United Bank for Africa Receives $17 Million From AfDB

The United Bank for Africa (UBA) recently received $17 million in funding from the Africa Development Bank (AfDB) Group to boost its support for the private sector and financing of infrastructure development in Nigeria.

The funding comprises $100 million in long-term senior debt, $50 million in trade finance medium-term senior debt, and a $25 million risk participation program. The Pan African Development Institution announced this during the weekend, having been approved by its Board of Directors.

The long-term senior debt will boost UBA's capacity to fund projects in Nigeria in the critical sectors of agriculture, infrastructure, SMEs, manufacturing, and other related industries.

It was also announced that 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 for women SMEs.

While the trade finance sector is debt, it will give UBA the 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 by expanding access to international markets for largely excluded African issuing banks.

According to the LEADERSHIP report, 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.

After the board's approval, Lamin Barrow, AfDB's group director general, said,

• We are pleased to support UBA with this package, which aligns with four of the African Development Bank’s five priorities: Light up and Power Africa, Feed Africa, Integrate Africa, and Industrialise Africa.

Adding to this, Ahmed Attout, African Development Bank's Acting Director for Financial Sector Development, said,

• This intervention will address the unmet demand for trade finance in Nigeria and Africa by providing medium-term finance to support exports and import intermediate goods required to sustain vital economic sectors. It will also unlock stable and affordable funding for SMEs, the engine of Nigeria’s economic growth and employment generation.

Also commenting, the Group managing director/CEO UBA, Oliver Alawuba, said,

• This facility will further deepen our support, which has been very considerable, for the critical sectors of the Nigerian economy, especially to women-owned businesses and small and medium enterprises, which we consider to be the engine of any country’s economic development.