Afreximbank and Sterling Bank Launch Innovative Payables Finance Solution in Nigeria
In a bold move to revolutionize trade finance in Africa, the African Export-Import Bank (Afreximbank) has teamed up with Sterling Bank to present 'Payables Finance' under the moniker 'Afreximbank Tradelink.' This initiative is a cornerstone of the Africa Trade Gateway (ATG) program, designed to empower African corporates and commercial banks with advanced digital tools. These tools are pivotal for accessing market information, facilitating buyer and seller connections, streamlining procurement, optimizing KYC processes, and promoting trade payments in local currencies.
Payables Finance stands out as a groundbreaking solution, allowing suppliers to obtain early payment for invoices approved by their corporate buyers. This mechanism plays a crucial role in assisting suppliers with working capital financing, thereby bolstering their business growth. Notably, the cost of financing is pegged to the corporate buyers’ credit rating, offering SME suppliers a competitive edge in accessing bank finance.
The partnership combines the strengths of Afreximbank and Sterling Bank, ensuring Nigerian corporates and their suppliers can secure financing in US Dollars, Euros, and Naira, catering to their diverse requirements.
Haytham ElMaayergi, Executive Vice President of Afreximbank Global Trade Bank, accentuated the launch's significance, marking it as a seminal step in Afreximbank’s mission to transform Africa’s trade landscape. He stressed the importance of increasing supply chain finance penetration through strategic financial interventions and capacity building.
Echoing this sentiment, Gwen Mwaba, Director & Global Head Trade Finance at Afreximbank, underscored the initiative's role in shrinking the trade finance gap in Africa, especially for SMEs, aligning perfectly with the bank's long-term strategy.
Chukwuka Onuaguluchi, Ecosystem Banking Head at Sterling Bank, reaffirmed Sterling Bank's dedication to addressing the trade finance needs of Nigerian corporates and suppliers through this collaborative effort.
The initiative gains enhanced functionality through a supply chain finance platform devised by UK-based fintech Demica, significantly boosting Afreximbank’s service capacity across the continent. The Nigerian rollout is complemented by capacity-building workshops for corporate entities and banks, orchestrated alongside Woodhall Capital, aiming to heighten the awareness and adoption of supply chain finance advantages.
Afreximbank, a Pan-African multilateral financial institution, has been at the forefront of financing and promoting intra-and extra-African trade over its 30-year trajectory. The bank has been instrumental in backing the African Continental Free Trade Agreement (AfCFTA), launching the Pan-African Payment and Settlement System (PAPSS), and establishing a US$10 billion Adjustment Fund for AfCFTA participation. As of September 2023, Afreximbank's total assets and guarantees have soared beyond US$33.4 billion, with shareholder funds standing at US$5.8 billion and disbursements exceeding US$104 billion between 2016 and 2023.
Sterling Bank, celebrated for its innovative financial solutions in Nigeria, focuses on sectors crucial to the Nigerian economy's development, including Health, Education, Agriculture, Renewable Energy, and Transportation.
Analyst comment
Positive news. The launch of the payables finance solution by Afreximbank and Sterling Bank in Nigeria will revolutionize trade finance in Africa, empowering African corporates and commercial banks with advanced digital tools. This will enhance market information access, streamline procurement, and promote trade payments in local currencies. The solution will assist suppliers with working capital financing and address the trade finance gap in Africa, particularly for SMEs. The partnership will offer financing in multiple currencies, catering to diverse requirements. This initiative marks a seminal step in transforming Africa’s trade landscape. The supply chain finance platform and capacity-building workshops will further enhance the functionality and adoption of the solution.
