The African Development Bank Group (AfDB) has recently approved a series of new loan agreements spanning across Africa, with Nigeria and Tanzania being in the spotlight.
Nigeria’s United Bank for Africa (UBA) managed to secure a $150 million loan deal in order to providing funding for infrastructure and SME projects, with a special focus on female-owned enterprises. The UBA is one of the country’s largest commercial banks and has supported a range of infrastructure projects, from power to educational facilities.
Kennedy Uzoka, UBA Group Managing Director & CEO, said the following:
“The Fund will support development of productive sectors of the economy; particularly the power sector, Infrastructure, Women owned enterprises as well as SMEs. This line of credit comes at an opportune time and would boost efforts at reducing the huge power sector-financing deficit that is limiting energy supply and complement our support to medium and small scale enterprises while also promoting gender diversification across the value chain”
The line of credit will be used to support SMEs and women-owned enterprises in both urban and rural communities in an effort to boost job creation and stimulate growth in multiple Nigerian sectors, such as education and manufacturing.
Nigeria is currently in the middle of a deep recession, influenced by low oil prices, dollar shortages and foreign investors diverting their money away from the nation. All of these factors, combined with an ongoing currency crisis, have been a catalyst in both households and businesses struggling to regain some form of confidence in Africa’s most populous country. Fitch have also expressed concerns about Nigeria’s oil and gas industry.
Tanzania’s CRDB Bank Plc (CRDB) ratified a $120 million loan agreement with the intention of also improving infrastructure in the country (primarily in the power and transport sectors) as well as SME projects (across a range of industries such as agriculture, manufacturing and education) in order to promote growth in the country.
The CRDB and AfDB have collaborated in the past. In 2008, the AfDB provided a risk-sharing platform to promote SMEs in multiple sectors, with 270 SMEs benefiting in the end. Since then, CRDB has substantially expanded its SME loan portfolio, partnering with over 1,700 agents. The bank has also provided services in difficult to reach areas to provide access to banking services that many people were unable to obtain.
The loan will be used to help support SME projects in Tanzania in an effort to feed through into the overall growth of the country. Similar to the loan issued to Nigeria’s UBA, and all inclusive growth will be targeted and female owned enterprises in rural and urban communities will be the focal point for an unspecified amount of the loan. Other potential positive effects of the latest loan include: an improvement in regional trade and integration; expansion of airports and tourism; and an increase in government revenues in coming year.