African Export-Import Bank (Afreximbank) has partnered with Nigeria-based financial institution Sterling Bank to launch its supply chain finance product ‘Payables Finance’ across Nigeria.
Under this arrangement, Afreximbank will provide financing to corporates and banks in US Dollars and Euros, while Sterling Bank will manage financing in Nigeria.
Payables Finance enables suppliers to access financing from the banking system by obtaining early payment for invoices which have been approved for payment by their corporate buyers.
Buyers continue to receive trade credit from the suppliers, and the suppliers finance their working capital through the early payment received, enabling them to grow their business. The financing cost is linked to the credit rating of the corporate buyers, thereby making this product particularly valuable for SME suppliers who may face challenges in accessing bank finance at competitive pricing.
The supply chain finance product, branded ‘Afreximbank Tradelink’, is one of the bank’s digital offerings under the umbrella of the Africa Trade Gateway (ATG). ATG provides African corporates and commercial banks with relevant digital tools to access market information, connect with buyers and sellers across the continent for efficient marketing and procurement, facilitate Know Your Customer (KYC) processes, and promote trade payments between African countries in local currencies.
Chukwuka Onuaguluchi, ecosystem banking head at Sterling Bank, said: “Sterling Bank is committed to meeting the trade finance needs of Nigerian corporates and their suppliers and we are proud to introduce this much-needed product in partnership with Afreximbank for the benefit of Nigerian businesses.”
‘Improving access to trade finance in Africa’
Haytham ElMaayergi, executive vice president of Afreximbank Global Trade Bank, welcomes the launch as another milestone in realising the Bank’s vision of transforming Africa’s trade: “Afreximbank identified supply chain finance as a solution for improving access to trade finance in Africa and embarked on a journey to increase penetration through financial intervention and capacity building.
“The Bank’s Factoring Working Group has done extremely well to provide lines of credit to support factoring and has actively promoted factoring across the continent in collaboration with other institutions.
“African businesses now have the opportunity to harness the potential of this product, which has been widely adopted globally, at an accelerated pace by learning from the experiences of other regions and using the latest technologies which have been developed.”
Afreximbank also plans to engage in similar partnerships in other parts of Africa to expand local currency financing capability across the continent in a phased manner. Adoption of the product will be supported by capacity-building events to increase awareness of supply chain finance and its benefits.
Gwen Mwaba, director and global head of trade finance at Afreximbank, also added: “The launch in Nigeria is a first step in Afreximbank’s plans to introduce Payables Finance across Africa in partnership with leading African financial institutions. The product will contribute towards the achievement of the Bank’s strategic objective of reducing the trade finance gap in Africa, particularly for the SMEs segment.”
