Access Bank Plc of Nigeria and five of its pan-African affiliates will get a $60 million trade financing credit from British Intl Investment (BII), a United Kingdom Development financing Institution (DFI) major impact investor. Local firms’ ability to import and export will be strengthened, and the shortage of foreign currency will be filled. The program strengthens BII’s dedication to improving the financial climate in weak economies and backs Access Bank’s plan to promote continental commerce. According to BII, the financing program will increase African trade by $90 million.
The arrangement strengthens BII’s ongoing partnership with the biggest commercial bank in Nigeria in terms of assets and makes it easier to provide system liquidity during a time when the macroeconomic environment is difficult. Both nationally and in the program’s target countries of the Democratic nation of Congo, Mozambique, Rwanda, Sierra Leone, and Zambia, higher inflation and increased capital costs have put a strain on currency performance. Intervention at this crucial time highlights the vital function of BII along with developmental finance institutions more broadly in providing countercyclical support to increase economic resilience.
The World Trade Organization, or WTO, estimates that between 80 and 90 percent of global trade depends on the accessibility of trade credit. That finance deficit in Africa was $82 billion before the COVID-19 outbreak, and it is getting bigger. In order to supply 15% of trade finance throughout Africa, Access Bank is expanding the trade books of its affiliates. This is done in recognition of the beneficial benefits that strong trade flows have on economies and livelihoods.
Nigeria’s currency instability may limit the spread of dollar-denominated trade loans throughout African markets, making it more difficult for nations to take advantage of the opportunities created by the African Continental Comprehensive Trade Association.
By focusing on import-dependent economies, many of and this will be engaging with BII’s Trade programme for the first time, the increased accessibility of trade loans denominated in US dollars will guarantee the availability of essential raw materials as well as manufacturing inputs for both the manufacture and export of goods. The main result will be an improvement in the standard of living and the maintenance of employment for workers of exporters and importers who have restricted availability of foreign exchange business loans.
The program will directly help achieve the Sustainable Development Goals of the United Nations 8 (Decent employment and economic growth) especially 9 (Industry, innovation, and infrastructure) by channeling the loans into businesses in the construction, manufacturing, and FMCG sectors.