IFC, Union Bank announce $25mn risk-sharing facility for Nigerian SMEs
IFC said the facility will support Nigerian businesses to grow and create jobs.
The International Finance Corporation (IFC), a member of the World Bank Group, has announced a $25 million local-currency risk-sharing facility aimed at expanding Union Bank’s lending to small and medium enterprises (SMEs) in Nigeria. According to a statement released today, IFC said the facility will support Nigerian businesses to grow and create jobs.
According to a recent World Bank survey, only 15 per cent of SMEs in Nigeria have a bank loan or line of credit. Also, more than half of the women-managed firms surveyed named access to finance as a major obstacle to growth.
With the risk-sharing facility, IFC will cover as much as 50 per cent of the risk of Union Bank's loans to SMEs in the country, particularly women-owned businesses in Nigeria’s conflict-affected Northern and Niger Delta regions. IFC said this group of business owners face more difficulty accessing finance, and more than half the population in these regions is excluded from the financial system.
“IFC’s risk sharing facility will help Union Bank increase its focus on Nigeria’s underserved areas, positioning it as one of the leading banks that provides customized services to SMEs that are driving job creation and growth across the country,” Eme Essien Lore, IFC’s Country Manager for Nigeria said.
The new facility is part of IFC’s Small Loan Guarantee Program (SLGP), used in easing local-currency lending to SMEs in frontier markets. SLGP is backed by the International Development Association’s (IDA) Private Sector Window, which the World Bank Group uses to catalyze private sector investment in the poorest and most fragile countries. IFC’s investment in Union Bank is also supported by the Women Entrepreneurs Finance Initiative (We-Fi), which seeks to unlock financing to tackle the barriers facing women entrepreneurs.
“Union Bank continues to develop sustainable products and services that promote enterprise and address poverty and financial inclusion,” said Emeka Emuwa, Union Bank's Group Managing Director and CEO. “This is in line with our commitment to support the communities within which we operate. The IFC facility is a welcome development which will further deepen our efforts to support Nigerian SMEs and women.”
Union Bank recently unveiled Alpher (α), a dynamic proposition aimed at uplifting Nigerian women through customised financial services, capacity building opportunities and competitive interest rates on loans. Three years ago, the bank introduced an innovative business acceleration programme, ‘Start up Connect,’ which enables Nigerian businesses creating technology-based solutions to be more competitive in the rapidly-expanding African technology market.
IFC said the partnership with Union Bank underscores its growing commitment to Nigeria. The country has been one of IFC’s fastest-growing country portfolios, making it one of the organization’s top ten country exposures. IFC has invested in several projects in the country, including in manufacturing, technology and financial services, amongst other key sectors in the country.
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