AFDB Grants $350 million lifeline To First Bank Of Nigeria

African Development Bank has granted $350 million loan to First Bank of Nigeria  and FSDH Merchant Bank Nigeria as part ot its effort to boost lending to ensure economic growth in Africa.

Of the amount, $300-million stands as Trade Finance Loans to FBN and and $50-million to FSDH Merchant Bank, representing AfDB’s broader efforts to provide countercyclical support to the Nigerian economy.

According to AfDB, the facility became necessary given the falling commodity prices, which has caused shortages in foreign currency supply and led to unmet demand for trade finance instruments to support Nigeria’s ongoing economic transitions.

It noted that the facilities will support local enterprises involved in import-export activity. “The project will help address critical market demand for trade finance and dollar liquidity by supporting vital economic sectors such as agri-business, chemicals, construction, engineering, food processing, manufacturing and non-traditional exports.

“It will foster financial sector development, enhance regional integration, contributing to increased government revenue generation at a time when the Nigerian economy is facing fiscal pressures and foreign currency liquidity challenges.

“It will enhance support to domestic enterprises whose businesses are being hamstrung by shortages in dollar funding. If fully utilized, counting rollovers, the interventions are expected facilitate about $2.5 billion of export-import related activity in intermediate and finished goods, raw materials and equipment to support economic growth and tax generation over a 3.5-year period,” a statement from the bank said.

It added that the facilities will contribute to the attainment of AfDB’s five operational priorities (the High 5s)- Light up and Power Africa, Feed Africa, Industrialize Africa, Integrate Africa and Improve the quality of life of the people of Africa.

The project also aligns with AfDB’s 10-Year Strategy, particularly the bank’s Financial Sector Development Strategy, which seeks to increase access to financial services for the underserved, and broaden and deepen Africa’s financial systems.

It also aligns with the bank’s Private Sector Strategy by contributing to the improvement of the investment and business climate in Nigeria with medium term trade finance; promoting enterprise development through increased access to appropriate levels of trade finance for SMEs and local corporates.