Small and medium-sized enterprises account for almost half of Nigeria’s GDP. Despite their importance for the economy, less than 20% of them benefit from a loan or credit line from a financial institution. SMEs are therefore largely left out of Nigeria’s traditional financial circuits, due to the lack of financial resources and solutions tailored to their needs. These companies often have to turn to informal sources of financing or self-financing that is unsuitable for balanced development.
To support the increase in UBA’s SME loan portfolio, Proparco has just signed an NGN 1.9bn portfolio guarantee (EUR 4.7m) to share the credit risk. This ARIZ guarantee will automatically cover 50% of future SME loans.
Part of the loans covered (at least 30%) will specifically concern SMEs in the education sector or SMEs owned by women.
UBA is one of the largest banks in Nigeria. It is the 4th largest for the size of its balance sheet, with a network of 700 branches and over 7 million clients.
This ARIZ guarantee follows on from a EURIZ guarantee signed in 2019 with UBA. With the support of the European Union and the African, Caribbean and Pacific Group of States, this guarantee targeted SMEs set up by young entrepreneurs and supported by the Tony Elumelu Foundation.
In November 2019, Proparco also allocated a USD 85m loan to UBA, combined with USD 35m of SUNREF financing allocated by its parent company AFD, to finance renewable energy or energy efficiency projects in Nigeria.
This new project is part of France’s Choose Africa initiative implemented by AFD Group to support and finance 10,000 African start-ups, microenterprises and SMEs by 2022.