United Bank for Africa (UBA), through its UK subsidiary UBA UK, and British International Investment (BII) have signed a letter of intent to explore cooperation in trade finance across Africa. The planned partnership aims to expand access to financing for African businesses, especially those involved in intra-African trade, targeting the continent's trade finance shortfall.
TACKLING AFRICA'S TRADE GAP
The African Development Bank estimates Africa’s trade finance gap at more than $80 billion a year, with small and medium-sized businesses often unable to secure letters of credit, guarantees and supply chain finance on commercially viable terms. UBA UK, as the group's trade operations hub, would use its presence across 20 African countries to identify and structure transactions tailored to local needs. “As the Group's hub for Trade Operations, UBA UK is uniquely positioned to connect African businesses with the international financial system,” said Lok Mishra, chief executive of UBA UK. “Working alongside BII, we can extend that capability further — mobilising capital where it matters most and helping to close the trade finance gap that holds back so much African potential,” he added.
BII, the UK’s development finance institution, views the collaboration as a way to advance its ambition to expand access to trade and working-capital finance, particularly in frontier markets. “Trade finance is a critical enabler of [private sector] growth,” said Chris Chijiutomi, managing director and head of Africa at BII. “We welcome the opportunity to collaborate with UBA Group, whose pan-African network and deep institutional relationships can help advance our ambition to expand access to trade and working-capital finance, particularly in frontier markets,” he added.
The initiative comes amid the African Continental Free Trade Area (AfCFTA), which entered into force in 2021. Both institutions see AfCFTA implementation as a catalyst for a trade finance facility.
LEVERAGING AFCFTA MOMENTUM
The UBA UK-BII initiative targets limited access to trade finance, one of the continent's biggest structural bottlenecks. BII could support deals seen as too risky by traditional lenders, in line with its mandate.
The deal builds on UBA's pan-African network. UBA Group operates in 20 African countries as well as the UK, the US, France and the UAE.
SME FOCUS AMID RISKS
The collaboration prioritizes businesses involved in intra-African trade.
The deal has yet to be finalised, with due diligence and internal approvals ahead. The partnership remains at the exploration stage.
BROADER ECONOMIC RIPPLE
As Mishra put it, UBA UK aims to work with BII to mobilize capital where it matters most.