African Export-Import Bank (Afreximbank) has announced its partnership with Sterling Bank to launch the innovative supply chain finance product, 'Payables Finance', in Nigeria. This new offering, branded as 'Afreximbank Tradelink', falls under Afreximbank's digital portfolio within the Africa Trade Gateway (ATG) framework. ATG provides African businesses and banks with digital tools to access market information, connect with buyers and sellers across the continent, streamline procurement processes, facilitate Know Your Customer (KYC) procedures, and promote trade payments within Africa using local currencies.
Payables Finance enables suppliers to obtain financing from the banking system by receiving early payment for approved invoices from their corporate buyers. This allows buyers to maintain trade credit with their suppliers, while suppliers can bolster their working capital by accessing early payments, fostering business growth. The financing cost is tied to the credit rating of the corporate buyers, making it especially advantageous for SME suppliers facing challenges in securing bank finance at competitive rates.
With Payables Finance being one of the fastest-growing trade finance products globally, there is significant potential for African businesses to capitalize on its benefits. The partnership between Afreximbank and Sterling Bank offers a unique and innovative solution, leveraging the strengths of both institutions to deliver a comprehensive market-oriented approach to Nigerian corporates and their suppliers. Under this collaboration, Afreximbank will provide financing in US Dollars and Euros to corporates and banks, while Sterling Bank will manage financing in Naira. This arrangement allows Nigerian suppliers to access financing in both local and foreign currencies based on their needs.
Haytham ElMaayergi, Executive Vice President of Afreximbank Global Trade Bank, hailed the launch as a pivotal milestone in realizing the bank's vision of revolutionizing Africa's trade landscape. He emphasized Afreximbank's commitment to enhancing access to trade finance in Africa through financial interventions and capacity building initiatives. ElMaayergi highlighted the crucial role of the Bank's Factoring Working Group in supporting factoring lines of credit and promoting factoring across the continent in collaboration with other institutions. He affirmed that the introduction of Payables Finance represents the next phase in Afreximbank's roadmap for supply chain finance across Africa.
“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, 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 will contribute towards achievement of the Bank’s strategic objective of reducing the trade finance gap in Africa, particularly for the Small and Medium Enterprises (SMEs) segment.”
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.”
Afreximbank provides both US Dollar and Euro financing to businesses in its member countries across Africa and in Caribbean Community (CARICOM) member countries. 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. The product rollout in Nigeria is complemented by a workshop targeting corporate institutions and banks, in collaboration with Woodhall Capital, a leading finance company in Nigeria.
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