NIGERIA — Union Bank has secured a US$25 million local-currency investment in a risk-sharing facility from the IFC (International Finance Corporation) to expand lending to small and medium enterprises (SMEs) in Nigeria.

According to an IFC statement, 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.

Union Bank said that, with IFC’s support, it plans to offer more products and services to women-owned businesses, especially in Nigeria’s conflict-affected Northern and Delta regions.

“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,” commented Eme Essien Lore, IFC’s Country Manager for Nigeria

According to Union Bank, entrepreneurs in these regions face particularly difficult challenges accessing finance, and more than half the population is excluded from the financial system.

“The IFC facility is a welcome development which will further deepen our efforts to support Nigerian SMEs and women,” said Emeka Emuwa, Chief Executive of Union Bank.

Although small businesses provide over 80 percent of Nigeria’s jobs, a recent World Bank survey found that only 15 percent of SMEs in the country reported having a bank loan or line of credit.

The survey also found that more than half of the women-managed firms surveyed named access to finance as a major obstacle to growth.

According to the IFC statement, the new facility is part of it’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 statement noted.

IFC’s investment also includes support from the Women Entrepreneurs Finance Initiative (We-Fi), in the form of performance-based incentives for increased lending to women-owned SMEs. 

Union Bank has continued to support 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.