Foreign Banks renew interest in Nigerian banks, economy
At the backdrop of the current call-back of their funds from Nigerian banks, some foreign financial institutions may have started re-considering their positions as new funds have started flowing into some selected Nigerian banks.Sources close to some of the foreign banks say that though they have reduced the volume of resources available to Nigerian institutions a few banks have been considered for continuous deployment of their funds given their pedigree and yield in the Nigerian market which is more impressive than developed markets.
One of the beneficiary banks, Intercontinental Bank Plc, confirmed this development when it received €50m (US$66million) Developmental Credit Facility window for education and health sectors of the Nigerian economy from the European Investment Bank (EIB) last week.
An official of the bank said some of the foreign banks that had earlier last year withdrawn from Nigeria when they faced credit crunch in their home countries are now coming back to re-invest in Nigerian economy through some selected Nigerian banks.
The EIB facility would be utilized in supporting various projects depending on eligibility and project category but would be specifically for SMEs, venture capital companies, direct loans and Structured Finance Facility (SFF) in the preferred sectors.
In the last five years EIB had invested about EUR179million in various projects in Nigeria through its financial partners.
The new line is to be disbursed to small and medium sized enterprises (SMEs) under Intercontinental Bank’s special product scheme-I-CARE. It is set aside to finance their working capital requirements, capital project financing and debts re-financing, among others.
Under the I-Care product, Intercontinental Bank intends to tailor the cheap and easy access to financial support to existing and new educational and healthcare delivery institutions in the country, with attractive tenor to be utilized in re-financing existing projects.
After the concluded recapitalization exercise of the Nigerian banking industry, EIB signed on two Nigerian banks as financial partners on the basis of their financial strength and project finance profile
The EIB, based in Luxembourg, Holland, is a long-term lending bank of the European Union and its mandate is to contribute towards the integration, balanced development and economic and social cohesion of the European Union member states.
The funding is coming against the backdrop of the fact that investments of between US$25billion and US$30billion would be needed in the next 10 years to meet the demands in the health sector alone in sub-Saharan Africa, according to the International Finance Corporation (IFC).
From 2003-2008, the EIB was expected to channel EUR 3.9billion to projects in African Caribbean and Pacific countries (ACP). The sum of EUR1.7billion was to be lent from the EIB’s own resources while EUR2.2billion would have been provided under a new investment facility, funded by European Union (EU) member states for private sector support, in particular SMEs, supporting the local savings’ markets as well as facilitating foreign direct investment.
