March 22 (THEWILL)—United Bank for Africa (UK) Limited (UBA UK) and British International Investment plc (BII), the UK’s development finance institution and impact investor, have announced that they have signed a letter of intent to develop opportunities for trade finance collaboration. The proposed initiative aims to expand access to trade and working capital facilities for companies operating across Africa.
Access to trade finance remains one of the most important structural constraints on African trade. Companies, particularly small and medium-sized enterprises, are often unable to secure letters of credit, guarantees and supply chain financing on commercially viable terms, limiting their ability to import and export competitively.
According to the African Development Bank, this trade finance gap is estimated to be more than US$80 billion annually.
Access to trade finance remains one of the most important structural constraints on African trade. Companies, particularly small and medium-sized enterprises, are often unable to secure letters of credit, guarantees and supply chain financing on commercially viable terms, limiting their ability to import and export competitively. According to the African Development Bank, this trade finance gap is estimated to be more than US$80 billion annually.
Lok Mishra, CEO of UBA UK, said: “The signing of this letter with BII represents a landmark moment for UBA UK and the UBA Group’s global ambitions. UBA As the center of the group’s trade operations, the UK is uniquely placed to connect African businesses with the international financial system. By working with BII, we can further expand that capacity, mobilizing capital where it matters most and helping to close the trade finance gaps that hold back much of Africa’s potential.”
Chris Chijiwitomi, Managing Director and Head of Africa, added: “UK International Investment is committed to driving private sector growth across Africa, and trade finance is a key enabler of that growth. We welcome the opportunity to work with UBA Group. UBA Group’s pan-African network and deep institutional relationships will help us advance our ambitions to widen access to trade and working capital finance, particularly in frontier markets.”
The announcement builds on the growing momentum around intra-African trade facilitated by the African Continental Free Trade Area (AfCFTA), which comes into force in 2021 and is one of the world’s most important trade integration initiatives. Both agencies recognize that the operationalization of the AfCFTA is a priority facilitator for trade finance capabilities, and UBA UK’s network across the major AfCFTA economies provides a foundation to support businesses as they navigate emerging continental markets.
It also complements the UK Government’s wider commitment to Africa’s economic development, including commitments at the UK-Africa Investment Summit, and strengthens the City of London’s role as a leading international financial center for Africa-focused capital mobilization.
Further cooperation is subject to further evaluation, due diligence and completion of internal approvals by both parties.
