The United Bank for Africa (UBA) has recently secured a substantial financial package of $175 million from the Africa Development Bank (AfDB) Group. This strategic collaboration aims to bolster UBA’s commitment to supporting the private sector and fueling Nigeria’s ongoing infrastructure development initiatives.
Breaking down the financial package, UBA revealed that it encompasses a combination of components, including a significant $100 million in long-term senior debt. This infusion of capital is earmarked to enhance it’s financial capacity, enabling the bank to actively participate in funding projects across critical sectors within Nigeria. Notably, these sectors include infrastructure, agriculture, and associated value chains, as well as manufacturing, energy, and small and medium-sized enterprises (SMEs).
In addition to the long-term senior debt, the financial package includes $50 million in trade finance medium-term senior debt. This allocation specifically aims to provide this with essential countercyclical dollar liquidity. The intended purpose is to support SMEs and local corporates engaged in export-import activities over the short to medium term, thus facilitating smoother trade operations.
Moreover, the financial arrangement involves a $25 million risk participation program, designed to strengthen it UK’s role as a regional confirming bank. This initiative has broader implications, extending access to international markets for African issuing banks, a move anticipated to reduce the prevailing exclusion of such banks.
As part of this collaboration, the Affirmative Action for Women in Africa (AFAWA) initiative will provide technical assistance. This support is poised to enhance access to finance and technical expertise for women-owned SMEs. The combined efforts of AFAWA and UBA are expected to contribute significantly to fostering a more inclusive economic landscape.
In response to the Board’s approval of this financial package, Lamin Barrow, the AfDB’s Group Director General for Nigeria, expressed satisfaction. He emphasized that the initiative aligns seamlessly with four of AfDB’s high-priority areas, including “Light up and Power Africa,” “Feed Africa,” “Integrate Africa,” and “Industrialize Africa.”
Ahmed Attout, AfDB Acting Director for Financial Sector Development, noted that the intervention would address the unmet demand for trade finance in Nigeria and Africa more broadly. By providing medium-term finance to support exports and the importation of crucial intermediate goods, the initiative aims to sustain vital economic sectors.
Conclusion: UBA
UBA’s Group Managing Director/CEO, Oliver Alawuba, acknowledged the significance of the financial facility. He highlighted that it would further deepen it’s support for critical sectors of the Nigerian economy, with a particular emphasis on women-owned businesses and SMEs, which he considers the engine driving the country’s economic growth and employment generation. This collaboration marks a substantial step towards fostering economic development, trade facilitation, and inclusivity within the African financial landscape.
