• Monday, July 15, 2024
businessday logo

BusinessDay

Afreximbank, NEXIM sign $50m deal to boost Nigeria’s trade sector

Nigeria looks to double export revenue leveraging AfCFTA

African Export-Import Bank (Afreximbank) and the Nigeria Export-Import Bank (NEXIM) have signed a Memorandum of Understanding (MoU) to establish a Joint Project Preparation Fund.

This will provide early project preparation financing and technical support services to public and private sector organisations operating in Nigeria’s trade sector.

Signed on 20 February 2021, the MoU provides that Afreximbank and NEXIM will collaborate through the Joint Project Preparation Fund to unlock investments into sectors such as export manufacturing, agro-processing, solid minerals development and beneficiation services, as well as healthcare, Information, and Communications Technology, and creative industries.

The Joint Project Preparation Fund will support public and private sector investors by providing technical and financial support services that will result in a steady pipeline of well-structured, bankable projects that Afreximbank, NEXIM, and other financial institutions can readily fund.

The Fund will assist the early development process of projects from concept stage to bankability by covering the preparation of feasibility studies, project development and advisory services and related costs.

Read Also: Risks facing Africa require urgent IMF special fund – Afreximbank report

Afreximbank and NEXIM aim to mobilise up to US$50 million in the form of project preparation funds for investments in Nigeria.

Benedict Oramah, President of Afreximbank, said, “The execution of this Memorandum of Understanding marks yet another significant milestone in our collaboration with NEXIM. I am particularly pleased that Afreximbank and NEXIM are boldly venturing upstream to help investors develop well-structured projects that meet market standards.”

This intervention is timely and the Fund will play a catalytic role in accelerating the diversification of the Nigerian economy by ensuring a steady flow of bankable projects in priority tradable sectors in a timely manner.

In addition to enhancing bankability, the Fund will, on a case-by-case basis, undertake feasibility studies to assess the viability of accessing markets in the sub-region, thereby promoting intra-African trade under the AfCFTA.

This replicates a similar initiative that Afreximbank pioneered in Malawi in partnership with Malawi Export Development Fund (EDF).

Abubakar Abba Bello, managing director of NEXIM, said his bank was pleased about the partnership opportunity with Afreximbank.

This will resolve the challenges associated with the shortage of credit in Nigeria’s export sector.

The Fund mitigates project selection challenges, particularly amongst the small and medium enterprises having a hard time because their businesses lack proper documentation and contribute little to formal export growth.

This technical expertise will enhance NEXIM’s implementation of its export development programme, especially with regards to the state export development and industrialisation initiatives.

“This partnership strongly aligns with the NEXIM’s mandate and strategic plan and will no doubt facilitate its intervention towards attracting critical investments in trade enabling infrastructure and the promotion of value-added exports,” Bello said.

The Joint Project Preparation Fund constitutes a direct response to complement Nigeria’s initiatives to address the twin challenges of the COVID-19 pandemic and existing economic difficulties associated with the country’s dependence on crude oil revenues.

Oil revenues account for 50 percent of consolidated government revenues, 30 percent of banking sector credit and 90 percent of export earnings.

The partnership aligns with Afreximbank’s broader mandate to develop, facilitate and accelerate intra-African trade.