The Africa Development Bank (AfDB) Group has awarded the United Bank for Africa (UBA) a $175 million financial package to strengthen its backing of the private sector and finance Nigeria’s infrastructure development.
According to a statement from UBA, this facility includes a $25 million risk participation programme, $50 million in medium-term senior debt for trade finance, and $100 million in long-term senior debt.
The long-term senior loan will improve UBA’s ability to fund projects in Nigeria that fall under the main categories of manufacturing, energy, SMEs, infrastructure, and agriculture and associated value chains.
The Affirmative Action for Women in Africa (AFAWA) programme will provide technical assistance to supplement the facility, thereby increasing women-owned small and medium-sized enterprises’ access to financing and technical support.
UBA will receive much-needed countercyclical dollar liquidity from the trade finance senior loan in the short to medium term to support local corporates and SMEs engaged in export-import-related activities.
By strengthening UBA UK’s position as a regional confirming bank, the unfunded risk participation agreement seeks to give African issuing banks—who have been mainly shut out of international markets—more access to global markets.
AfDB and UBA UK, a UBA PLC affiliate, will split the default risk equally between them on a set of qualifying trade transactions that were started by African issuing banks and for which UBA UK will provide indemnification.
“We are pleased to support UBA with this package, which aligns with four of the AfDB’s high five priorities namely Light up and Power Africa, Feed Africa, Integrate Africa, and Industrialise Africa,” stated Lamin Barrow, the Group Director General for the AfDB in Nigeria, following the Board’s approval.
“This intervention will provide medium-term credit to support exports and the importation of intermediate products essential to sustain important economic sectors, thereby addressing unmet demand for trade finance in Nigeria and Africa, respectively. The AfDB’s Acting Director for Financial Sector Development, Ahmed Attout, stated, “It will also unlock stable and affordable funding for SMEs, who are the engine of Nigeria’s economic growth and employment generation.
“This facility will further deepen our support, which has been very considerable, to the critical sectors of the 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,” added Oliver Alawuba, Group Managing Director/CEO of UBA.
