The African Development Bank (AfDB) has signed two loan agreements worth US$150mn in favour of United Bank for Africa (UBA) to facilitate trade finance in Africa.
The loan agreements were signed under the AfDB emergency liquidity facility (ELF) and trade finance initiative (TFI), designed for the rapid injection of liquidity into African markets via strong private sector partner institutions.
These are the largest facilities to date granted by the AfDB to a private sector financial institution in Africa. The TFI loan totaling US$100mn will be used by UBA to advance trade credits to corporate customers across its pan-African network, enabling it fill the gap left by the retreat of non-African institutions from the market.
This loan will permit UBA to significantly ramp up its intra-African corporate banking operations and specifically the promotion of regional trade.
The ELF of US$50mn – also approved by the AfDB – will enable UBA to play a catalytic role in supporting corporate projects, infrastructure and SME financing across Africa.
Speaking at the ceremony, AfDB vice-president, Aloysius Uche Ordu, stated that: “regional commercial banks such as the United Bank for Africa have an important role to play in accelerating Africa’s economic growth, social development and economic integration of our nations”.
Ordu continued by saying that “the AfDB is committed to supporting these institutions with comprehensive assistance. We hope that this support will go a long way in strengthening and enhancing UBA’s ability to impact its pan-African operations”.
These transactions are consistent with the AfDB’s initiatives formulated in response to the global financial crisis, its country strategy paper for Nigeria, as well as the Nigerian government’s millennium development agenda.
This financial assistance to UBA also fits with the AfDB's private sector strategy to support sound and capable financial institutions during the financial crisis.
On behalf of their respective institutions, Ordu and Faith Tuedor-Matthews, deputy managing director, from UBA, signed the agreements on December 16.
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