NEXIM Bank signs agreement to increase bankable projects in trade sector
NEXIM Bank and Afreximbank said they aim to mobilise up to $50 million in the form of project preparation funds for investment in Nigeria.
The African Export-Import Bank (Afreximbank) and the Nigerian Export-Import Bank (NEXIM Bank) have signed a Memorandum of Understanding (MoU) to establish a Joint Project Preparation Fund to expand the pipeline of well-structured projects in Nigeria to boost investment and trade. The fund will provide public and private sector entities in the country's trade sector with project preparation technical and financial support services.
According to a joint statement sent to Financial Nigeria on Wednesday by NEXIM Bank – the export credit agency of the Federal Government – the new fund will 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 MoU, which was signed on February 20, 2021, is in line with NEXIM Bank’s mandate to promote the diversification of Nigeria’s non-oil exports. The bank also said the partnership will strengthen its intervention towards attracting critical investments in trade-enabling infrastructure and the promotion of value-added exports.
“We are quite pleased by this opportunity to, once again, partner with Afreximbank in proffering a solution to one of the major challenges that have limited the flow of credit to the Nigerian export sector," said Abubakar Abba Bello, Managing Director of NEXIM Bank. "The Fund is designed to mitigate the project selection challenges, particularly amongst the SMEs, towards boosting their contribution to formal exports."
Project preparation is the process of analysing and developing projects from the concept stage to when they are ready for implementation. The process spans activities such as conceptualization, feasibility analysis, deal structuring and financing. The Joint Project Preparation Fund will assist investors in the entire process by covering the related costs to ensure the projects are bankable and ready for financing from Afreximbank, NEXIM Bank and other financial institutions.
“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,” said Benedict Oramah, President of Afreximbank. “In addition to enhancing bankability, the Fund will, 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 AfCFTA.”
Afreximbank and NEXIM Bank said they aim to mobilise up to $50 million in the form of project preparation funds for investment in Nigeria. The fund was designed as a direct response to complement various initiatives by the Nigerian government to tackle COVID-19 shocks and existing economic difficulties associated with the country’s dependence on crude oil revenues.
The Joint Project Preparation Fund is also in alignment with other initiatives being implemented by NEXIM Bank to unlock opportunities and attract investments towards Nigeria’s effective participation and competitiveness under the African Continental Free Trade Area (AfCFTA).
The Cairo-headquartered Afreximbank said the project preparation fund was earlier pioneered in Malawi through a partnership with the Malawi Export Development Fund (EDF), a development finance institution (DFI) in the country. The bank aims to replicate the initiative across the continent.
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