African Export-Import Bank (AFREXIMBANK) and Nigeria Export-Import Bank (NEXIM) have agreed to jointly mobilize about $50 million as project preparation funds for investments in Nigeria’s export sector.
A Memorandum of Understanding (MoU) was signed recently to establish a Joint Project Preparation Fund would see the two banks provide early project preparation financing and technical support services to public and private sector entities operating in Nigeria’s trade sector.
Under the terms of the MoU signed on February 20, 2021, AFREXIMBANK and NEXIM would 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 would support public and private sector investors by providing technical and financial support services that would result in a steady pipeline of well-structured, bankable projects the two banks and other financial institutions could readily finance.
The Fund would 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.
President of AFREXIMBANK, Benedict Oramah, described t execution of the MoU as another significant milestone in the bank’s 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. The partnership aligns with AFREXIMBANK’s broader mandate to develop, facilitate and accelerate intra-African trade.
“This intervention is timely as 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,” he said.
To enhancing bankability, Oramah said the Fund would, 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 African Continental Free Trade Agreement (AfCFTA). He said the bank was pleased to be replicating a similar initiative pioneered in Malawi in partnership with Malawi Export Development Fund (EDF), saying he looked forward to more opportunities across the continent.
Managing Director of NEXIM, Abba Bello, expressed delight for the opportunity to work with AFREXIMBANK on the financing deal, adding that once again, partnering with the bank in proffering a solution to one of the major challenges that have limited the flow of credit to the Nigerian export sector.
“The Fund is designed to mitigate the project selection challenges, particularly amongst the small and medium enterprises (SMEs), towards boosting their contribution to formal exports.
“This technical expertise will therefore enhance NEXIM’s implementation of its export development programme, especially with regards to the State Export Development and industrialization initiatives,” Bello said.
This partnership, he said, strongly aligns with the NEXIM’s mandate and strategic plan and would no doubt facilitate its intervention towards attracting critical investments in trade enabling infrastructure and the promotion of value-added exports.
The Joint Project Preparation Fund, the NEXIM ND said, 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.
These challenges, he said, account for 50 percent of consolidated government revenues, 30 percent of banking sector credit and 90 percent of export earnings.
AFREXIMBANK is a pan-African multilateral financial institution with the mandate of financing and promoting intra-and extra-African trade. Established in October 1993, AFREXIMBANK is owned by African governments, the African Development Bank (AfDB) and other African multilateral financial institutions as well as African and non-African public and private investors.
The bank specializes in deploying innovative structures to deliver financing solutions to support the transformation of the structure of Africa’s trade, accelerating industrialization and intra-regional trade, thereby sustaining economic expansion in Africa.
On its part, NEXIM was established by Act 38 of 1991 as an Export Credit Agency (ECA) and Export Development Bank owned by the Federal Ministry of Finance and the Central Bank of Nigeria.
The object of the Bank is to provide export finance, export credit guarantee and insurance as well as export trade information and advisory services to expand and diversify the export base towards increased foreign exchange earnings of the country.
NEXIM has a deliberate policy to focus its activities at promoting non-oil exports in order to achieve a positive balance of trade and address the challenges associated with the dominance of oil exports.
The Bank is currently implementing initiatives to unlock opportunities and attract investments towards Nigeria’s effective participation and competitiveness under the AFCFTA framework.