IFC, a member of the World Bank Group, has announced a finance guarantee facility to Union Bank to boost access to finance for local business, enable increased international trade for Nigeria, and help protect the country’s economy from the impact of the COVID-19 pandemic.
The $40 million facility, under IFC’s Global Trade Finance Program (GTFP), will support Union Bank to establish working partnerships with nearly 300 major international banks within the GTFP network, thereby broadening access to finance and reducing cash collateral requirements for Nigerian businesses.
The facility will 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 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.
Commenting on the development, the Chief Executive Officer, Union Bank, Emeka Emuwa, expressed happiness at joining the IFC’s Global Trade Finance Programme and added that it is a significant achievement as the bank continues to expand its trade financing offerings to its corporate customers.
