| Project Detail |
This facility will provide a Partial Portfolio Guarantee (PPG) to Wema Bank plc to support financing eligible investments by SMEs in Nigeria. The facility will be dedicated to SMEs owned or managed by women and/or young people, and to start-ups. This operation will contribute to inclusive growth and innovation in Nigeria, the most populous country in Africa, a key EU partner in the region, a significant market for EU exports, and a strategic partner of Europe in terms energy. It is conducted under the SME Access to Finance Initiative supported by the European Fund for Sustainable Development (EFSD) under the EUs External Investment Plan. The proposed risk sharing facility is fully aligned with the EUs 2021-2027 Nigeria Multi-Annual Indicative Programme (MIP) and with Nigerias Financial Inclusion Strategy.
Objectives
This is one of the last operations presented under the EU Mandate EFSD Guarantee "Access to Finance Initiative", a mandate received from the European Commission which covers capped guarantees provided by EIB to selected financial intermediaries for portfolios of SME financing. Following the outbreak of the Covid-19 pandemic crisis, and in order to provide an immediate response to alleviate the socio-economic consequences linked to it in the EU Neighbourhood and Sub-Saharan Africa, the EC proposed to redirect and accelerate some of the operations under the EFSD Guarantee by increasing and prioritising those supporting the SME sector. Against the backdrop of heightened risk and vulnerability in the geographies targeted by the SME Access to Finance Initiative, at the end of 2023 the European Commission and EIB agreed to extend the enhanced guarantee to all eligible SMEs in priority areas. Its main added-value lies in the fact that SMEs operating in Nigeria face various obstacles and uncertainty, making it almost essential to go through the intermediary of a reputable commercial bank, as opposed to directly lending to SMEs or through a Government-linked entity. The proposed operation is a partnership with Wema Bank to bolster investments by Small and Medium Enterprises (SMEs) in Nigeria. The range of applicable investments is as defined in the Term Sheet. The EIB will commit to sharing risks over an extended duration, enabling Wema Bank to expand its lending activities in underserved market segments, securing loans to SMEs with an 80% guarantee, up to 20% of a portfolio of maximum EUR 50,000,000. This intervention aims to enhance inclusive growth, innovation, and access to finance for SMEs owned or managed by women and/or youth, and for start-ups.
Comments
This request is time-sensitive. I am sorry about the time pressure, I have been caught up by the calendar myself due to some mandate-related issues that are forcing us to bring forward this operation. I am planning to start DG consultation on Friday and prior to that my Director would have to review my entire file, including the AIM under discussion. Thank you for your prompt attention to this request.
Sector(s)
Credit lines - Credit lines
Proposed EIB finance (Approximate amount)
EUR 8 million
Total cost (Approximate amount)
EUR 50 million |
