Small and medium enterprises in Nigeria are assured of credit facilities to expand their businesses courtesy of funding by the African Development Bank
| By Maureen Chigbo | Feb. 18, 2013 @ 01:00 GMT
SMALL and medium enterprises entrepreneurs, who are having difficulty getting bank credits to expand their businesses have hope. The Bank of Industry, BOI, and the Nigerian Export-Import Bank, NEXIM, have secured funding from the African Development Bank, AfDB, with which to assist them. On January 29, the AfDB and the two institutions signed an agreement to provide two sovereign-guaranteed multi-tranche lines of credit, LoCs, of $500 million and $200 million to BOI and NEXIM, respectively, to support the modernisation and expansion of export-oriented small and medium enterprises, SMEs.
The LoCs will allow local SMEs to be more competitive, scale up their operations and ultimately create more jobs in Nigeria. The LoCs will include a technical assistance package to strengthen institutional capacity of both the BOI and NEXIM as well as their SME clients. Through this integrated financing package, the AfDB is supporting Nigeria’s efforts towards a more diversified economy away from oil and gas.
The LoCs will supply multi-sector financing to address the challenge that SMEs face in accessing finance in the country. Therefore, export-oriented SMEs will be able to become more competitive, ensure sustainable growth of their operations and generate employment in the Nigerian productive sectors.
Ousmane Dore, AfDB’s Resident Representative in Nigeria, said: “This AfDB combined program will contribute to mobilise significant financial resources for Nigerian export-oriented SMEs, ultimately contributing to economic developm1ent, employment opportunities, foreign exchange and regional trade integration.”
Evelyn Oputu, BOI managing director, said: “The AfDB’s operation, which is contributing to capital market development and government revenue, is likely to generate significant additional lending to our export-oriented SMEs clients at a time when it is sometimes difficult for commercial banks to finance this important sector of the Nigerian economy.”
Robert Orya, NEXIM managing director, added: “Thanks to AfDB’s support through this program, NEXIM seeks important economic development achievements, including approximately 55,000 new jobs for its SME clients, $1.6 billion in foreign exchange and an overall contribution of almost seven per cent to non-oil exports, including a 10 per cent share in Economic Community Of West African States, ECOWAS, exports. This facility will provide a great opportunity for NEXIM to make available concessional long-term funding in pursuance of its strategic objectives of enhancing value-added exports and bolstering the capacity of SMEs for job creation and foreign exchange earnings.”
The Bank of Industry, BOI, is the leading catalyst for industrial development resources in Nigeria and one of the oldest development finance institutions in Africa. It was established in 1964 and reorganised in 2001. In line with its mandate to finance industrial development projects, the BOI provides term finance and advisory services primarily to indigenous SMEs, to which it devotes at least 85 per cent of its resources.
The Nigerian Export-Import Bank is the national export credit agency of Nigeria. It was established by Act 38 of 1991 with a mandate to provide export credit, export guarantee and export credit insurance as well as export advisory services to export oriented companies, particularly the SMEs in the non-oil sector.