IFC, a member of the World Bank Group announced early this week a $25 million local-currency investment in a risk-sharing facility to expand Union Bank’s lending to small and medium enterprises (SMEs) in Nigeria. The facility, which will cover as much as 50 percent of the risk of the bank’s loans to entrepreneurs, aims to help Nigerian businesses grow and create jobs.
With the support of IFC, Union Bank plans to offer more products and services to women-owned businesses, especially in Nigeria’s conflict-affected Northern and Delta regions, where more than half the population is excluded from the financial system and entrepreneurs face especially difficult challenges accessing finance.
According to the Chief Executive of Union Bank, Emeka Emuwa:
“Union Bank continues to develop sustainable products and services that promote enterprise and address poverty and financial inclusion. 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.”
Also commenting on the initiative, Eme Essien Lore, IFC’s Country Manager for Nigeria said;
“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.”
Even though small businesses provide over eighty percent of Nigeria’s jobs, a recent survey from World Bank found that only 15 percent of SMEs in Nigeria reported having a bank loan or line of credit. It also discovered that more than half of the women-managed firms surveyed, commented that access to finance as a major obstacle to growth.
The new facility is part of IFC’s Small Loan Guarantee Program (SLGP), which is easing local-currency lending to SMEs in frontier markets. SLGP is backed by the International Development Association’s (IDA) Private Sector Window, which is providing a first-loss guarantee, allowing IFC to scale up its support to underserved and unbanked SMEs.
The support from IFC’s investment also includes the Women Entrepreneurs Finance Initiative (We-Fi), in the form of performance-based incentives for increased lending to women-owned SMEs.
Union Bank has continuously supported SME and empower women-led businesses through tailored products and services. The 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.
In 2017, the Bank also launched 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.
The partnership with Union Bank underscores IFC’s growing commitment to Nigeria. IFC has invested in several projects in heavy manufacturing, technology and financial services amongst other key sectors in the country. Nigeria has been one of IFC’s fastest growing country portfolios, making it one of the organization’s top ten country exposures.