Why UBA sealed 7 year $100m financing deal with China Development Bank
More details have emerged on why Africa’s global bank, United Bank for Africa (UBA) Plc, and China Development Bank (CDB), the world’s largest development finance institution, sealed a $100 million seven-year letter of intent agreement.
A credible source at the bank told Business Hilights on Wednesday in Lagos that the key reason for the Memorandum of Understanding (MoU) is to deepen the financing of budding small and medium enterprises (SMEs) in Africa.
The top official who pleaded anonymity averred that “As you can recall, the major challenge of SMEs in Africa is business education and funding. So the fund will among others, be channeled to business development trainings for SMEs which will be followed up with adequate funding of SMEs that met given terms and conditions for accessing the facility within the first seven years”.
Business Hilights further gathered that the $100 million which is not limited to Nigerian SME operators, will enhance UBA’s capacity to provide access to finance to small and medium enterprises (SMEs) across the 19 African countries where UBA currently operates.
It would be recalled that in his remarks shortly after sealing the deal in Lagos on Monday, the Group Managing Director/CEO, UBA Plc, Kennedy Uzoka, noted that “We are excited to partner with China Development Bank (CDB), the Development Financial Institution of the Chinese government, on this historic transaction, as we strongly believe that the facility will serve as a catalyst to the sustainable development of commerce and industry in Africa through provision of critical financial interventions to SMEs across our presence countries”.
He noted that this line of credit is timely, as it should complement the recovery of economic activities. It will also further encourage African entrepreneurship particularly as the funds will be applied to SMEs, which are important for inclusive growth on the continent, he said.
Earlier in his goodwill message, Chairman of UBA Plc, Tony Elumelu, disclosed that the fund will boost small and medium scale enterprises across Africa, noting that CDB’s interest in supporting SMEs aligns with UBA’s vision in growing business across Africa.
He said “In UBA, CDB would have an enduring partner in reaching out to Africans as UBA provides banking services to over 14 million people across 20 African countries, and like CDB, UBA funds critical infrastructural projects on the continent”, Elumelu said. He expressed that he would like to see an even stronger relationship grow with CDB and UBA as well as with China and Nigeria.
Explaining why CDB was attracted to the deal, President of the bank, Zheng Zhijie, said the agreement is the beginning of cooperation between UBA and CDB that would translate into an enduring business relationship between China and Africa and Nigeria in particular.
Zhije stressed further that “UBA is a leading and dependable bank not only in Nigeria but Africa, and this partnership will help our bank to accelerate its business objectives in Africa, more importantly as we deepen our investment in energy, road and rail constructions, infrastructure in Africa”.
However, UBA is yet to rollout terms and conditions upon which the facility will be accessed by SMEs in participating African countries including Nigeria.
Before now, Nigerian SMEs had been wallowing in paucity of funding as analysts say majority of Nigerians banks are not originally structured to support SMEs, but just retail banking and support for imports where returns are made within a given short period of time than long terms gains after all.
