Microfinance - U.S. $ 5 Million Line of Credit to Benefit 1,500 Entrepreneurs and Create 2,500 New Jobs

23 September 2014
Content from a Premium Partner
African Development Bank (Abidjan)
press release

The Board of Governors of the African Development Bank Group (AfDB) through its private sector window approved on September 18, 2014 a USD 5 million line of credit (LOC) equivalent in Naira (NGN) to AB Microfinance Bank Nigeria.

AB Microfinance Bank Nigeria (ABN) is a microfinance institution (MFI) which started in 2008 in Nigeria's Lagos state and offers a broad range of financial services to largely micro, small and medium-sized enterprises (MSMEs). Thanks to a good build-up of its banking activities, it currently has 14 branches and has obtained a license to operate as national MFI, being able to operate across the country. At the end of 2013 AB Microfinance Bank had a loan portfolio of well over 30,000 clients and which is growing further rapidly. An increasingly important number of these consist of SME clients, mostly micro-businesses that 'migrated' thanks to business growth to become small enterprises.

The LoC will support ABN's existing and new SME clients; ABN has a strong pipeline of SME projects seeking funding to expand their business. This includes SMEs from various economic sectors, including trade, commerce, manufacturing, services, construction and transport. The funding will support investments and working capital. Thanks to the longer term financing from the AfDB, it is expected that ABN will also be able to provide longer tenor loans to its SME clients, thus stimulating much needed investments in the SME sector. The LoC is expected to benefit around 1500 entrepreneurs over a 5 year period, of which a sizeable part will be for new SME clients. Initial estimates suggest this may contribute to the creation of at least 2,500 new jobs, in addition to maintaining existing jobs at these enterprises. Since women and youth constitute important clients at ABN, these will also be important beneficiaries from the AfDB LoC. In addition to the LoC, the AfDB will also discuss with ABN the possibility of strengthening ABN's operations through Technical Assistance, thus effectively supporting its further expansion across Nigeria.

AB Microfinance Bank is part the AfDB's Africa SME Program to develop and expand its SME financing activities and provide medium- to long-term financing options to local SMEs.

Approved by the AfDB's Board of Directors in July 2013, the Africa Small and Medium Enterprises (SME) Program is a four-year, US $125-million funding program combined with a US $3.98-million technical assistance package granted by the Fund for African Private Sector Assistance (FAPA), which aims to supporting micro, small and medium enterprises (MSMEs) in Africa. SME Program will provide the necessary longer term finance and a technical assistance package to address a number of constraints faced by around 25 target financial institutions and their SME clients across Africa.

Throughout its ongoing selection process, the SME Program will avail further longer-term resources to thousands of SMEs, including women and youth, thus contributing to job creation, poverty reduction and inclusive growth on the continent.

About the Fund for African Private Sector Assistance

The Fund for African Private Sector Assistance (FAPA) is a multi-donor thematic trust fund that provides grant funding for technical assistance and capacity building to support implementation of the Bank's Private Sector Development Strategy. The Government of Japan, African Development Bank, the Austrian Development Bank and the Government of Austria are the contributors to the fund, which to date has provided US $42 million to 47 projects across the African continent. The FAPA portfolio includes regional and national projects in sectors such as business enabling environment, financial intermediation, infrastructure, trade and micro, small and medium enterprises.

Contacts:

Media: Onike Nicol-Houra, tel. +216 7110 3227, o.nicol@afdb.org

Technical: Robert Zegers, Chief Investment Officer, tel. +225 2026 35 51, r.zegers@afdb.org

Kazuhiro Numasawa, Senior Investment Officer, tel. +225 2026 28 82, k.numasawa@afdb.org

AllAfrica publishes around 500 reports a day from more than 100 news organizations and over 500 other institutions and individuals, representing a diversity of positions on every topic. We publish news and views ranging from vigorous opponents of governments to government publications and spokespersons. Publishers named above each report are responsible for their own content, which AllAfrica does not have the legal right to edit or correct.

Articles and commentaries that identify allAfrica.com as the publisher are produced or commissioned by AllAfrica. To address comments or complaints, please Contact us.