Adedapo Adesanya
By Adedapo Adesanya
The African Export-Import Bank (Afreximbank) has partnered with Sterling Bank to introduce an innovative supply chain finance product called Payables Finance in Nigeria.
This product, branded as Afreximbank Tradelink, is one of Afreximbank’s digital offerings under the Africa Trade Gateway (ATG), which 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.
According to a statement, Payables Finance will enable suppliers to access financing from the banking system by obtaining early payment for invoices approved for payment by their corporate buyers.
The 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 small and medium enterprise (SME) suppliers who may face challenges in accessing bank finance at competitive pricing.
“The partnership with Sterling Bank is a unique and innovative arrangement which leverages the complementary strengths of both institutions to provide a comprehensive market-led solution to Nigerian corporates and their suppliers,” the statement noted.
Under this arrangement, Afreximbank will fund corporates and banks in US Dollars and Euros while Sterling Bank will manage financing in Naira. Suppliers of Nigerian corporates can then benefit from financing in both local and foreign currency as per their requirements.
Mr Haytham ElMaayergi, Executive Vice President of Afreximbank Global Trade Bank, welcomed 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.”
He added that the introduction of Payables Finance is the next step on the bank’s roadmap for supply chain finance across Africa.
The launch in Nigeria will be followed by similar partnerships in other African countries 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.
“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,” he explained.
Commenting on this partnership, Mrs Gwen Mwaba, Director & Global Head Trade Finance, Afreximbank said: “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, which will deploy world-class technology and a collaborative delivery model and contribute towards the achievement of the bank’s strategic objective of reducing the trade finance gap in Africa, particularly for the Small and Medium Enterprises (SMEs) segment.”
Adding his input, Mr 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.”
