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AfDB to Lend Nigeria $4.1bn

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The African Development Bank is working on giving Nigeria loan facilities of $4.1bn between now and next year for critical sectors of the economy.

The loans include $1bn at a concessionary interest rate of 1.2 per cent for Nigeria to address the 2016 budget deficit and aid her economic recovery.

The President, AfDB, Dr. Akinwunmi Adesina, disclosed this to State House correspondents on Monday after a meeting with Vice President Yemi Osinbajo and other members of the Economic Management Team at the Presidential Villa, Abuja.

According to the AfDB president, the package includes; $1bn in budget support, $300m to create jobs for 185,000 youths, $250m towards infrastructure development in the North-East, $1m grant to deal with challenges of Internally Displaced Persons, $300m for infrastructure development around Abuja, and $200m for the Transmission Company of Nigeria to improve its facilities, among others.

Stressing that Nigeria was the largest shareholder in the bank, Adesina said that the bank was in the country to offer its support in the face of the current tough times.

He said, “I think the times are difficult but I want to commend the government for being bold in taking the right decisions. I think that the fact that the price of crude oil has gone down is a big challenge, because you have 98 per cent external forex revenue coming from the sector.

“So, it has created calibrations; I’m not going to go into the details of all the problems, but what is important is what we are going to do about it.

“I’m not here to lecture the Nigerian government. I’m here to support very strongly. We have said that we are going to support the Nigerian government with the budget support to be able to deal with some of the fiscal imbalances that they have. We are looking to consider for an award of $1bn to help to deal with that particular deficit.”

Adesina added that the bank would help to revive Nigeria’s economy, especially by deepening the level of diversification in critical sectors such as agriculture, solid minerals and manufacturing.

According to him, the bank is going to provide in total $4.1bn to Nigeria between 2016 and 2017 for power, infrastructure, agriculture and for the private sector, including financing and lending to the Small and Medium-scale Enterprises.

He also said that he expected the AfDB portfolio in the country to grow to $10bn by 2019.

Adesina, a former Nigerian Minister of Agriculture, added, “We also recognise that power is perhaps the most important challenge that is driving inflation in the country. So, we expect in our portfolio this year to invest in a total of 1,400 megawatts of power to focus on the energy sector; and by 2017, we plan to add 1,387 megawatts to the sector.”

He said that the bank also discussed with Osinbajo and the Minister of Finance, Kemi Adeosun, on how to invest in areas of women and youth employment in the country as well as to look for opportunities to support access to finance by supporting the Development Bank of Nigeria with $500m, which will help to provide cheap financing for the real sector that the country wants to grow.

According to him, the bank is also providing $100m to the Bank of Industry to enable it to lend to small and medium-sized enterprises.

Adesina said, “Let me just say that Nigeria is experiencing tough times, but Nigeria is not falling apart; and when people talk about debt crisis, Nigeria is not in a debt crisis. If you look at the fiscal deficit of this country with regard to the GDP, it is about three or 3.5 per cent. It is still way below the five per cent recommended by the Fiscal Responsibility Act.

“If you look in terms of the debt to the GDP ratio for Nigeria, it is 15 per cent. So, there is no debt crisis in Nigeria; what you have is liquidity problem and we are trying for the country to be able to drive down inflation and to be able to make sure we are working with the government to be able to provide incentives for the private sector.

“Because to come out of recession you need more than the government, you need the private sector. So, incentives are very important. The Finance minister talked about a whole lot of incentives that they are going to give and I think that is the right way to go.

“Nigeria will come out of this as a better and more diversified economy than before it went into the recession.”

Also speaking, Adeosun said there was no need to fear over the new loan as it would be put into good use, adding that the government was not over-borrowing.

She added, “And as Dr. Adesina said, we are looking unto them with $1bn budget support; but beyond that, there are lots of loans and initiatives around agriculture, job creation for the youths, solid minerals, women empowerment and women’s access to finance, and access to finance by the SMEs.

“We are not over-borrowing, what we are trying to do is to ensure that this money we are borrowing we use it on the key infrastructure that will drive the economy.”

CEO/Founder Investors King Ltd, a foreign exchange research analyst, contributing author on New York-based Talk Markets and Investing.com, with over a decade experience in the global financial markets.

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Union Bank Announces the Appointment of Aisha Abubakar as Independent Non-Executive Director

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Union Bank of Nigeria Plc (“Union Bank”) has announced a change to the membership of its Board of Directors with the appointment of Ms. Aisha Abubakar as an Independent Non-Executive Director effective 9th September 2021, following the approval of the Central Bank of Nigeria (CBN).

Ms. Abubakar joins the Board of Union Bank following her tenure as Nigeria’s Honourable Minister for Women Affairs and Social Development from 2018 to 2019. Prior to this, she also served as the Honourable Minister of State for Industry, Trade and Investment between 2015 and 2018. At the start of her career, Ms. Abubakar worked at Continental Merchant Bank Ltd., African Development Bank and African International Bank.

She is an accomplished public sector administrator with over three decades of professional experience in Public Service and Pension Administration, Investment Banking, SME Finance/Rural Enterprise Development and Micro-Credit Administration.

Ms. Abubakar is a Fellow of the International Professional Managers Association (IPMA-UK), and the President of the International Experts Consultants (IEC-UK).

Commenting on the addition to the Board, Mrs. Beatrice Hamza Bassey, Union Bank’s Board Chair said: “On behalf of the Board of Directors, I welcome Ms. Aisha Abubakar to the Board. She brings many years of robust experience which will be invaluable in supporting our efforts to steer the Bank forward and deliver on our strategic objectives.”

Also commenting, Chief Executive Officer, Mr. Emeka Okonkwo said: “I am pleased to welcome our new Independent Non-Executive Director, Ms. Aisha Abubakar to the Board. We look forward to drawing from her wealth of experience and fresh perspectives as we continue to execute our vision to be Nigeria’s most reliable and trusted partner.”

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AfDB Approves $50M Trade Finance Deal with Standard Chartered Bank

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The African Development Bank Group has approved a $50m Trade Finance Unfunded Risk Participation Agreement (RPA) for StandardChartered Bank.

This was contained in a statement titled ‘African Development Bank approves a $50m Multinational Trade Finance Risk Participation Agreement facility for Standard Chartered Bank’ published on the bank’s website on Wednesday.

The statement said, “The board of directors of the African Development Bank Group has approved a $50m Trade Finance Unfunded Risk Participation Agreement facility between the African Development Bank and Standard Chartered Bank.”

The essence of this agreement is to promote intra-Africa trade, ensure regional integration and lessen the trade finance gap in Africa.

“The agreement is expected to boost intra-Africa trade, promote regional integration, and contribute to the reduction of the trade finance gap in Africa, in line with implementation aspirations of the African Continental Free Trade Area,”

The bank’s Director for Financial Sector Development, Stefan Nalletamby, stated that “We are excited about finalising this facility with Standard Chartered Bank as it offers us the flexibility to use our strong AAA-rated risk-bearing capacity to increase access to trade finance and boost intra/extra-African trade on the continent, in support of the AfCFTA.

“This partnership is expected to catalyze more than $600m in value of trade finance transactions across multi-sectors such as agriculture, manufacturing and energy over the next three years.”

Director-General of the bank’s Southern Africa region, Leila Mokadem, was quoted to have said, “The advent of COVID-19, coupled with stringent regulatory/capital requirements and Know Your Customer compliance enforcement, has seen many global banks reduce their correspondent banking relationships in Africa, while some are exiting the market altogether.

“There is, therefore, an urgent need for financing to reenergise Africa’s trade, which requires more participation of institutions like the African Development Bank.”

The parties in the agreement are expected to share the default risk on a portfolio of eligible trade transactions originated by African Issuing Banks and indemnified by Standard Chartered Bank.

Beneficiaries of this facility are issuing banks in Africa with the ability to grow their trade finance business has been constrained by inadequate trade confirmation lines from international banks.

Other beneficiaries are small and medium enterprises (SMEs) and domestic firms which rely on these issuing banks to fulfill their trade finance commitments.

The RPA facility is aligned with the AfDB’s High 5 priority goals which are: light up and power Africa, feed Africa, industrialize Africa, integrate Africa, and improve the quality of life for the people of Africa.

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SMEs

Standard Chartered Launches Flexible ‘Smart Business Loan’ Product To Support SMEs

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Standard Chartered Nigeria - Investors King

Standard Chartered on Wednesday launched its Smart Business Loan (SBL) product to support Small and Medium Scale Enterprise (SMEs) in Nigeria.

David Idoru, Head of Consumer, Private and Business Banking, of the bank in Nigeria, said in a statement in Lagos that SBL was an unsecured installment/term loan available to SME clients within key target sectors.

“Qualified SMEs would be able to access up to N20million loan, without providing tangible security/collateral to purchase asset, finance business expansion and other capital expenditure needs.

“This loan was designed to help SMEs meet their short to medium-term needs.

“As a Bank, our purpose is to drive commerce and prosperity in the locations we operate in. This is done through offering cash, lending, trade and wealth management solutions that specifically drive economic growth,” he said.

Idoru said that the bank was constantly looking for ways to ensure SMEs get access to the needed support to enable their businesses to thrive, adding that prior to the product launch, clients were required to provide full collateral cover to access loans from the bank, but SBL had been designed to provide the necessary flexibility to the clients.

“It is accessible to new and existing clients of the Bank with no waiting period, including small and medium scale organisations, who can access up to N20million in loans without collateral for a maximum tenure of two years,” he said.

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