The Africa Development Bank (AfDB) Group has granted the United Bank for Africa (UBA) a $175 million funding package. This grant includes $100 million in long-term senior debt, $50 million in trade financing medium-term senior debt, and a risk participation programme worth $25 million. The Pan African Development Institution made the news following approval by its Board of Directors.
The long-term senior debt aims to increase UBA’s ability to fund projects in Nigeria, with a focus on essential sectors such as infrastructure, agriculture, manufacturing, energy, and small and medium-sized companies (SMEs). The Affirmative Action for Women in Africa (AFAWA) project will provide technical assistance and financial support to complement the facility, to improve access for women-led SMEs.
In the short to medium term, the trade finance senior loan part will provide UBA with critical countercyclical dollar liquidity to support SMEs and local corporates engaged in import-export activity. The underfunded Risk Participation Agreement aims to strengthen UBA UK’s function as a regional confirming bank, allowing African issuing banks who have previously been excluded access to international markets.
The African Development Bank and UBA UK, a subsidiary of UBA Plc, will share equally the default risk on a portfolio of qualifying trade transactions originated by African issuing banks and insured by UBA UK under this arrangement.
Speaking after the board’s approval, AfDB’s group director-general for Nigeria, Lamin Barrow, expressed his delight at the development.
“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,” he said.
The managing director and CEO of UBA, Oliver Alawuba, further explained that the support would help critical sectors of the Nigerian economy.
“This facility will further deepen our support, which has been very considerable, for the critical sectors of the Nigerian economy, especially women-owned businesses and small and medium enterprises, which we consider the engine of any country’s economic development.”