British International Investment (BII), a prominent UK-based Development Finance Institution (DFI) and an impact investor, has unveiled a trade finance facility of $60 million for Access Bank Plc in Nigeria and five of its pan-African subsidiaries. This initiative is designed to enhance the import and export capabilities of local businesses while addressing the shortfall in foreign currency supply.
This program aligns with Access Bank’s strategic objective of facilitating continental trade and further underscores BII’s commitment to improving financing conditions in fragile economies. BII estimates that this loan program will boost African trade volumes by an estimated $90 million.
This agreement highlights BII’s ongoing partnership with Nigeria’s largest commercial bank by assets and plays a pivotal role in providing systemic liquidity, especially during a challenging macroeconomic environment characterised by rising inflation and increased capital costs. This support is particularly crucial in the target markets of the Democratic Republic of Congo, Mozambique, Rwanda, Sierra Leone, and Zambia, where currency values have been facing pressure. Such interventions underscore the crucial role of development finance institutions like BII in offering counter-cyclical support to bolster economic resilience.
The availability of trade credit plays a vital role in global trade, with approximately 80% to 90% of world trade relying on it, according to the World Trade Organisation. Before the COVID-19 pandemic, the trade financing gap in Africa stood at $82 billion, and this gap has been growing. Access Bank aims to make a substantial contribution to trade finance across Africa by expanding the trade portfolios of its subsidiaries.
The instability of the currency in Nigeria has hindered the widespread adoption of dollar-denominated trade loans across African markets, limiting the ability of countries to take advantage of opportunities presented by the African Continental Free Trade Agreement. By specifically targeting economies dependent on imports, this initiative will enhance the availability of US dollar-denominated trade loans, ensuring a consistent supply of crucial commodities and manufacturing inputs needed for the production and export of goods. Ultimately, the goal is to improve livelihoods and preserve jobs for employees in sectors that have limited access to foreign exchange trade loans.
This program, which focuses on companies in the construction, manufacturing, and fast-moving consumer goods (FMCG) sectors, will directly contribute to the achievement of UN Sustainable Development Goals 8 (Decent work and economic growth) and 9 (Industry, innovation, and infrastructure).
Additionally, the initiative will promote inclusivity, aligning with the 2X Challenge, which seeks to advance female participation and leadership in business. Access Bank will deliberately allocate loans to support its gender-related commitments. Furthermore, the facility will contribute to BII’s BOLD program, which is dedicated to making finance more affordable for Black-owned, African businesses.
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