Zanzibar, CRDB ink interest-free loans deal for SMEs

Zanzibar. The Government of Zanzibar and CRDB Bank Plc have signed an agreement that will have the latter disbursing Sh81.8 billion to stimulate economic activities in the Isles.

The package encompasses Sh60 billion that will be disbursed in form of interest-free loans to income-generating groups in Zanzibar while the remaining Sh21.8 billion will be allocated for improvement of the necessary infrastructure that will enable the income-generating groups to conduct their undertakings in modern facilities.

Code-named: ‘Inuka na Uchumi wa Buluu’ (Grow with the Blue Economy), the deal - which was signed on January 31, 2022 – is part of Zanzibar’s wider plan to stimulate economic activities after the Covid-19 pandemic effects.

Speaking during the official launch of the deal here at the weekend, the Zanzibar President, Dr Hussein Mwinyi, urged income-generating groups in the Isles to grab the opportunity and get the interest-free loans for their own economic good.

After ascending to the Presidency following the October 2020 general election, Dr Mwinyi promised to implement a number of measures, including issuing special identity cards to small scale traders so that they can conduct their businesses freely.

He also promised to build markets for them; avail them with working tools and equipment - and that he would discuss with lenders on the possibility of reducing lending rates.

“Within one year, we have achieved a lot. Instead of lowering interest rates, we have actually brought interest-free loans that are guaranteed by the government in our partnership with the CRDB Bank,” he said.

The money is part of a package that was disbursed to Zanzibar as part of the $576 million (about Sh1.3 trillion) Rapid Credit Facility (RCF) that Tanzania received last year from the International Monetary Fund (IMF).

Earlier, the CRDB Bank Plc managing director, Mr Abdulmajid Nsekela, said the bank decided to partner with the Isles’ government in a efforts to play an important role in the implementation of President Mwinyi’s blue economy agenda.

“At first, it looked impossible to talk of interest-free loans; but, through innovation and partnerships, we have made it,” he said.

He said the bank’s involvement with Small and Medium Enterprises (SMEs) was derived from the fact that the sector accounts for over one-third of Tanzania’s gross domestic product (GDP).

“As much as we are talking of Sh60 billion in interest-free loans here, bear in mind that we have much more than this in support of SMEs,” he said. Until Friday (February 12), he said, five income-generating groups in the Isles had received a total of Sh94 million in interest-free loans under the ‘Inuka na Uchumi wa Buluu’ arrangements. “Applications for loans by six more groups are currently being processed while 50 more have applied for loans totaling over Sh2 billion,” he said.

According to Mr Nsekela, in last year alone, the CRDB Bank disbursed a total of Sh150 billion to various sectors of Zanzibar’s economy, including agriculture, construction, trade and industries.

In his remarks, the Permanent Secretary of the Zanzibar ministry of State in the President’s Office (Finance and Planning), Dr Juma Malik Akil, said that, in line with the goal of developing a blue economy, the government will spend another Sh36.5 billion from the Covid-19 kitty on buying fishing boats, increasing the capital for the state-owned Zanzibar Fisheries Company Limited (Zafico) and building fish ponds for fish farming.

“In the process, a total of 705,000 people will benefit, creating jobs for 117,000 people,” he said.

Speaking in October last year, the Union Minister for Finance and Planning, Dr Mwigulu Nchemba, said Zanzibar would receive Sh230 billion out of the Sh1.3 trillion IMF Covid-19 loan.