Towards enhancing its support to the private sector and financing of infrastructure development in Africa’s largest economy, Nigeria, the United Bank for Africa (UBA) has received a $175 million financial package from Africa Development Bank(AfDB) Group.
This facility comprises a $100 million in long-term senior debt, $50 million of trade finance medium-term senior debt and a $25 million risk participation program. This 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 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 women 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 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 Plc 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 approval, AfDB’s group director general for Nigeria, Lamin Barrow said: “We are pleased to support UBA with this package, which aligns with four 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 exports² 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,” Ahmed Attout, African Development Bank Acting Director for Financial Sector Development, further said
Also commenting, the Group managing director/CEO, UBA, Oliver Alawuba said: “this facility will further deepens our 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.”
by BUKOLA ARO-LAMBO
