NIGERIA – Union Bank, one of Nigeria’s leading commercial banks, has secured a US$40 million finance guarantee facility from IFC- a member of the World Bank Group-to boost access to finance for local business.
As a result of the transaction, Union Bank also gained access to IFC’s Global Trade Finance Program – a platform that promotes international trade by leveraging the financial resources of its huge network of banks.
IFC in a statement said that the finance guarantee facility will stimulate increased international trade in Nigeria and help protect the country’s economy from the impact of the COVID-19 pandemic.
According to IFC, Union Bank will use the facility to establish working partnerships with nearly 300 major banks within the GTFP (Global Trade Finance Program) network, thereby broadening access to finance and reducing cash collateral requirements for Nigerian businesses.
The facility will also enable the continued flow of trade credit into the Nigerian market at a time when imports are critical, and the country’s exports can generate much-needed foreign exchange.
Emeka Emuwa, Chief Executive Officer of Union Bank, said, “Union Bank is pleased to join the IFC’s Global Trade Finance Program. This is a significant achievement as we continue to expand our trade financing offerings to our corporate customers.”
According to the terms of the agreement, the GTFP will offer confirming banks partial or full guarantees covering payment risk on Union Bank’s trade-related transactions.
IFC says that these guarantees are transaction-specific and may be demonstrated by a variety of underlying instruments including letters of credit, trade-related promissory notes, guarantees, bonds, and advance payment guarantees.
“Keeping trade moving is essential to growth and job creation, especially during the challenging economic times we are living through today. We welcome Union Bank to IFC’s Global Trade Finance Program and value a partnership that will make a positive impact on Nigeria’s economy.”Eme Essien Lore – IFC’s Country Manager for Nigeria
Union Bank’s admission into the GTFP network underscores its focus on developing innovative channels to support Nigerian businesses.
The Bank becomes the latest Nigerian bank to join the IFC program after Coronation Merchant Bank joined the platform in March this year.
The IFC had then said that that by joining the programme, Coronation Merchant bank will be able to establish partnerships with several international banks who are also part of the GTFP initiative, which will in turn boost access to finance in Nigeria.
IFC’s recent partnership Union Bank further underscores the lender’s growing commitment to Nigeria, with investments focused on sectors including healthcare, agribusiness, manufacturing, technology, and SME financing.
Since its launch in 2005, the GTFP has backed over US$60bn in transactions with guarantees like this, in a bid to mitigate risk for international lenders and boost the flow of goods and services between developing countries.
Fifteen years on, the network has grown to be the largest of IFC’s seven trade initiatives with a robust network of major international banks across the world.
Liked this article? Subscribe to DealStreet Africa News, our regular email newsletter with the latest news, deals and insights from Africa’s business, economy and more. SUBSCRIBE HERE