Group Chief Executive Officer and the Managing Director of CRDB Bank PLC Abdulmajid Nsekela. PHOTO | COURTESY
Dar es Salaam. Over 150,000 small and medium-sized enterprises (MSMEs) in
Tanzania are expected to benefit from Sh182 billion in lending package that CRDB Bank Plc has secured from financier, Proparco.The two organisations signed an agreement in Dar es Salaam yesterday that will see CRDB Bank Plc receive Sh182 billion for lending to MSMEs in Tanzania.
Data from the Financial Sector Deepening Trust (FSDT) shows that MSMEs contribute to 27 percent of Tanzania’s GDP and that they employ more than 5.2 million people.
However, FSDT says, a majority of MSMEs experience limited access to finance and effective use of financial products and services as major barriers to growth.
CRDB Bank Group chief executive officer and managing director, Abdulmajid Nsekela and Proparco’s regional director for East Africa, Jean Bendit-Du Chalard signed the documents on behalf of their two organisations in Dar es Salaam yesterday.
Under the agreement, the Sh182 billion comes in form of a credit line and two portfolio guarantees.
It will be channelled towards financing MSMEs in line with the country’s economic growth agenda, with a particular focus on women-led enterprises, and those recovering from the Covid-19 disruptions.
Proparco is an arm of AgenceFrançaise de Développement Group (AFD Group).
It provides funding and support to both businesses and financial institutions in Africa, Asia, Latin America and the Middle East.
Mr Nsekela said the money would revitalize Tanzania’s MSME, a majority of which have been grappling with uncertainties during the past three years of the global Covid-19 pandemic.
“We expect that this guarantee facility, alongside our innovative financial solutions, will provide the much-needed support to business owners and enable them to emerge financially healthier and stronger,” he said.
In his remarks, Chalard said the credit line and the two guarantees would contribute the success of an initiative known as Choose Africa.
Launched in 2018, Choose Africa is a French initiative that is dedicated to supporting African entrepreneurs, start-ups and MSMEs.
“Proparco is pleased to initiate this relationship with CRDB Bank and to welcome it as a new partner of the Choose Africa initiative. The comprehensive package of support illustrates Proparco’s commitment to Tanzanian MSMEs and CRDB Bank to provide the right set of products and tools, to meet the needs of entrepreneurs,” said Chalard.
Under the signed agreement, Proparco will receive $50 million (about Sh115 billion) in form of a credit line to support the bank’s financing activity towards MSMEs.
It will also help CRDB Bank set up new, innovative products dedicated to the agricultural sector to increase the sector’s resilience and capacity to adapt to climate change.
The package also comprises of an 8 million Euros (Sh20 billion) guarantee to help CRDB Bank support MSMEs that have been particularly affected by the Covid-19 crisis.
“This guarantee offers, made possible thanks to resources specially allocated by the French government, as part of the Resilience component of AFD Group’s Choose Africa initiative,” the organisations say in their joint statement.
The remaining 18.5 million Euros (about Sh47 billion) EURIZ guarantee, will cover up to 70 percent of loans granted to women entrepreneurs.
This guarantee will be supplemented with a technical assistance grant to reinforce the capacity of the Bank to serve them.
Launched in May 2019, with the support of the European Union (EU) and the European Development Fund, and the Organization of African, Caribbean and Pacific States (OACPS), the EURIZ guarantee aims to facilitate access to credit for MSMEs in particular in sectors with a high development impact, to help them play their essential role in economic growth and job creation
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