Les Assemblées annuelles 2019 du Groupe de la Banque africaine de développement se tiendront du 11 au 14 juin 2019 à Malabo, en République de Guinée équatoriale. En savoir plus
Use of Funds: Long-term financing to a new client of the AfDB, Stanbic IBTC Bank PLC of Nigeria ("SIBTC"), for on-lending to small and medium-sized enterprises ("SMEs") operating in various sectors of the Nigerian economy, including agriculture/agribusiness, transportation and manufacturing, as well as for financing renewable energy and energy efficiency ("RE/EE") projects in Nigeria.
Borrower: SIBTC is a medium-sized bank in terms of market share and branch network. It was created in 2007 following the merger between Stanbic Bank Nigeria and IBTC Chartered Bank PLC. Its majority shareholder (52.8%) is the Standard Bank Group ("SBG") of South Africa, Africa's largest banking group by assets and earnings, whose 150+ years of experience is manifested in its reputation, strong credit analysis, underwriting, portfolio management and asset-liability management skills. By leveraging the skills, economies of scale and synergies of being part of the SBG, SIBTC has consolidated its local position as a diversified business with a proven track record.
Financing Plan: Stanbic has a pipeline of projects of USD 296 million. The financing from the AfDB will fund a portion of this pipeline with the balance to be funded with internally generated resources and loans from other DFIs where possible.
Bank's Role: A USD 100 million 7-year line of credit ("LOC") to SIBTC of which USD 75 million will be from the AfDB's own resources while the remaining USD 25 million will be sourced from the Clean Technology Fund ("CTF"), one of the Climate Investment Funds ("CIFs") for which the World Bank acts as a trustee while the AfDB is an implementing agency.
Implementation Arrangements: The LOC agreement will explicitly govern the use of the proceeds of the line of credit to ensure that they are used exclusively for funding SMEs and RE/EE projects. It will also reflect the disbursement triggers, the reporting requirements as well as environmental and social compliance.
Market: The SME sector represents a strategic pillar for Nigeria's quest to modernize and improve its economy while diversifying away from the 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 and despite the various widely documented positive reforms to the banking sector since the crisis in 2009, access to credit for the SMEs is still severely constrained. The proposed LOC will contribute to filling this critical financing gap. In addition, since part of the LOC will be for financing RE/EE projects (with concessional terms), this will contribute to filling the financing gap in the clean energy sector in Nigeria, which is one of the biggest contributors to greenhouse gas emissions in Africa. A supply and demand side approach is urgently needed to alleviate the problem of severe energy deficits in the country albeit with clean energy sources.
Strategic Alignment: The LOC aligns with the renewed strategy of the Government of Nigeria to revitalize the economy by developing its SME and energy sectors. It also aligns with the Bank's country assistance strategy to support private sector led growth in Nigeria as well as the energy sector. Furthermore, it is consistent with the Bank's strategy to support SMEs through sound and reputable financial intermediaries. Finally, it aligns with the Bank's new inclusive and green growth priorities by supporting SMEs and renewable energy and energy efficiency projects.
Commercial Viability: SIBTC is a well-regarded Nigerian bank with strong revenue growth and adequate capitalization. It has a strong risk position underpinned by a strong franchise, prudent underwriting standards and moderate loan growth targets, based on international benchmarks of SBG. It also has a stable core deposit base with strong liquidity indicators. As of 30 June 2012, its total assets stood at USD 3.73 billion and its shareholders' equity was USD 550 million million. Its NPL ratio was at 7%, the same level as at December 2011 and above many of its peers'
Development Outcomes: Expected development outcomes from infrastructure projects include enhanced transportation facilitation and energy access, which are expected to reduce operational costs and boost productivity for people and businesses. It is also expected to facilitate access to social and economic facilities for people in poor urban and rural regions, thereby contributing to inclusive growth. SME financing aims at such development outcomes as job creation, increased government tax revenues and export revenues. The proposed LOC will also underpin national poverty reduction efforts as well as facilitate national development.
Additionality and Complementarity: The proposed LOC will enable SIBTC to gain access to much needed long-term foreign currency funding to generate additional lending to its clients. This funding is still not readily available on terms that would be comparable to what the AfDB can offer. In fact, the maximum available tenor for USD funding for Nigerian banks from commercial sources is 5-years and this is from the Eurobond market which is considered as too expensive as well. Without the AfDB's assistance SIBTC, is likely to delay or drop some of the pipeline projects for lack of appropriate funding. Finally, the proposed intervention will complement the existing efforts to support to the Nigerian SME and energy sectors.
AKINWUMI Emmanuel Ibituase - PIFD0