THE African Development Bank has announced plans to provide a $230m trade finance package for Access Bank Plc to support trade finance activities and ease foreign exchange liquidity constraints for small and medium-sized enterprises in Nigeria.
This was contained in a Project Summary Note seen by The PUNCH on Wednesday, detailing the facility’s structure and expected impact on Nigeria’s trade sector.
The package comprises a $170m Trade Finance Line of Credit with a 3.5-year tenure and a $60m Transaction Guarantee with a three-year tenure.
The line of credit will provide much-needed foreign exchange liquidity for Nigerian businesses to settle trade finance obligations and maintain access to international financial markets and global supply chains.
According to the project description, the package involves the “provision of a $230m, Trade
Finance Package (Facility) to Access Bank Plc (“Access Bank” or “ABN”) comprising (i) a $170m Trade Finance Line of Credit with a 3.5-year tenor and (ii) a $60m Transaction Guarantee instrument with a tenor of 3 years.
“The TFLOC will provide critically needed FX liquidity to support SMEs and local enterprises operating in the tradable sectors to settle maturing trade finance obligations and continue to have unencumbered access to international financial markets and global supply chains as they procure critical inputs such as raw material, equipment, and intermediate goods for further local processing.”
The transaction guarantee will allow Access Bank to act as an Issuing Bank for trade finance transactions, while AfDB will provide up to 100 per cent risk coverage to Confirming Banks against non-payment risks linked to letters of credit and other trade finance instruments issued by Access Bank.
The facility is expected to address foreign exchange liquidity challenges faced by Nigerian businesses, particularly SMEs that rely on imports for raw materials, equipment, and intermediate goods.
The Project Summary Note stated that the initiative aligns with Nigeria’s 2020-2024 Country Strategy Paper and AfDB’s Ten-Year Strategy (2024-2033), which prioritises economic growth through enterprise development.
It also supports the bank’s High 5s agenda, particularly its goals to ‘Feed Africa,’ ‘Integrate Africa,’ and ‘Industrialise Africa’ by enhancing regional trade integration and strengthening domestic production.
The trade finance package will be implemented through separate legal agreements outlining fund disbursement, repayment terms, and compliance with environmental and social regulations.
The document stated that Central Bank of Nigeria’s approval will be required before disbursement, making it a condition precedent for the financing package.
The Transaction Guarantee component will be governed by an Issuing Bank Agreement between AfDB and Access Bank, detailing responsibilities and eligibility criteria for trade finance transactions.
The Private Sector and Industrial Development Finance Department at AfDB will oversee approvals for individual trade finance guarantees.
The $230m facility is expected to support private sector growth by easing trade finance constraints for businesses and increasing financing for women-led enterprises, with a portion of the funds set aside for women-owned SMEs engaged in trade.
The financing is also expected to help stabilise supply chains for critical imports, including agricultural inputs, food products, and capital goods, especially amid worsening dollar liquidity shortages in Nigeria
