British International Investment Partners Access Bank on $60m Trade Finance On-lending Facility for Five African Countries

The British International Investment (BII), the United Kingdom’s Development Finance Institution (DFI) and impact investor has announced a $60 million trade finance facility for Access Bank Plc in Nigeria and five of its pan-African subsidiaries.

The partnership was expected to strengthen import and export capabilities amongst local businesses and plug the foreign currency supply gap.

A statement yesterday, explained that the programme supports Access Bank’s strategy to enable continental trade and deepens BII’s commitment to bolstering financing environments in fragile economies.

BII estimates that the loan programme would stimulate African trade volumes by $90 million.

According to the statement, the agreement reinforced BII’s ongoing relationship with Nigeria’s largest commercial bank by assets and facilitates the provision of systemic liquidity during a period characterised by a challenging macroeconomic environment.

It noted that higher inflation and rising cost of capital have placed downward pressure on currency performance, both domestically and in the programme’s target markets of the Democratic Republic of Congo, Mozambique, Rwanda, Sierra Leone, and Zambia.

“Intervention at this critical juncture underlines the key role of BII, and development finance institutions in general, in extending countercyclical support to build economic resilience.

“Between 80 per cent and 90 per cent of world trade is estimated to rely on the availability of trade credit, according to the World Trade Organisation.

“Prior to the COVID-19 pandemic, that financing gap stood at $82 billion in Africa, and it is increasing. Recognising the positive ripple effects of robust trade flows on economies and livelihoods, Access Bank is aiming to provide 15 per cent of trade finance across Africa, by growing the trade books of its subsidiaries.

“Currency instability in Nigeria can hinder the wider proliferation of dollar denominated trade loans across African markets, constraining countries’ ability to capitalise on opportunities opening up under the African Continental Free Trade Agreement.

“By specifically targeting import dependent economies – many of which will mark the first engagement with BII’s Trade programme – the improved availability of US dollar denominated trade loans will ensure availability of key commodities and manufacturing inputs for the production and export of goods,” the statement added.

It pointed out that the key outcome would be improving livelihoods and preserving jobs for the employees of importers and exporters with limited access to foreign exchange trade loans.

With the loans channelled into companies in construction, manufacturing and FMCG, the programme would directly contribute to the UN Sustainable Development Goals 8 (Decent work and economic growth) and 9 (Industry, innovation and infrastructure).

Simultaneously, it noted that the facility would improve inclusion.

“Qualifying under the 2X Challenge, aimed at strengthening female participation and leadership in business, Access Bank will ensure the allocation of loans is designed deliberately to advance its gender commitments.

“In addition, the facility will contribute to BII’s BOLD programme, dedicated to enhancing the availability of finance at more affordable rates to Black, African-owned businesses,” it added.

Commenting on the transaction, the Executive Director, African Subsidiaries at Access Bank, Seyi Kumapayi, remarked: “Access Bank is on a purposeful mission to scale intra-African trade and position the continent as a viable market for global trade.

“Hence, we are thrilled about the tremendous potential that this trade finance facility with the BII affords us across our pan-African subsidiaries. This strategic collaboration not only strengthens our import and export capabilities but also expands our resources to support local industries – especially women-owned businesses – and ultimately drive economic growth.

“By stimulating trade volumes, we will be playing a key role in fostering long-term economic resilience for the continent, while increasing its attractiveness for increased foreign investments.”

Also, the Director and Head of Trade and Supply Chain Finance at BII, Admir Imami, noted: “Access Bank is a long-standing partner of BII’s and our new partnership is a significant step closer to narrowing the trade finance gap in Africa, particularly in countries such as the DRC and Rwanda. 

“Access to finance in fragile states is hugely constrained, often these countries are buffeted by macroeconomic events far beyond their control. BII and Access Bank share a conviction that building the resilience of these businesses by ensuring affordable access to foreign exchange is vital to keep intra-African trade moving and support the growth of inclusive economies.” 

For his part, Head of Office & Coverage Director for Nigeria, BII, Benson Adenuga said: “Our latest commitment to Access Bank reiterates our assurance to this leading multinational institution and to Nigeria. It comes at a time when Nigeria’s fragile economic situation needs additional funding, particularly from counter cyclical investors like development finance institutions.

“Our funding will help bolster the economy and ensure the availability of staple goods, medicines and food across Africa.”