How the EU’s Sh1.4 trillion support will be spent by three Tanzanian banks

Dar es Salaam. Three major commercial banks - CRDB Bank Plc, KCB Bank Tanzania, and NMB Bank Plc - say they would use part of the 540 million euros (Sh1.4 trillion) support from the European Investment Bank to fill the financing gap on small and medium-sized enterprises, start-ups, and women-owned or managed businesses.

The three banks yesterday signed separate agreements with the EIB yesterday totalling 270 million euros (Sh700 billion) to be spent to bankroll businesses in the agreed categories.

A significant part of the money, 170 million euros will be disbursed as credit to women businesses and the rest, 100 million euros will be channelled to companies in the blue economy.

Representatives of the three banks said the EU financial support is vital in unlocking job creating opportunities and in stimulating economic growth.

KCB Tanzania’s managing director Mr Cosmas Kimario said the new credit line is even more significant due to its long-term nature of five to 12 years as it will allow SMEs to spread out their loan payments over a more manageable timeline and have the capacity to grow and succeed. Moreover businesses will be granted a two year grace period before starting repayments, Mr Kimario added.

“The timing is also excellent. We need as much financial resources as we can get to fully recover from the effects of Covid-19 pandemic,” he said.

The CRDB Bank would receive 150 million euros to loan out to its clients in the said categories, according to Managing Director, Abdulmajid Nsekela.

“Having adequate access to credit is essential for SMEs to growth. And when you talk of small and medium businesses you talk of women, so the gender factor is appropriate here,” he said.

The Treasurer for NMB Bank Plc, Mr Aziz Chacha, said his bank would get 100 million euros, which will be used to supplement initiatives towards supporting women entrepreneurs.

“We should attribute this deal to Tanzania’s good business environment and the country’s ability to attract foreign capital and attracting new investors,” he said.

EIB vice president Thomas Östros said this new financing facility will also be associated with technical support.

“The new business financing confirmed today in Dar es Salaam demonstrates the close cooperation between Tanzania and European partners to ensure that Tanzanian companies can expand, create skilled jobs, and explore new business opportunities in the years ahead,” he said.

“The European Investment Bank is pleased to return to Tanzania and confirm our largest ever support for targeted investment by entrepreneurs and businesses across the country,” he added.

The signing of the agreement between EIB and the three local banks yesterday marked the end of the two-day business forum organized by the European Union in Dar es Salaam and which attracted the participation of over a thousand individuals.

Gracing the closing ceremony Zanzibar’s President Hussein Ali Mwinyi said Europeans should consider Tanzania as a preferred investment destination, given its conducive business environment and untapped investment opportunities. “The Government has put investment at the forefront of its agenda and is committed to creating a competitive business and investment climate for private sector development.”

“Through partnerships and collaborations, we can transform the private sector to achieve the goal of an inclusive and broad-based middle-income economy come 2025,” he said.

President Mwinyi said untapped investment opportunities in Tanzania are in sectors such as agriculture, blue economy, renewable energy, manufacturing, mining, oil and gas, construction, transport and logistics, and financial services.