The Board of Directors of the African Development Bank (AfDB) has approved a $15 million trade finance line of credit for UniBank Ghana (UniBank).
AfDB said in a statement that the loan would go towards enhancing UniBank’s capacity to finance small and medium enterprises (SMEs) and indigenous firms operating within the tradable sector in Ghana.
The facility is a fully funded three-year trade facilitation (senior) loan which will be used by UniBank to support trade finance (TF) instruments issued largely in favour of SMEs and indigenous firms in Ghana.
The project will help address critical market demand for TF and dollar liquidity in Ghana by supporting trade for indigenous firms and SMEs in vital economic sectors such as non-traditional exports, agri-business, construction and light manufacturing, AfDB said.
The Ghanaian economy is currently struggling with fiscal pressures and liquidity challenges.
Counting rollovers, the project is expected to facilitate approximately $90 million of export-import related activity in intermediate and finished goods, raw materials and equipment to support economic growth.
The development bank added that the majority of African banks have small capital bases which constrain their ability to obtain adequate trade limits from international confirming banks and to undertake sizeable transactions that have significant development impact.
AfDB’s additionality in the project stems from its ability to increase UniBank’s capacity to support trade by availing affordable medium-term liquidity support for on-lending to SMEs and indigenous firms in Ghana.