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The African Development Bank (AfDB) has announced a $230 million trade finance facility for Access Bank Plc to strengthen trade finance activities and mitigate foreign exchange liquidity constraints for small and medium-sized enterprises (SMEs) in Nigeria.
The funding is designed to bolster Nigeria’s trade sector by enhancing financial support for businesses engaged in cross-border transactions.
Facility Structure and Objectives
The trade finance package consists of two components:
- A $170 million Trade Finance Line of Credit (TFLOC) with a 3.5-year tenure to provide much-needed foreign exchange liquidity, enabling Nigerian businesses to meet trade finance obligations and maintain access to global financial markets.
- A $60 million Transaction Guarantee with a three-year tenure, allowing Access Bank to serve as an Issuing Bank for trade finance transactions. The AfDB will provide up to 100% risk coverage to Confirming Banks, mitigating non-payment risks associated with letters of credit and other trade finance instruments issued by Access Bank.
This initiative is expected to help Nigerian enterprises—especially SMEs—secure critical imports, such as raw materials, equipment, and intermediate goods, ensuring seamless participation in international supply chains.
Strengthening Nigeria’s Trade Ecosystem
The trade finance facility aligns with Nigeria’s 2020-2024 Country Strategy Paper and the AfDB’s Ten-Year Strategy (2024-2033), both of which prioritize private sector growth, enterprise development, and economic diversification. It also supports the AfDB’s High 5s agenda, particularly its objectives to ‘Feed Africa,’ ‘Integrate Africa,’ and ‘Industrialise Africa.’
By facilitating trade finance, the package will contribute to regional trade integration, enhance domestic production capacity, and improve access to essential inputs needed for industrial and agricultural development.
Regulatory and Implementation Framework
Before fund disbursement, the Central Bank of Nigeria’s (CBN) approval will be required as a condition precedent for financing. The transaction guarantee will be governed by an Issuing Bank Agreement between AfDB and Access Bank, specifying eligibility criteria and compliance obligations. The Private Sector and Industrial Development Finance Department at AfDB will oversee the approval process for individual trade finance guarantees.
The funding structure ensures adherence to environmental and social regulations while outlining repayment terms through legally binding agreements.
Supporting Private Sector Growth and Women-Led Enterprises
Beyond easing foreign exchange constraints, the $230 million facility is set to boost private sector financing, with a portion earmarked for women-owned SMEs engaged in trade. This allocation aligns with broader efforts to promote financial inclusion and gender equity in Nigeria’s economic landscape.
Additionally, by stabilizing supply chains for essential imports—such as agricultural inputs, food products, and capital goods—the facility aims to cushion businesses against the worsening dollar liquidity shortages affecting Nigeria’s trade ecosystem.
This strategic intervention underscores AfDB’s commitment to fostering economic resilience, supporting local enterprises, and strengthening Nigeria’s position in global trade.
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