The International Finance Corporation (IFC) has extended a $40 million credit facility to Nigeria’s Union Bank to spur trade as the key African country is beset with its worst downturn in nearly 40 years.
Union Bank said the credit facility, which comes under the IFC’s Global Trade Finance Program, will help it establish a working relationship with hundreds of banks across the world taking part in the IFC program.
That, in turn, will boost the ability of Nigerian businesses to obtain loans and credit while also reducing collateral requirements, the bank and the IFC noted in a press release.
The larger, macro-economic goal, the bank noted, is to keep trade credit flowing into the Nigerian market to ease the purchase of critical imports while also enabling the country’s exports to bring in badly needed foreign currency.
The Nigerian economy is expected to shrink by 3 percent by the end of the year, according to a forecast by Fitch Ratings, the worst downturn in 37 years.
The economy of Africa’s largest country is expected to see a modest rebound in 2021, with growth of 1.3 percent, provided the coronavirus pandemic eases and there are improvements oil market on which the country depends, according to Fitch.
“Keeping trade moving is essential to growth and job creation, especially during the challenging economic times we are living through today,” said Eme Essien Lore, IFC’s country manager for Nigeria, in the press release.
“We welcome Union Bank to IFC’s Global Trade Finance Program and value a partnership that will make a positive impact on Nigeria’s economy,” the IFC executive said.
The deal also comes amid growing interest in digital payment options in Nigeria as the coronavirus pandemic reshuffles the financial landscape in a country where cash has long been king, Jay Alabraba, co-founder of Nigerian payments platform Paga, recently told Karen Webster.
The company has seen a surge in sign-ups since the pandemic hit, according to Paga’s Alabraba.
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