The African Export-Import Bank (Afreximbank) has teamed up with Sterling Bank to introduce an innovative supply chain finance solution named ‘Payables Finance’ in Nigeria.
Vincent Musumba, the Manager of Communications and Events at Afreximbank, announced this partnership in a statement released on Friday.
The statement highlighted that ‘Payables Finance,’ branded as ‘Afreximbank Tradelink,’ falls under Afreximbank’s digital offerings as part of the Africa Trade Gateway (ATG). ATG aims to equip African corporates and commercial banks with digital tools to access market information and connect with buyers and sellers across the continent, thereby facilitating efficient marketing and procurement. Additionally, it streamlines Know Your Customer (KYC) processes and promotes trade payments in local currencies between African countries.
‘Payables Finance’ allows suppliers to secure financing from the banking system by receiving early payment for invoices approved by their corporate buyers. This arrangement enables suppliers to maintain trade credit with their buyers while financing their working capital with the early payments received, thus facilitating business growth. Importantly, the financing cost is tied to the credit rating of the corporate buyers, making this product particularly beneficial for Small and Medium Enterprises (SMEs) facing challenges in accessing bank finance at competitive rates.
The statement emphasized that ‘Payables Finance’ is one of the fastest-growing trade finance products globally, presenting significant opportunities for African businesses. The partnership with Sterling Bank represents an innovative collaboration leveraging the strengths of both institutions to offer a comprehensive market-led solution to Nigerian corporates and their suppliers.
Under this partnership, Afreximbank will provide financing in both US Dollars and Euros, while Sterling Bank will manage financing in Naira, allowing Nigerian suppliers to access financing in both local and foreign currencies according to their needs.
Haytham ElMaayergi, Executive Vice-President of Afreximbank Global Trade Bank, underscored the bank’s commitment to improving access to trade finance in Africa through supply chain finance interventions and capacity building. He noted that the introduction of ‘Payables Finance’ marks the next step in Afreximbank’s roadmap for supply chain finance across Africa, offering African businesses the opportunity to leverage this globally adopted product.
Gwen Mwaba, Director & Global Head of Trade Finance at Afreximbank, highlighted that the launch of ‘Payables Finance’ in Nigeria is the first step in Afreximbank’s plans to introduce the product across Africa in collaboration with leading African financial institutions. Mwaba stressed that the product, supported by world-class technology and a collaborative delivery model, will contribute to reducing the trade finance gap in Africa, particularly for the SME segment.
Chukwuka Onuaguluchi, Ecosystem Banking Head at Sterling Bank, affirmed the bank’s commitment to meeting the trade finance needs of Nigerian corporates and their suppliers. He expressed pride in introducing this much-needed product in partnership with Afreximbank for the benefit of Nigerian businesses.
The statement concluded by highlighting Afreximbank’s provision of US Dollar and Euro financing to businesses in its member countries across Africa and the Caribbean Community (CARICOM) member countries. It outlined plans for similar partnerships in other African countries to expand local currency financing capabilities across the continent gradually. Additionally, the adoption of the ‘Payables Finance’ product will be supported by capacity-building events aimed at increasing awareness of supply chain finance and its benefits. Finally, it mentioned a workshop conducted in collaboration with Woodhall Capital, a leading finance company in Nigeria, to complement the product rollout in Nigeria.
