African Export-Import Bank (Afreximbank) and Nigerian Export-Import Bank (NEXIM) have entered into a Memorandum of Understanding (MoU) to establish a Joint Project Preparation Fund.
The agreement aims at providing immediate project preparation financing and technical support services. With services rendered to public and private sector entities operating in Nigeria’s trade sector.
Under the terms of the MoU signed earlier this year, Afreximbank and NEXIM will collaborate through the Joint Project Preparation Fund.
This collaboration is to free-up investments into sectors such as export manufacturing, agro-processing, solid minerals development among others. Other areas earmarked for support are healthcare, Information and Communications Technology, and creative industries.
Rationale for the Collaboration
The Joint Project Preparation Fund intends supporting public and private sector investors. The fund’s coverage will provide technical and financial support services focused on ensuring well-structured, bankable projects that Afreximbank, NEXIM and other financial institutions can readily finance.
Furthermore, the Fund will assist the early development process of projects from concept stage to bankability. This will then cover the preparation of feasibility studies, project development and advisory services and related costs.
Afreximbank and NEXIM have targeted mobilizing approximately $5 million in the form of project preparation funds for investments in Nigeria.
The Joint Project Preparation Fund constitutes a way of complementing Nigeria’s initiatives to address challenges. Challenges associated with the COVID-19 pandemic and prolonged economic difficulties emanating from the country’s dependence on crude oil revenues.
Representatives of the banks share thoughts on the collaboration
Professor Benedict Oramah, President of Afreximbank indicated that:
“The execution of this Memorandum of Understanding marks yet another significant milestone in our collaboration with NEXIM. Particularly pleased that Afreximbank and NEXIM are boldly venturing upstream; Aimed at helping 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; Assessing 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.”
Moreover, Mr. Abubakar Abba Bello, the Managing Director of NEXIM also made the point that:
“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.”
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