African Export-Import Bank (Afreximbank) has cemented a partnership with Sterling Bank to introduce the innovative supply chain finance product ‘Payables Finance’, in Nigeria.
This product, branded as ‘Afreximbank Tradelink,’ is one of Afreximbank’s digital offerings under the umbrella of the Africa Trade Gateway (ATG).
ATG provides African corporates and commercial banks with relevant digital tools to access market information, connect with buyers and sellers across the continent for efficient marketing and procurement, facilitate Know Your Customer (KYC) processes, and promote trade payments between African countries in local currencies.
Payables Finance enables suppliers to access financing from the banking system by obtaining early payment for invoices which have been approved for payment by their corporate buyers.
The buyers continue to receive trade credit from the suppliers, and the suppliers finance their working capital through the early payment received, enabling them to grow their business.
The financing cost is linked to the credit rating of the corporate buyers, thereby making this product particularly valuable for SME suppliers who may face challenges in accessing bank finance at competitive pricing.
Payables Finance is the fastest growing trade finance product globally and there is an enormous opportunity for African businesses to benefit from it.
The partnership with Sterling Bank is a unique and innovative arrangement which leverages the complementary strengths of both institutions to provide a comprehensive market-led solution to Nigerian corporates and their suppliers.
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Under this arrangement, Afreximbank will provide financing to corporates and banks in both US Dollars and Euros while Sterling Bank will manage financing in Naira.
Suppliers of Nigerian corporates can thus benefit from financing in both local and foreign currency as per their requirements.
Haytham ElMaayergi, executive vice president of Afreximbank Global Trade Bank, welcomed the launch as another milestone in realising the Bank’s vision of transforming Africa’s trade.
He said:
“Afreximbank identified supply chain finance as a solution for improving access to trade finance in Africa and embarked on a journey to increase penetration through financial intervention and capacity building.
The Bank’s Factoring Working Group has done extremely well to provide lines of credit to support factoring and has actively promoted factoring across the continent in collaboration with other institutions.”
