African Export-Import Bank (Afreximbank) and Nigeria Export-Import Bank (NEXIM) have entered into a Memorandum of Understanding (MoU) to establish a fund that will provide early project preparation financing and technical support services to public and private sector entities.
Under the terms of the MoU signed in February 2021, Afreximbank and NEXIM will collaborate through the Joint Project Preparation Fund to unlock investments into sectors such as manufacturing, agro-processing, solid minerals development, beneficiation services, healthcare, information, and communications technology as well as creative industries.
The 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 the concept stage to bankability by covering the preparation of feasibility studies, project development advisory services, and related costs.
Afreximbank and NEXIM aim to mobilise up to $50 million forms of project preparation fund for investments in Nigeria.
President of Afreximbank, Prof. Benedict Oramah, said: “The execution of this MoU 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 promptly.
“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.”
The Managing Director of NEXIM, Abubakar Abba Bello, said: “We are quite pleased by this opportunity to, once again, partner 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.”