturing, services, and natural-resource projects across Nigeria. These projects will ultimately enhance productive capacity and growth in the country.
This LoC will expect 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.
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 have a strong SME assistance component.