The Dutch institution says its largest ever syndicated loan will provide crucial support for beleaguered small businesses facing the country’s difficult economic conditions. BII and Swedfund are among the DFIs backing the facility.
Dutch development bank FMO has arranged a $295m (€270m) syndicated loan facility, to Access Bank, Nigeria’s largest lender by assets, to support underserved SMEs, such as those led by women and young people.
The facility, which is the largest ever syndicated loan arranged by FMO, is backed by a group of prominent development finance institutions (DFIs) and impact investors. They include British International Investment (BII), Belgian DFI BIO, BlueOrchard, FinDev Canada, Finnfund, Norfund, Swedfund and social investor Oikocredit.
The loan will expand Access Bank’s capital reserves and provide access to working capital for SMEs, at a time when many businesses in the country are struggling to stay afloat, battling economic turmoil and rampant inflation. Nigeria was home to almost 40 million micro, small and medium-sized enterprises, providing 86% of employment and contributing 50% of GDP, according to 2022 figures from the World Bank.
One-third of Nigeria’s fast-growing population of 230 million is unemployed. The country has in recent years had to deal with a number of crises, including food shortages and rising prices for energy and staple foods such as rice. Inflation was 34.2% in June, according to the National Bureau of Statistics of Nigeria, which was a jump of 11.4% compared with the same month a year ago.
Michael Jongeneel, FMO’s CEO, said the loan would provide significant support to the sector, notably in underserved segments such as women and young entrepreneurs, improving financial inclusion and empowering local entrepreneurs in the agri-business and other SME sectors.
Access Bank is a commercial bank, which says it has more than 60 million customers and over 700 branches and service outlets in Nigeria, sub-Saharan Africa and elsewhere. It is part of Access Holdings, which has been listed in the Nigerian stock exchange since 1998.
The bank has a long track record of support from FMO and other western financial institutions. Roosevelt Ogbonna, Access Bank’s chief executive officer, said the Tier II Facility agreement underscored “deep-rooted trust” between the bank and the Dutch lender.
“For us at Access, this facility not only enhances our capital reserves but also strengthens Africa’s trade capabilities and export potential. Putting these funds to use, we aim to catalyse growth across various sectors, stimulate business development, create jobs, and deepen financial inclusion,” he said.
BII
Jonny Baxter, British deputy high commissioner in Nigeria said the $50m that BII was committing to the facility reflected the commitment of the UK DFI to deepen economic co-operation with the Nigerian government to boost growth and development opportunities.
“When smaller businesses and women entrepreneurs are economically empowered, their whole community benefits,” Baxter said.
Separately, BII has just published an annual review of its 2023 global spending commitments, with £725m, or 61% of those going to Africa. BII said its Africa portfolio now totals $5.6bn across 812 businesses, providing almost 500,000 jobs directly.
Swedfund
Sweden’s DFI Swedfund said it is committing $30m to the facility. According Kitanha Toure, regional director of West Africa at Swedfund, Access Bank’s strong market presence and focus on small businesses makes it “an effective partner to reach MSMEs in need of financing in Nigeria”.
Swedfund said it expects its investment to contribute to the creation of jobs, as well as improved access to finance for rural and underserved groups, including female- and youth-owned companies.
Founded in 1979, Swedfund aims to reduce poverty through sustainable investments in developing countries. Since its foundation, the institution has granted 690,000 loans to SMEs while 338,000 people are employed in the portfolio companies in which it has invested. Swedfund’s portfolio was valued at SEK10bn (€870m) at the end of last year, according to its 2023 annual report.
