Bridging Africa's trade financing gap
The British International Investment has provided a $60 million trade financing facility to Access bank as part of efforts to narrow the trade financing gap on the continent. Benson Adenuga, the Head of Office and Coverage Director for Nigeria at BII joins CNBC Africa to share more insights on the facility.
Wed, 04 Oct 2023 13:07:52 GMT
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AI Generated Summary
- The importance of trade finance in African economies, addressing the $120 billion trade finance gap, and the strategic collaboration between BII and Access Bank to bridge the gap.
- The significance of counter-cyclical investments by BII in supporting African economies during challenging macroeconomic environments, such as high inflation and FX constraints.
- The emphasis on financing repeat usability, mobilizing other financiers, and focusing on capacity building for small businesses to empower them in import-export activities, ultimately stimulating African trade volumes.
The British International Investment (BII) has recently announced a significant trade financing facility of $60 million to Access Bank. This move is part of the efforts to bridge the trade financing gap on the African continent. Benson Adenuga, the Head of Office and Coverage Director for Nigeria at BII, shared insights on the facility in an exclusive interview with CNBC Africa. Adenuga highlighted the importance of trade finance in African economies, where over 80% are import-dependent, yet the trade finance gap exceeds $120 billion. The collaboration between BII and Access Bank aims to provide support not only in Nigeria but also in five other countries where Access Bank operates. The objective is clear - to bridge the gap in trade finance and support African businesses importing critical raw materials, capital goods, food, and medicines. Adenuga emphasized the timeliness of this facility, considering the challenging macroeconomic environment in Nigeria, marked by high inflation and FX capacity constraints. BII's counter-cyclical investment approach stands out as a crucial driver in providing financial support when other financiers retreat from the market. By offering direct trade loans and risk participation agreements, BII aims to enhance the capacity of partner banks to boost trade finance activities in various sectors. The facility is expected to stimulate African trade volumes by around $90 million, showcasing the potential for sustainable business operations in challenging environments. Adenuga underlined the repeat usability of the funding and the mobilization of other financiers to multiply the benefits for African businesses. Beyond financing, BII focuses on capacity building for small businesses to empower them in import-export activities. The company's strategic initiatives in Ghana, through Growth Investment Partners, offer long-term, local currency financing to SMEs and technical support for business and trade operations. Adenuga emphasized that combining financing with capacity building is essential to maximize the impact of funding and optimize benefits for businesses. The interview shed light on the critical role of trade finance in supporting African economies and fostering intra-Africa trade. BII's partnership with Access Bank signifies a step towards narrowing the trade financing gap and promoting sustainable economic growth across the continent.