The International Finance Corporation (IFC), has approved a credit facility totalling $35 million in partnership with FSDH, Merchant Bank Group, to be used to improve access to finance for medium-scale businesses in the emerging sectors of the Nigerian economy.
The facilities are of two folds; $20 million Working Capital Solutions (WCS) and the Global Trade Finance Program (GTFP).
The WCS facility will help FSDH to provide loans to local enterprises in Nigeria especially those with foreign currency receivables. The GTFP is a functional trade finance tool that would enable FSDH to support its numerous trade finance customers as it will open them up to access any beneficiary across the globe.
A statement from the bank said it will also help to reduce the trade finance gap In Nigeria by making financial resources available to small and medium-sized enterprises (SMEs) in the industrial sector. The GTFP will guarantee up to 100 percent of non-payment risks arising from letters of credit and similar trade finance instruments issued by FSDH under the guarantee portion.
This will allow confirmation of trade transactions originated by FSDH, benefiting local import and export businesses. Since the pandemic, Nigeria continues to suffer significant foreign exchange constraints in the economy, and this deal will help to further ameliorate FX liquidity in the market.
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IFC, a member of the World Bank Group, has established a leading position promoting private sector investment in Africa. In nearly six decades, the Group has invested more than $60 billion in African businesses and financial institutions, with a portfolio that currently exceeds $12 billion. With this deal, the IFC is supporting FSDH’s drive to scale Small and Medium Enterprise – SME financing in the country which according to a 2022 survey by the Small and Medium Enterprises Development Agency (SMEDAN), contributes up to 43.31 percent to Nigeria’s Gross Domestic Product (GDP).
As part of FSDH’s commitment to further support growth of the emerging sectors, the bank recently announced its operations in new segments – Agriculture, Technology Funding Solutions, Healthcare Financing, Business Banking and also launched a Women in Business desk that will give female-led and female-founded businesses access to finance, market network and mentorship under its flagship Women in Business Initiative.
In her statement, Bukola Smith, managing director, FSDH Merchant Bank said “We are committed to our mission of empowering businesses and partnering with them to achieve sustainable success, the IFC facility brings us closer to the actualization of that mission. It avails us the right capital from a reputable partner at such a crucial time. Also, partnering with a credible, leading global funder like IFC is a boost for our credibility and viability as an institution. We are well positioned and on course to reach various segments in the emerging economy through our different interventions in growing sectors like health, agriculture, technology, renewable energy and the female economy. Our commitment is to the success of our clients, partners and ultimately, the growth of the economy at scale; we will not relent.’’
FSDH continues to deliver an excellent track record of innovative financial & investment solutions, providing a one-stop array of financial services to its customers.
Earlier this year, FSDH announced a N3.8 billion agreement with African Guarantee Fund (AGF) to scale up its business portfolio, this deal will further boost the bank’s credibility and enhance its customer base. Also, the bank recently announced a $25million Trade Finance Facility with African Development Bank to provide loan and import finance facilities to growing enterprises in Nigeria.
This partnership reflects IFC’s strategy to engage the private sector as a way to ending extreme poverty, promoting economic growth and boosting shared prosperity in emerging markets and developing countries.