African Export-Import Bank (Afreximbank) and Nigeria Export-Import Bank (NEXIM) have entered into a Memorandum of Understanding (MoU) to establish a Joint Project Preparation Fund that will provide early project preparation financing and technical support services to public and private sector entities operating in Nigeria’s trade sector.
Under the terms of the MoU signed on February 20, 2021, Afreximbank and NEXIM will collaborate through the Joint Project Preparation Fund to 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 Joint Project Preparation Fund will support public and private sector investors by providing technical and financial support services that will result in a steady pipeline of well-structured, bankable projects that Afreximbank, NEXIM and other financial institutions can readily finance.
The Fund will assist the early development process of projects from concept stage to bankability by covering the preparation of feasibility studies, project development and advisory services and related costs.
Afreximbank and NEXIM aim to mobilize up to US$50 million in the form of project preparation funds for investments in Nigeria.
Prof. Benedict Oramah, President of Afreximbank, said: “The execution of this Memorandum of Understanding marks yet another significant milestone in our collaboration with NEXIM. I am particularly pleased that Afreximbank and NEXIM are boldly venturing upstream to help investors develop well-structured projects that meet market standards. 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. 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. We are pleased to be replicating a similar initiative we pioneered in Malawi in partnership with Malawi Export Development Fund (EDF) and look forward to more opportunities across the continent.”
Mr. Abubakar Abba Bello, Managing Director of NEXIM, said: “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. The Fund is designed to mitigate the project selection challenges, particularly amongst the SMEs, towards boosting their contribution to formal exports. This technical expertise will therefore enhance NEXIM’s implementation of its export development programme, especially with regards to the State Export Development and industrialization initiatives. This partnership strongly aligns with the NEXIM’s mandate and strategic plan and will no doubt facilitate its intervention towards attracting critical investments in trade enabling infrastructure and the promotion of value-added exports.”
The Joint Project Preparation Fund constitutes a direct response to complement Nigeria’s initiatives to address the twin challenges of the COVID-19 pandemic and existing economic difficulties associated with the country’s dependence on crude oil revenues, which account for 50% of consolidated government revenues, 30% of banking sector credit and 90% of export earnings.
The partnership aligns with Afreximbank’s broader mandate to develop, facilitate and accelerate intra-African trade.