UBA gets Sh37bn loan from parent for SMEs

UBA managing director and CEO, Mary Mulili.  

Photo credit: File | Nation Media Group

UBA Kenya has received $282 million (Sh37.5 billion) from its parent firm for lending to small and medium-sized enterprises (SMEs) over the next three years, joining the growing list of lenders directing money to small businesses.

The lender, which is marking 15 years in Kenya, said Tuesday the amount has been allocated from the $6 billion (Sh789 billion) SME funding agreement that its parent company, United Bank of Africa (UBA) Plc, signed with the African Free Trade Area (AfCFTA) to disburse to small businesses across Africa.

“We remain committed to supporting SMEs and we recognise the financing and market access gaps which we are stepping in to bridge. SMEs play a pivotal role in Kenya’s economy and contribute to over 90 per cent of total labour force,” said Mary Mulili, chief executive at UBA Kenya.

“UBA remains a go-to financial partner for SME growth and is in line with our strategic focus on the SME segment being a catalyst to the economic development in Kenya.”

The lender’s loan book hit Sh4.06 billion from Sh2.86 billion, marking a 42 percent growth. Lending Sh37 billion to SMEs in three years or about Sh12.3 billion annually would mean more than tripling its loan book as it diversifies its business from corporate lending to SMEs.

About $57 million (Sh7.5 billion) will be disbursed in the first year, followed by $91.2 million (Sh11.9 billion) in the second year and $136.8 million (Sh17.9 billion) in the third year.

UBA is the latest lender to commit funds to small businesses, following the trend of other lenders that have been tapping long-term loans from development partners for on-lending to SMEs, women and youth.

The $282 million announcement was made on the sidelines of UBA PLC marking 75 years since it started operations in Nigeria in 1949. The lender was licensed to operate in Kenya in September 2009.

UBA Kenya cut its net loss to Sh344.12 million in the financial year ended December 2023, from Sh436.5 million loss posted a year earlier.

The Nigerian billionaire Tony Elumelu-owned lender acquired 13 percent additional stake in UBA Kenya Ltd in 2022, signalling the lender’s growing appetite for investment in Kenya. The transaction increased UBA Plc shareholding in the Kenyan unit to 94 percent from 81 percent, in a deal that was valued at about $9.99 million (Sh1.3 billion).

UBA Plc also runs subsidiaries in Uganda, Tanzania and the Democratic Republic of Congo (DRC).

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