United Bank for Africa Plc (NGX: UBA) has announced an initiative to provide financing for up to US$6 billion over the next three years to eligible SMEs across Africa.
The financing initiative is powered by UBA’s recent partnership with the African Continental Free Trade Area (AfCFTA) secretariat, according to a statement released by the bank which prides itself as Africa’s Global Bank.
UBA and AfCFTA signed an agreement on the initiative on the sidelines of the 30th Afreximbank Annual Meeting (AAM) which was held in Accra, Ghana in June.
By the agreement, UBA and AfCFTA agreed to promote the development of SMEs operating in four sectors under the 1st phase of the partnership which are largely import–dependent, by providing technical and financing solutions for intra-African/domestic alternatives. These economic sectors are Agro-processing, Automotive, Pharmaceuticals, Transport and Logistics.
The Deputy Managing Director of UBA, Muyiwa Akinyemi who signed the agreement on behalf of the bank noted that being Africa’s global bank, UBA remains committed to supporting the growth/development of SMEs across Africa. This is in line with our strategic focus on the SME segment being a catalyst for the economic development of Africa.
Muyiwa further said, “Under this partnership, UBA will go beyond just financing to provide non-financial services to these SMEs to develop the capacity for growth across the 20 African countries that we are present, and build sustainable business practices. We shall also be leveraging technology to deliver our financing activities to the beneficiaries and this platform provides us with a unique opportunity to stimulate the development of the continent as Africa’s Global Bank.”
UBA’s Group Head, Marketing and Corporate Communications, Alero Ladipo, noted that the $240,000 financing by the bank will be in the form of working capital loans and asset finance loans, with the aim of positioning the businesses for growth and success in the evolving African business landscape.
Specifically, she explained that the SMEs in the particular sectors of Agro-processing, Automotive, Pharmaceuticals, Transport and Logistics, will be able to access a working capital loan by way of overdrafts and short-term loans with a maximum value of $120,000 in each of their country’s local currency; and asset finance loan of up to $120,000 in the local currency of the obligor, to use for the acquisition of operational assets and equipment to meet their business expansion needs.
Ladipo also pointed out that this strategic move aligns with UBA’s vision to be a catalyst for economic development across Africa, as she noted that by empowering SMEs in key sectors, the bank is fostering job creation, enhancing local production, and promoting intra-African trade, all of which are pivotal goals of the AfCFTA agreement.
In addition to financial support, she emphasised the bank’s commitment towards providing capacity-building opportunities for SMEs through various training programmes and resources, and how UBA aims to equip the businesses with the knowledge and skills needed to thrive in a competitive market environment.
She said, “UBA recognises the critical role that SMEs play in driving economic growth and job creation. To facilitate their growth and success. To this end, We are proud to be at the forefront of driving entrepreneurship in Africa. Our partnership with AfCFTA and our commitment to SMEs in these critical sectors reflect our dedication to the economic transformation of our continent. We believe that this initiative will not only benefit individual businesses but will also contribute significantly to the overall development and prosperity of Africa.”
The Federal Government of Nigeria on ratified the African Continental Free Trade Area (AfCFTA) membership in November 2020, at a Federal Executive Council meeting presided over by the President, Muhammadu Buhari.
AfCFTA was created by the African Continental Free Trade Agreement among 54 of the 55 African Union nations, with Eritrea being the only country that has not signed the agreement. The country said the reason is that they did not participate in the negotiations due to their conflict with Ethiopia at the time.
The aim of AfCFTA is to create a single continental market for goods and services, with free movement of business persons and investments, and thus pave the way for accelerating the establishment of the Customs Union.
Nnamdi Maduakor is a Writer, Investor and Entrepreneur