In a bid to empower the private sector and support the financing of infrastructure development in Africa’s largest economy, Nigeria, the United Bank for Africa (UBA) has received a $175 million financial package from the Africa Development Bank(AfDB) Group.
The breakdown of this facility shows $100 million as long-term senior debt, $50 million of trade finance as medium-term senior debt and a $25 million risk participation program.
This facility was announced at the weekend by the Pan African development institution having been approved by its Board of Directors.
The long-term senior debt will enhance UBA’s capacity to finance projects in Nigeria in the key sectors of infrastructure, agriculture, and related value chains, as well as in manufacturing, energy, and SMEs.
The facility will be complemented with technical assistance from the Affirmative Action for Women in Africa (AFAWA) initiative to boost access to finance and technical assistance to female-owned SMEs.
The trade finance senior debt will provide UBA with much-needed countercyclical dollar liquidity to support SMEs and local corporates involved in export-import-related activities in the short to medium term.
The unfunded Risk Participation Agreement aims to strengthen UBA UK’s role as a regional confirming bank and by extension expand access to international markets for largely excluded African issuing banks.
The African Development Bank and UBA UK, a subsidiary of UBA Group, will share 50/50 the default risk on a portfolio of eligible trade transactions originated by African issuing banks and indemnified by UBA UK.
Speaking after the Board’s approval, AfDB’s Group Director General for Nigeria, Lamin Barrow, said, “We are pleased to support UBA with this package, which aligns with four (4) of the African Development Bank’s High five priorities namely Light up and Power Africa, Feed Africa, Integrate Africa, and Industrialise Africa.”
“This intervention will address unmet demand for trade finance in Nigeria and Africa respectively by providing medium term finance to support exports and the importation of intermediate goods required to sustain vital economic sectors. It will also unlock stable and affordable funding for SMEs who are the engine of Nigeria’s economic growth and employment generation,” African Development Bank Acting Director for Financial Sector Development, Ahmed Attout, said.
Commenting on the facility which he described as timely, UBA’s Group Managing Director/CEO, Oliver Alawuba, said “This facility will further deepen the bank’s support, which has been very considerable, to the critical sectors of Nigerian economy and especially to Women-owned businesses and small and medium enterprises, which we consider as the engine of any country’s economic development.”
UBA Plc is a leading pan-African financial services institution with a global footprint. With a history of over seven decades, UBA provides corporate, commercial, SME, consumer, and retail banking services to more than 35 million customers, served through diverse channels.
Headquartered in Lagos, Nigeria, UBA has operations in 20 African countries. It also has a presence in the UK, the US, France, the Cayman Islands and the United Arab Emirates.
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