AfDB approves US$ 20m Trade Finance Credit for UT Bank Ghana to Support SMEs

BY EDMUND SMITH-ASANTE

The Board of Directors of the African Development Bank (AfDB), Tuesday, May 22 approved a US$ 20 million Trade Finance Line of Credit for UT Bank Ghana (UT Bank), a mid-sized, indigenous Ghanaian bank, to support the trade finance activities of Small and Medium Enterprises (SMEs) and local corporates in Ghana.     

Explaining the underlining reason for the credit approval, via a press statement, AfDB maintained that as the Ghanaian economy continues to grow and diversify, there is increasing need to address critical market demand for Trade Finance by supporting businesses in key economic sectors such as agriculture and light manufacturing.

“This facility will therefore foster financial sector development, enhance regional integration through intra-African trade, and contribute to government revenue generation. Counting roll-overs, the Project is expected to facilitate approximately US$ 140 million of trade in essential raw materials, intermediate and finished goods, and equipment to support economic growth in Ghana,” the bank said.

The 3¹/₂ year facility is AfDB’s first trade finance intervention in Ghana since its participation in the Ghana Cocoa Board (COCOBOD) syndicated Commodity Finance Facility in 2009.

It is designed to enhance UT Bank’s capacity to provide appropriate trade finance support to SMEs and local corporates, thereby promoting inclusive growth and contributing to Ghana’s economic progress. 

The facility not only aligns with AfDB’s Ten-year (2013-2022) Strategy and Ghana Country Strategy, but also resonates well with UT Bank’s strategic intent to become a significant provider of trade finance solutions to SMEs in Ghana.

AfDB’s additionality in this project stems from its ability to provide UT Bank with medium term resources that are not readily available in the trade finance market under the prevailing economic environment.

Established in 1997 as a non-bank financial institution, UT Bank, which has its headquarters in Accra, has over the years transformed into a full-fledged commercial bank that is recognised as a strong SME partner in Ghana.

The Ghanaian bank has strong shareholder support from institutional investors, including major development finance institutions, is listed on the Ghana Stock Exchange and has approximately 600 employees and 26 branches across the country.