AfDB $25m Loan For Nigerian SMEs Approved
A lot of small and medium businesses in the country are either closing up or are reducing the cost of running their businesses, this has in turn affect their output. However, in order to arrest this situation, the AfDB loan has become inevitable.
According to a reliable source, a total of $25 million has been approved as AfDB loan, its will be disbursed this;
- $15 million has been place in the trade finance credit line and then
- $10 million for a transaction guarantee
This sum have been approved by the African Development Bank (AfDB) Group for FSDH Merchant Bank, the idea is to ensure that the fund gets to every eligible Nigerian who are owners of both small and medium-sized businesses across the country.
The information further disclosed that the banks Board of Directors also authorized the $25 million package in fulfillment of future business growth, the plan is that there will an increase the critical funding of these small and medium-sized businesses unlike when they lacked the needed fund for their growth, this will help in bridging the trade finance gap in the Nigeria business communities (SMEs).
In accordance with the guarantee section, “the regional bank stated that it would additionally guarantee non-payment risks resulting from letters of credit and other comparable trade finance instruments issued by FSDH up to 100%. The local import and export industries will profit from being able to verify trade transactions that were started by FSDH”.
Over the following three years, it is expected that the loan facility will geometrically increase trade finance transactions in the small and medium business circle to an approximate $200 million or more in various important industries that will enhance economic growth, sectors such as manufacturing, agriculture, and energy.
AfDB loan has ensured that the availability of trade finance instruments which wasn’t available initially is to support these businesses in response to subsidies business hardship and enhance pandemic economic recovery, according to Lamin Barrow, director general of the AfDB for Nigeria. As a result, the financing provided by the Bank would assist qualifying Nigerian SMEs in seizing both current and future market possibilities.
According to statics, an estimated $82 billion trade finance shortfall has been reported in Africa. This has informed the decision by the bank to make available Accessing trade financing from local lenders is a difficult task for SMEs.
According to a statement released by the bank in respect to the proposed loan, the loan facility is in line with the AfDB strategy plan aimed at improving the financial sector development policy and also too further strengthening Africa’s financial system. In addition, the project termed “Feed Africa” and “Industrialize Africa,” remains the Bank’s High strategic priorities.