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Home » AfDB and FSDH Merchant Bank Sign $20M Trade Finance Agreement to Boost SMEs in Nigeria

AfDB and FSDH Merchant Bank Sign $20M Trade Finance Agreement to Boost SMEs in Nigeria

The African Development Bank(AfDB) has signed a $20 million Trade Finance Facility Agreement with FSDH Merchant Bank. 

This deal aims to support small and medium businesses in Nigeria’s industrial and manufacturing sectors.

The Trade Finance Facility Agreement includes a $15 million Trade Finance Line of Credit for SMEs and indigenous corporations. 

Additionally, it includes a $5 million Transaction Guarantee supporting FSDH’s trade finance transactions confirmation.

For the $20 million facility availed to FSDH, the African Development Bank will guarantee up to 100% of non-payment risks from letters of credit and similar trade finance instruments.

This Transaction Guarantee supports local import/export businesses by covering letters of credit, fostering economic growth and stability.

The facility is also expected to drive over $200 million in trade finance transactions over the next three years. 

These transactions will cover sectors such as agriculture, manufacturing, and energy.

Nurturing Growth and Inclusion

Lamin Barrow, the African Development Bank’s Director General, Nigeria Country Department signed the agreement.

He stated the arrangement as proof of the Bank Group’s dedication to filling Nigeria’s trade finance gap, collaborating with partners like FSDH for SME support.

Barrow added,  “Lack of sufficient correspondent banking lines of credit and inadequate access to foreign exchange have been identified as some of the major reasons banks in Nigeria do not finance trade finance requests from their clients. 

“That is why the African Development Bank established a dedicated Trade Finance Program in 2013. 

“Its aim is to provide critical liquidity and risk mitigation support to financial institutions in Africa.

As a result, this will be for the benefit of SME and local corporate importers and exporters.”

Additionally, he noted that in the past ten years, the Bank Group has assisted over 120 financial institutions.

FSDH Managing Director/CEO Bukola Smith expressed gratitude to the Bank for the facility. 

She emphasised the need to prioritise women-owned businesses during fund disbursement.

“We have been looking forward to receiving this financing. Just like we did with the first facility we received from the African Development Bank, we promise that this one will be well utilised because it will help us grow our business and meet the needs of our clients, including women-owned enterprises.”     

The African Development Bank’s current engagements in Nigeria consist of 48 operations, totaling $4.4 billion. 

This includes 24 public sector projects ($2.5 billion) and 24 private sector operations ($1.9 billion).