The Eastern and Southern Trade and Development Bank (TDB), formerly the PTA Bank, yesterday signed a three-year ZWL1 million dollar credit guarantee in favour of NMB Bank, guaranteeing loans from NMB to Untu Capital for on-lending to small businesses.
The guarantee, which was signed at TDB’s Southern African Regional Office in Newlands, Harare, enables NMB Bank to provide finance for small to medium enterprises (SMEs) through Untu Capital without requiring any collateral, since the loans are guaranteed by TDB.
The three-year guarantee of ZWL 1 000 000 is scaleable to up to ZWL6 000 000. TDB is also providing a technical assistance grant of ZWL 250 000 to enhance Untu’s ability to lend to MSMEs.
The guarantee is the first of its kind to be extended by TDB under its SME programme, which was launched in 2018 to leverage on its seed capital in order to enable partner financial institutions to provide finance to SMEs.
Lack of access to finance is one of the challenges that hinders SMEs from flourishing or even surviving.
After TDB head of mission Gloria Mamba and Untu Capital chief executive Clive Msipha had signed the credit guarantee agreement, Ms Mamba handed over the guarantee to NMB Bank chief executive Ben Washaya.
Speaking prior to the signing and hand over of the guarantee, Mr Msipha thanked NMB Bank for its commitment to supporting Untu Capital. He said NMB had been Untu Capital’s bankers from its inception more than 10 years ago.
Women’s Affairs and Community and Small and Medium Enterprises Development Ministry director for SMEs Francis Gondo said his ministry had worked with both NMB Bank and Untu and expressed his appreciation of the roles they were playing in regards to the development of SMEs.
Ms Mamba said TDB had a long history of working with NMB Bank.
“We are pleased to support the work NMB does with the SME sector,” she said.
She said TDB hoped to replicate in other countries the support for SMEs programme it was undertaking in Zimbabwe.
Mr Washaya said that NMB Bank has a deliberate focus to support the growth of indigenous businesses.
He said the bank had considered where the country’s economic growth was going to come from and acknowledged that it was going to come from the SME sector.
He said small businesses tended to move fast in difficult circumstances and often succeeded where large corporations failed.
Having identified SMEs as the likely growth centre, NMB established a dedicated SME banking unit which, he said, had done extraordinarily well.
Speaking prior to the event, Mr Washaya said NMB Bank was keen to partner SMEs and micro-finance institutions such as Untu Capital to contribute to the growth and development of small businesses.
“The crucial role NMB Bank is playing in this transaction resonates well with our model of capacitating SMEs, which are the future of the Zimbabwe economy,” he said.
“We are pleased to be working with these key longstanding partners, namely TDB and Untu, in supporting the SME sector.
“This guarantee facility enhances our capacity to lend to this crucial sector and augments our current efforts to support SMEs,” he said.
It is estimated that SMEs contribute more than half of Zimbabwe’s Gross Domestic Product (GDP) and employ more than 75 percent of the country’s workforce.
In a statement, TDB president and chief executive Admassu Tadesse said TDB appreciated the value of MSMEs in the region’s economies.
“We appreciate the value of MSMEs in our economies and are thus delighted to extend this facility to Untu Capital in favour of NMB Bank under our SME programme,” he said.
“It complements our regular operations, which, among other priorities, also target SMEs and mid-cap companies, namely via dedicated lines of credit with various partners around the globe.”