UBA gets approval of $175 million from AFDB to finance key projects
The African Development Bank Group’s Board of Directors has approved a financial package of $175 million for the United Bank for Africa (UBA) to finance key projects in Nigeria.
AfDB has approved a financial package of $175 million for the United Bank for Africa (UBA).
The package includes $100 million in long-term senior debt, $50 million in trade finance medium-term senior debt, and a $25 million risk participation program.
AfDB and UBA UK, a subsidiary of UBA PLC, will share 50/50 the default risk on a portfolio of eligible trade transactions.
This information was disclosed in a statement released by the AfDB on its website.
The package, which includes $100 million in long-term senior debt, $50 million in trade finance medium-term senior debt, and a $25 million risk participation program, 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 bank recently announced that its financial commitment to development projects in Nigeria totals $4.4 billion, making it the largest investment in Africa.
The new facility will be accompanied by technical assistance from the Affirmative Action for Women in Africa (AFAWA) initiative to boost access to finance and provide technical assistance to women-led small and medium enterprises (SMEs).
What the AfDB board said:
Bank Group Director General for Nigeria, Lamin Barrow said, “We are pleased to support UBA with this package, which aligns with four (4) of the African Development Bank’s High 5 priorities namely Light up and Power Africa, Feed Africa, Integrate Africa, and Industrialise Africa.”
According to Ahmed Attout, African Development Bank Acting Director for Financial Sector Development, “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.”
Per the statement, the trade finance senior debt will also provide UBA with the 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 a regional confirming bank and, in turn, broaden access to international markets for African issuing banks that are often underserved.
Under this arrangement, 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.
