CRDB Bank delivering on President Samia’s promise to open up economy

On her maiden state visit to Kenya soon after taking office in May 2021, President Samia Suluhu Hassan made a promise when she addressed the private sector.

“We are going to open up the country, in Kenya you have Uhuru which means freedom to do busi­ness; in Tanzania now we have Suluhu which means solutions to business obstacles, the ball is in your court,” President Samia said attracting applause from Kenyan and Tanzanian business commu­nities.

In order for the private sector to work and deliver on growth, financ­ing of utmost importance. Among many other obstacles facing the pri­vate sector in countries like Tanza­nia is where to get affordable loans to invest as capital.

“Capital remains to be a critical factor hindering growth of busi­nesses hence impacting on our abil­ity to competitively produce and sell to East African Community countries such as Kenya,” said Tan­zania Private Sector Foundation’s Chairperson, Angelina Ngalula.

The country’s financial sector has responded positively to President Samia’s business friendly reforms. “We as the financial sector, we are duty bound to support govern­ment’s efforts in growing the econo­my which means providing financ­ing both to the public and private sectors,” says CRDB Bank’s Manag­ing Director cum CEO, Abdulmajid Nsekela who is currently visiting the headquarters of Groupe Agence Francaise in Paris, France.

Mr Nsekela who is leading the bank’s delegation, has sought to strengthen the lender’s loan porti­folio by boosing its volumes through forging partnerships with leading global financial institutions such as Proparco and several others.

CRDB Bank which first signed a collaboration agreement with Proparco, the French international development agency’s commercial lending arm, is seeking broader partnership with the Paris based institution.

In March this year, CRDB Bank and Proparco signed an over Tshs 182 billion agreement to boost its capacity to lend to micro, small and medium-sized enterpris­es (MSMEs) in the country. The amount that was in form of a credit line and two portfolio guarantees has since been channeled towards financing MSMEs in line with the country’s economic growth agenda, with a particular focus on wom­en-led enterprises that are recov­ering from the COVID-19 disrup­tions.

Proparco, an arm of Agence Française de Développement Group (AFD Group), provides funding and support to both busi­nesses and financial institutions in Africa, Asia, Latin America and the Middle East. After making notable success with the initial funding, the bank has seen room for more opportunity.

Mr Nsekela said their discussions with Proparco’s CEO, Françoise Lombard were centered on boost­ing CRDB Bank’s capacity for private sector’s financing, with a particular interest on supporting businesses and SMEs recovery from the impacts of COVID-19, as well as bridging the financing gap to women entrepreneurs in Tanzania, and Burundi where the bank has a subsidiary.

“We are very happy to strength­en our cooperation with Proparco to achieve sustainable and inclu­sive development. We are ready to increase our collaboration and use our expertise to meet the ambitious agenda of supporting growth of our people and the economy at large,” Nsekela noted.

He revealed that after a few months of partnership with Proparco, they realized that there are numerous opportunities for the Bank to grow its business and the Tanzanian economy. He said his management is confident that broader collaboration will increase the CRDB Bank’s capital hence grow its liquidity for lending across the economy.

“I don’t find it surprising that investors want to take part in Tan­zania’s economy, our President Samia Suluhu Hassan is doing a commendable job in opening up the country’s economy and hastening recovery,” the CRDB chief added.

Commenting on the two parties partnership, Proparco’s Lombard said: “Cooperation between finan­cial institutions is key to support­ing the development of the private sector and growth of economies. I’m delighted by the CRDB Bank’s willingness to enhance collabora­tion; it demonstrates their eager­ness to support Tanzanian busi­nesses and SMEs, which is in line with Proparco’s objective.”

Lombard added that, in addi­tion to financial assistance, they have discussed providing techni­cal assistance to CRDB Bank in order to improve the Bank’s lend­ing practices, and support prod­uct innovation, thereby increas­ing the impact of Proparco’s and CRDB Bank’s investments in local development.

Tanzania, according to Lom­bard, has a huge potential to grow economically because of its stra­tegic geographical location and abundance of economic activities. “The growth is only possible if financial institutions are willing to the finance sectors of the econ­omy. CRDB Bank has shown a genuine desire to be a part of Tan­zania’s transformational story.”

In France, the CRDB Bank del­egation also met with France’s government institutions, banks, and businesses to discuss various investment opportunities in the country. Some of the institutions are; Business France responsible for supporting the international development of the French econ­omy; Bpifrance a Public Invest­ment Bank; and SH Biaugeaud an industrial agro engineering com­pany, specializing in the process­ing of fruits and vegetables.

CRDB Bank has, this year alone, entered into credit line and port­folio guarantee agreements of over Sh 500 billion with Propar­co, USAID and DFC, IFC, AfDB, and AGF to support business and SMEs in the country.

In June this year, the Dar es Salaam based lender and the United States Agency for Inter­national Development (USAID) and the United States Develop­ment Finance Corporation (DFC) signed a deal to facilitate Sh 100 billion in loans.

The partnership was aimed to assist the Bank to expand access to finance for women and youth borrowers, especially in education and health sectors, which domi­nate the informal sector through­out Tanzania.

CRDB Bank also sealed agree­ments with African Development Bank and the African Guarantee Fund for a U$110 million to boost access to finance by women SMEs mid this year.

The AfDB’s Director General for East Africa, Nnenna Nwabufo said during the signing ceremony that the bouquet of financing will ena­ble CRDB to significantly impact the socio-economic growth of the region by empowering SMEs, especially women, and unleashing their full potential.

In July the Bank also secured new investment from World Bank Group’s commercial lending arm, the increase access to finance for micro, small and medium-sized enterprises in Tanzania and Burundi.

Under the deal, IFC provided a U$100 million loan to CRDB Bank, half of which will be in local currency, and a U$5 million loan to CRDB Bank Burundi to sup­port lending to smaller business­es in both countries, especially to women-owned businesses. Up to 25 percent of the loan in Tan­zania will be dedicated to wom­en-owned businesses.

In addition this year also, the country’s largest Bank successful­ly raise U$130m syndicated loan from Investec Bank and Intesa Sanpaolo. The capital raised will be used to unlock working capital for the corporate and SME sector in the country including project and infrastructure finance linked to the commodity trading.

In 2019, CRDB Bank became the first private commercial bank to be accredited by UN GCF as a financial intermediary in green financing in Sub Saharan Africa. With this endorsement, CRDB Bank is now able to finance var­ious green projects worth up to USD 250 million per single pro­ject funding proposal.

Last year the Bank unveiled a USD 200 million facility to finance climate-resilient and adaptation projects in the country through its green financing program dubbed Tanzania Agriculture Climate Adaptation Technology Deploy­ment Program (TACADTP). GCF approved USD 100 million to sup­port the project, while CRDB Bank also allocated the same amount.

“As a leading Bank in Tanzania, CRDB Bank continues to explore business opportunities in stra­tegic sectors that will bring the much needed development to boost the country’s economy. These collaborations will help us boost our lending activities and further strengthen our leadership position,” Mr Nsekela stated.

CRDB Bank is Tanzania’s largest bank, with a strong balance sheet worth more than Sh 10 trillion. According to its half-year finan­cial results, the bank is the leading financier of Tanzania’s economy, with over Sh 6 trillion in loans.

The Bank is the first bank in Tanzania to be rated among the top ten stable and safer institu­tions to invest in Africa by Moody`s Investors Services. Moody’s rated CRDB Bank with a “B1 stable out­look” which is the highest rating to have been acquired by financial institutions in Sub Saharan Afri­ca. This has attracted many inter­national financial institutions to partner with CRDB Bank.