After partnership with AfCFTA Secretariat: UBA to invest 16 billion FCFA to support Cameroonian SMEs.

UBA’s Head of SME Banking, Joseph Tchinda, explained that the initiative would be powered by the bank’s partnership with the African Continental Free Trade Area, AfCFTA Secretariat.

It should be recalled that the UBA had signed an agreement with the AfCFTA Secretariat on June 19, 2023, to invest $6 billion as funding for African SMEs within the next three years. 

A breakdown of the $6 billion investment shows that a total of $1.2 biilion has been budgeted for the year 2023, $1.9 billion for 2024 and $2.88 billion for 2025. 

Through the initiative, UBA would be giving SMEs the opportunity to access financing for small businesses that specialise in the key sectors of agro-processing, pharmaceuticals, automotive and transport and logistics to small and medium enterprises in all the 20 African countries where UBA operates.

By the agreement, UBA and AfCFTA also agreed to promote the development of SMEs operating in the four selected sectors. 

This will be under the first phase of the partnership largely import dependent, by providing technical and financing solutions for intra-African/domestic alternatives. 

One of the key initiatives of the AfCFTA agreement focuses on improving access to finance and markets for SMEs to encourage their growth and contribution to the socio-economic development of Africa

The objective is to catalyse Africa’s industrialisation and boost intra-Africa trade to improve the socio-economic well-being of the continent and its people.

Commenting on the bank’s support, the Managing Director/CEO of UBA Cameroon, Jude Anele, noted that SMEs are perceived as risky and therefore have limited access to financing, despite being the backbone of all African economies, accounting for 90% of the private sector and 60% of all jobs.

He said another impediment is that, SMEs are most often than not, one person show, with very poor succession plan, poor governance, no internal controls, zero accountability in records of finance, not trust worthy in repaying loans. 

All these, he added, make banks to shy away from giving loans to them despite them being the engine of the economy and or GDP booster of every country. 

He, however, said the scheme like that of AfCFTA is to encourage banks to loan out money because they take upon them to bear the financial burden. 

Through this guarantee facility and the capacity development grant support, UBA will de-risk SMEs with a priority on trade within the borders of the African continent. 

UBA, it was said, has made interest rates highly competitive and compelling. 

The bank’s retail officers once again use the opportunity to reiterate their ambition to promote women led businesses as part of the scheme. 

In order to be a beneficiary of the 16 billion FCFA set aside for Cameroonian SMEs, he/she has to be a Cameroonian business owner operating in the selected sectors and whose business makes exchanges within the AfCFTA and also be a member of UBA. 

“UBAs objectives have always been to support entrepreneurs in all they do. That is why we insisted in access to markets, the guarantees, collateral are very moderate. What triggered the initiative is that we are looking forward to the future and the key economic players need to be empowered if we must emerge in 2035,” Fred Fonda of UBA Customer Service Office emphasised. 

He disclosed that: “In 2023, we loaned out 37 billion FCFA to support SMEs. This is the pilot phase and we are willing to scale up the 16 billon FCFA if this phase in successful”.

The bank is currently receiving applications of eligible SMEs, and business persons who will be granted these loans have between 12 months to 4 years to reimburse, depending on the chosen scheme between the banker and the client.