The Board of Directors of the African Development Bank (AfDB) has approved a loan of $50 million to Nigeria’s First City Monument Bank (FCMB) to be channeled to local enterprises and women-empowered businesses in the agribusiness, manufacturing, healthcare and renewable energy sectors.

According to the AfDB, thirty percent of the funds, which are intended to mitigate effects of the challenging COVID-19 environment, are earmarked for underserved women-empowered businesses.

In addition, the Bank will provide a technical assistance grant of $200,000 through its Affirmative Finance Action for Women in Africa (AFAWA) initiative supported by the Women Entrepreneurship Finance Initiative. The grant will complement the loan by enabling First City Monument Bank to provide non-financial services, including training, and to strengthen its monitoring and reporting functions.

Stefan Nalletamby, the African Development Bank’s Director of Financial Sector Development highlighted the significance of the gesture to the underserved segments of the Nigerian economy.

“The African Development Bank is pleased to support FCMB’s strategy to become a dominant player in addressing the funding needs of women-empowered and local enterprises. This project will extend valuable resources to critical but underserved segments during the ongoing COVID-19 pandemic, with its adverse macroeconomic impacts”.

Role of SMEs in African Economies

Small- and medium-sized firms play significant roles in the development of most economies, especially those in developing countries. According to the African Development Bank, Small- and medium-sized firms account for up to 80% of employment in most African countries. However, the AfDB bemoaned the fact that women-empowered businesses typically face a considerable financing gap. This makes it very difficult for women businesses to survive in these countries. Even when they do, they are unable to match up with the completion from their male counterparts in similar industries.

Meanwhile, Nigeria, Africa’s largest and most populous nation, has been hard hit by the COVID-19 pandemic. Additionally, falling crude oil prices have had a ripple effect on the wider economy. As such, the recent funds will contribute significantly to reviving women-led businesses in the country.

The choice of the FCMB is also strategic because it’s a Nigerian commercial bank with around 5 million customers. It’s total assets as of the end of December 2020 stood around $5 billion.

The Affirmative Finance Action for Women in Africa (AFAWA) initiative

Furthermore, the project aligns with the objectives of AFAWA, which aims to improve gender inclusivity by improving access to finance for women entrepreneurs. The project also advances the Bank’s Ten-Year Strategy and is consistent with three of its High-5 strategic priorities: Industrialize Africa, Feed Africa, and Improve the Quality of Life for the People of Africa. It also aligns with the Nigeria Country Strategy Paper 2020-2024.

The African Development Bank is an implementing partner of the Women Entrepreneurs Finance Initiative. This is a ground-breaking partnership housed in the World Bank Group that aims to unlock financing for women-led businesses in developing countries.