The African Development Bank (AfDB) signed on Tuesday, January 29, 2013 an agreement to provide two sovereign-guaranteed multi-tranche lines of credit (LoCs) of respectively US $500 million to Bank of Industry (BOI) and of US $200 million to Nigerian Export-Import Bank (NEXIM) in order to support the modernization 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 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.
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 reorganized in 2001. In line with its mandate to finance industrial development projects, BOI provides term finance and advisory services primarily to indigenous SMEs, to which it devotes at least 85 per cent of its resources
Nigerian Export-Import Bank (NEXIM) 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 SMEs in the non-oil sector.
Ousmane Dore, AfDB's Resident Representative in Nigeria, said: "This AfDB combined program will contribute to mobilize significant financial resources for Nigerian export-oriented SMEs, ultimately contributing to economic development, employment opportunities, foreign exchange and regional trade integration."
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, US $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."
Evelyn Oputu, BOI Managing Director, concluded: "The AfDB's operation, contributing to capital market development and government revenue, is likely to generate significant additional lending to our export-oriented SMEs client at a time when it is sometimes difficult for commercial banks to finance this important sector of the Nigerian economy."