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The Board of Directors of the African Development Bank (AfDB) approved on Wednesday, October 14, 2015, in Abidjan, a US $15-million trade finance line of credit for UniBank Ghana (UniBank) to enhance its capacity to finance small and medium enterprises (SMEs) and indigenous firms operating within the tradable sector in Ghana.
The facility is a fully funded three-year trade facilitation (senior) loan which will be used by UniBank to support trade finance (TF) instruments issued largely in favour of SMEs and indigenous firms in Ghana.
The project will help address critical market demand for TF and dollar liquidity in Ghana by supporting trade for indigenous firms and SMEs in vital economic sectors such as non-traditional exports, agri-business, construction and light manufacturing. It will foster financial sector development, enhance regional integration and contribute to government revenue generation at a time when the Ghanaian economy is faced with fiscal pressures and liquidity challenges. It will result in the provision of significant trade finance support to local businesses and SMEs in Ghana for longer tenors than generally available. Counting rollovers, the project is expected to facilitate approximately US $90 million of export-import related activity in intermediate and finished goods, raw materials and equipment to support economic growth.
The majority of African banks have small capital bases which constrain their ability to obtain adequate trade limits from international confirming banks and to undertake sizeable transactions that have significant development impact. AfDB’s additionality in the project stems from its ability to increase UniBank’s capacity to support trade by availing affordable medium-term liquidity support for on-lending to SMEs and indigenous firms in Ghana.
The proposed facility aligns with AfDB’s Ten Year and Regional Integration strategies, and particularly with the Bank’s Financial Sector Development Strategy which seeks to (i) increase access to financial services for the underserved and (ii) broaden and deepen Africa’s financial systems. It also aligns with the Bank’s Private Sector Strategy by (i) contributing to the improvement of the investment and business climate in Ghana by supporting UniBank with medium-term trade finance; (ii) promoting enterprise development in Ghana through increased access to appropriate trade finance for SMEs and local corporates.
UniBank is a mid-sized, indigenous Ghanaian bank registered, headquartered in Accra, Ghana. It has 37 branches located across eight of Ghana’s 10 regions. UniBank is recognized by its peers as a leading provider of finance to the SME sector in Ghana and strong promoter of gender equality. It has total assets of about US $781 million and shareholders’ funds of US $72 million. As at August 2015, it ranked 8th out of the 30 banks in Ghana in terms of assets. SME lending accounts for an estimated 40% of UniBank’s loan portfolio and 80% of its borrowing clientele. www.unibankghana.com