Nigeria and other African shareholders of the African Export-Import Bank – Afreximbank – will benefit from a $450 million trade finance package approved for the pan-African trade bank by the board of directors of the African Development Bank (AfDB).
Nigeria is a major shareholder of Afreximbank, and hosts the bank’s second branch at Asokoro, Abuja.
The board of directors of AfDB approved on March 29, a three-year $150 million unfunded risk participation agreement (guarantees) and a four-year $300 million trade finance line of credit.
According to Obi Emekekwue of Afreximbank’s external communications, the composite facility will help to expand the bank’s risk bearing capacity for the confirmation of letters of credit, and to support more trade through the provision of increased liquidity to local financial institutions and corporates in Africa.
The project is aligned with AfDB’s High 5 priority goals, which are: light up and power Africa; feed Africa; industrialise Africa; integrate Africa, and improve the quality of life for the people of Africa.
With $9.4 billion asset base, and objective to promote finance and trade within the African continent, and trade between African and other continents, Afreximbank is using the AfDB facility to boost intra-African trade, promote regional integration, and contribute to the reduction of the trade finance gap in Africa.
Given Afreximbank’s commitment to helping African economies diversify their exports, strengthen trade value chains and promote value addition, the facility is believed would contribute to macroeconomic resilience in at least 28 countries.
It will provide financing to more than 100 financial institutions and corporates, and support at least US$2.8 billion of trade in Africa over a 4-year period.
AfDB’s interest in the project stems from its ‘AAA’ rating that will enable Afreximbank enhance its trade finance confirmation capabilities; its ability to avail medium-term liquidity support to Afreximbank to provide appropriate trade finance to local banks and corporates in Africa, and its demonstrable appetite for Africa risk.