African Development Bank invests up to USD 150 million to support the United Bank of Africa (UBA)
Tunis – 22 July 2009- The Board of Directors of the African Development Bank (AfDB) Group approved on Wednesday in Tunis, loans under the Bank’s Emergency Liquidity Facility (ELF) and Trade Finance Initiative (TFI) for a total amount of US$ 150 million to United Bank of Africa Plc (UBA) Nigeria.
The Facility loan will be used to shore up shrinking foreign currency lines resulting from the financial crisis and to minimize disruptions to UBA’s operations, which includes financing of projects relating to infrastructure, Small and Medium Enterprises (SMEs) and corporate development. The loan under the Trade Finance Initiative will fund UBA’s trade finance operations, including providing short-term credit for import and pre-export finance.
The TFI loan would be used by UBA to support trade finance activities in Nigeria and subsidiaries of UBA Group at a time of credit constraints in the market. It will also be utilized to support trade activities for fragile and post-conflict countries in West Africa, where UBA currently operates. The current international financial crisis has affected many markets and trade finance is no exception. The current environment is creating a risk-averse culture and this trend is accelerating and spreading in Nigeria and across the continent.
These transactions are consistent with the Bank’s Liquidity Facility and Trade Finance Initiative formulated in response to the impact of the Global Financial Crisis. Furthermore, the project aligns with the Bank’s Country Strategy Paper as well as the Nigerian Government’s promotion of the private sector as part of its national development agenda. This financial assistance to UBA also fits with the Bank’s Private Sector strategy to support sound and capable financial institutions during the financial crisis.
This operation will enhance the operational resilience of UBA in the wake of the financial crisis and minimize potential disruptions to the financing of projects and trade-related transactions. The project will thus help to safeguard client businesses, employment, livelihoods and government tax revenue.