The Eastern and Southern Trade and Development Bank (TDB), formerly the PTA Bank, has signed a three-year ZW$1 million credit guarantee in favour of NMBBank, 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 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 ZW$1 million is scaleable to up to ZW$6 million.
TDB is alsoproviding a technical assistance grant of ZW$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 financialinstitutions to provide finance to SMEs.
Lack of access to finance is one of the challenges that hinders SMEs from flourishing or evensurviving.
After TDB head of mission Gloria Mamba and Untu Capital chief executive Clive Msiphahad signed the credit guarantee agreement, Ms Mamba handed over the guarantee to NMBBank 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’sbankers 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 thedevelopment 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 wasundertaking 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 comefrom 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.
Mr Washaya said NMB Bank was keen to partner SMEs and microfinance institutions such as Untu Capital to contribute to the growth and developmentof 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 ourcurrent 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.”