The International Finance Corporation (IFC), a member of the World Bank Group, has partnered with Union Bank Plc to boost access to finance for local business and increase international trade for Nigeria.
According to the organisations, the financial guarantee facility would help ease the impact of the COVID-19 pandemic on the country’s economy.
The $40 million facility under IFC’s Global Trade Finance Programme (GTFP), will support Union Bank to establish working partnerships with nearly 300 major banks within the GTFP network, thereby broadening access to finance and reducing cash collateral requirements for Nigerian businesses.
The facility would 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 the much-needed foreign exchange.
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. 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.
Speaking on the development, Chief Executive Officer, Union Bank, Emeka Emuwa, said the bank was pleased to join the IFC’s Global Trade Finance Programme, noting that it was a significant achievement, as the bank strives to expand its trade financing offerings to its corporate customers.
“Even in these peculiar times, we remain focused on contributing to economic growth by developing tailored solutions that help our customers to harness teeming opportunities that still exist in the Nigerian market,” he said.
In her remarks, IFC’s Country Manager for Nigeria, Eme Essien Lore, said: “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.”
Since the launch of the GTFP in 2005, 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.
Union Bank’s admission into the GTFP network underscores its focus on developing innovative channels to support Nigerian businesses. In 2018, the Bank introduced the Local Letter of Credit, a first-of-its-kind adaptation of the standard Letter of Credit which focuses on facilitating local trade.
IFC’s partnership with Union Bank underscores IFC’s growing commitment to Nigeria, with investments focused on sectors including healthcare, agribusiness, manufacturing, technology, and SME financing.