Dutch Bank, FCMB sign $25m agreement to fund entrepreneurs

(Credit: AIT)

The Dutch Entrepreneurial Development Bank FMO, in collaboration with the European Union, has signed a $25 million Nasira Guarantee Agreement with First City Monument Bank (FCMB) to boost funding for excluded entrepreneurs in Nigeria.

Nasira is an automated loan portfolio guarantee programme introduced by FMO in 2020 in partnership with the EU. It covers a large part of entrepreneurs’ credit risks.

Myriam Ferran, deputy director-general of the Directorate of International Partnerships (INTPA), European Commission, disclosed this during the signing ceremony on the sidelines of the ninth Nigeria EU Business Forum.

According to Ms Ferran, the guarantee will enable FCMB to expand its funding to agricultural, youth, and women-owned small and medium enterprises without requiring collateral, targeting a client group typically deemed too risky by banks.

“We are very happy to see that the EU investment instruments, such as the European Fund for Sustainable Development (EFSD+) guarantees, have come to Nigeria,” said Ms Ferran. “It plays a catalytic role in leveraging private sector investments for the benefit of the real sector, economic diversification and employment creation, especially for youth and women.”

Ms Ferran said that NASIRA, funded by the European Commission, is one of FMO’s most innovative programs.

She said, “Often, the FMO guarantee that effectively replaces the collateral is not fully utilised, demonstrating that these entrepreneurs, primarily women and young people, are not riskier than others. Job creation in Nigeria, home to 220 million people and the largest population in Africa is critical.

“The country faces severe economic challenges, including high unemployment. Providing small loans to typically high-risk groups will enable them to start and expand their businesses, offering a means of income for themselves and their families.”

It plays a catalytic role in leveraging private sector investments for the benefit of the real sector, economic diversification and employment creation, especially for youth and women.

Ms Ferran disclosed that, in addition to the $25 million Nasira guarantee, FMO would support FCMB with a syndicated loan of $60 million, $20 million through FMO. She said FCMB would also receive $30 million through the European Financing Platform on behalf of BIO, DEG, EIB, FINNFUND, Proparco, and SWEDFUND and USD 10 million through FMO Investment Management.

She said the loan is dedicated to growing the existing FCMB loan portfolio of small and medium-sized entrepreneurs (SMEs). The transaction also contained a technical assistance (TA) programme.

Ms Ferran said that through the TA initiative, FCMB and FMO would select and support 15 scalable early-stage agri-tech businesses in Nigeria. She said that FMO and FCMB would identify 15 disruptive business models that addressed pressing problems in the agricultural sector, contributing to SDG2: zero hunger and food security.

In a related development, the European Union and Eurocham Nigeria (the European Business Chamber) signed a 300,000 Euro grant agreement to support the Chamber’s further development.

According to Ferran, the substantial financial contribution underscores the EU’s commitment to fostering strong economic and commercial ties with Nigeria.

She said the grant aimed to enhance Eurocham’s capacity to better serve its members, promote European business interests in Nigeria, and contribute to overall mutual economic growth and development.

Yomi Onifade, CEO of Allianz Nigeria and Frederik Klinke, CEO of APM Terminals, vice-presidents of Eurocham Nigeria, who were present at the signing of the grant agreement, expressed gratitude for the continued support from the EU Delegation.

They said the funds would be allocated to various developmental projects, including capacity-building programs, enhancement of member services, and initiatives to improve Nigeria’s business climate. (NAN)

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