FSDH Merchant Bank gets $35m Financing from IFC to Support Enterprises in Nigeria

Justice Godfrey Okamgba — Fri, 09 Dec 2022 12:27:23 +0000

In collaboration with FSDH, Nigeria’s top merchant banking group, the International Finance Corporation (IFC) has authorized a credit facility worth US$35 million that will be used to increase access to capital for medium-sized firms in the country’s developing economic sectors.

The two facilities are Working Capital Solutions (WCS) ($20 million) and the Global Trade Finance Program ($10 million) (GTFP).

The WCS facility will assist FSDH in lending money to local businesses in Nigeria, particularly those with receivables in foreign currencies. The GTFP is an effective trade finance tool that will give FSDH the ability to support its many Trade Finance clients by giving them access to any beneficiary worldwide.

By making financial resources available to small and medium-sized firms (SMEs) in the industrial sector, it will also aid in closing the trade financing gap in Nigeria. Under the guarantee part, the GTFP will cover up to 100% of the non-payment risks associated with letters of credit and other comparable trade finance instruments issued by FSDH.

This will make it possible to verify trade transactions started by FSDH, which will be advantageous for regional import and export companies. because of the epidemic, Nigeria continues to suffer significant foreign exchange constraints in the economy, and this deal will help to further ameliorate FX liquidity in the market

The International Finance Corporation IFC- a member of the World Bank Group, IFC 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 & 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% to Nigeria’s Gross Domestic Product.

As part of FSDH’s commitment to further support the growth of the emerging sectors, the bank recently announced its operations in new segments – Agriculture, Technology Funding Solutions, Healthcare Financing, and Business Banking and also launched a Women in Business desk that will give female-led & female-founded businesses access to finance, market network and mentorship under its flagship Women in Business Initiative.

In her statement, the Managing Director, of FSDH Merchant Bank, Bukola Smith 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 of 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. Recall that earlier this year, FSDH announced an 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 $ 25 million 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 end extreme poverty, promote economic growth and boost shared prosperity in emerging markets and developing countries.

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AfDB to Support FSDH with $25m to Finance Nigerian SMEs

Joan Aimuengheuwa — Wed, 05 Oct 2022 18:14:03 +0000

Nigeria’s FSDH Merchant Bank has received a $15 million trade finance line of credit and $10 million transaction guarantee approved by the Board of Directors of the African Development Bank Group.

The fund will enable FSDH to work towards ensuring the growth of SMEs in Nigeria, providing loans — which are otherwise inaccessible and in turn causing limitations — to stimulate their progress.

The Bank will also guarantee up to 100% 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.

Overall, the facility will catalyze more than $200 million of trade finance transactions across multi-sectors, including agriculture, manufacturing, and energy over the next three years.

The African Development Bank’s Director General for Nigeria, Lamin Barrow said: “The availability of trade finance instruments to drive post-pandemic economic recovery efforts cannot be overemphasized. Hence, the Bank’s financing will help eligible Nigerian SMEs to take advantage of existing and emerging opportunities in the domestic and regional markets.”

The African Development Bank estimates the trade finance gap for the continent at $82 billion. SMEs and other domestic firms have greater difficulty accessing trade finance than multinational and large local corporates.

Barrow noted that the Covid-19 pandemic and other factors had led global banks to reduce their correspondent banking relationships in Africa or to exit completely.

The facility aligns with the African Development Bank’s Financial Sector Development Policy and Strategy to deepen Africa’s financial systems. It also aligns with two of the Bank’s High 5 strategic priorities: ‘Feed Africa’, and ‘Industrialize Africa.

The Bank’s Director for Financial Sector Development, Stefan Nalletamby said, “We are excited about finalizing this facility with FSDH as having the Bank as a partner will aid FSDH in scaling up its trade finance offerings in Nigeria to help meet the ever-increasing trade finance gap. This partnership is expected to catalyze more than $200 million value of trade finance transactions across multi-sectors such as agriculture, manufacturing, and energy over the next 3.5 years.”

The African Development Bank anchors its current Nigeria strategy on two pillars: supporting infrastructure development and promoting social inclusion through agribusiness and skills development. The Bank believes there are numerous opportunities for the youth and women from its financing and non-lending activities.

The Bank’s current portfolio in Nigeria comprises 53 operations with a total value of $4.5 billion. This is made up of 30 sovereign operations, with a value of $2.7 billion and representing 60% of total commitments. In addition, there are 23 non-sovereign operations valued at $1.8 billion.

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FSDH Merchant Bank gets $35m Financing from IFC to Support Enterprises in Nigeria

AfDB to Support FSDH with $25m to Finance Nigerian SMEs