By Amaka Abayomi

The Board of Direc-tors of the African Development Bank (AfDB) Group has approved sovereign guaranteed programmes of $200m and $500m to the Nigerian Export-Import Bank (NEXIM) and Bank of Industry (BOI) respectively for financing export-oriented Small and Medium-sized Enterprises and domestic-oriented Small and Medium-sized Enterprises (SMEs) in Nigeria.

According to AfDB, the funds for the programmes will be channeled through NEXIM and BOI by way of a multi-tranche Line of Credit, and a portion of the proceeds of the programmes would be used to pay for Technical Assistance for capacity building at NEXIM, BOI and the SMEs.

Data from the Nigerian Federal Office of Statistics, the SME sector represents a strategic pillar for Nigeria’s quest to modernize and improve its economy in its bid to diversify from heavy dependence on the oil industry.

Identifying limited access to bank credit as the major barrier to SMEs’ growth, the Nigerian Federal Office of Statistics said SMEs account for 97 per cent of all businesses in Nigeria, contributing 50 per cent of employment and output in the non-oil sector.

The funds for the programme will be deployed by BOI towards systematic poverty reduction, employment generation, wealth creation through entrepreneurial, social and economic development.

The financing will be extended for loans to SMEs as well as for capital projects in the form of cluster and infrastructure development.

The associated Technical Assistance package will contribute to strengthen capacity at both BOI and SMEs.

Equally, the $200m sovereign guaranteed programme for NEXIM will contribute to mobilize significant financial resources for Nigeria’s export-oriented SMEs operating in various sectors of the economy, thereby contributing to economic development, employment opportunities, foreign exchange and regional trade integration.

Reportedly, NEXIM seeks important economic development achievements, including approximately 55,000 new jobs for its SME clients, $1.6bn in foreign exchange and an overall contribution of almost 7 per cent to non-oil exports, including a 10 percent share in ECOWAS exports.

These programmes align with the renewed Federal Government of Nigeria’s strategy to revitalize the economy by developing its SME sector and its export-oriented subsector.

It is also well aligned with the AfDB’s priority areas as it will enhance SME access to finance, therefore contributing to their growth and development; contribute to financial sector development; promote sustainable economic growth in Nigeria; promote trade and regional and integration; and support capacity building in the financial and productive sectors, therefore enhancing productivity and competitiveness.