The African Development Banak or AfDB announced Thursday that its Board of Directors has approved a line of credit (LOC) of US$ 3 million (synthetic local currency equivalent) to Union Trust Bank Sierra Leone (UTB) to help finance projects and enterprises in transformational sectors such as agriculture, energy, manufacturing and services, with strong emphasis on women-owned businesses.
UTB is the only indigenous private bank in Sierra Leone and an important provider of finance for indigenous micro, small and medium- sized enterprises. This facility also entails the provision of Technical Assistance support of US$ 320,000 and an additional US$ 300,000 from the Transition Support Facility to subsidize the cost of a synthetic swap associated with conversion of the proceeds of the facility into local currency for ease of lending to local businesses.
The facility is expected to deliver strong development outcomes by enhancing access to finance (under competitive terms and longer tenors than typically available in Sierra Leone) to SMEs, indigenous firms and women-owned enterprises in Sierra Leone as the country seeks to rebuild following the widespread damage caused by the Ebola Viral Disease epidemic and more recently, devastating mudslides which displaced thousands of people.
Most of the funding is expected to be channeled towards women and rural dwellers. The project will enhance private sector development, by demonstrating the viability of investing in growth oriented SMEs. Increased revenue by the beneficiaries at sub-project level will lead to incremental tax accrual to governments. The facility will also support financial inclusion, gender and social benefits as well as fiscal impacts.
This will be the first Line of Credit by the AfDB to UTB and demonstrates AfDB’s continued commitment to assist Regional Member Countries experiencing fragility.