What Sh470 billion NBC, NMB financing in Zanzibar means

Zanzibar. The National Bank of Commerce (NBC) and NMB Bank have concluded a $200 million (about Sh470 billion) syndicated loan to the Government of Zanzibar as the two leaders seek to play an increasingly key role in the isles’ economic development endeavours.

The money will be spent towards financing various socioeconomic development projects in the Isle as part of the implementation of Zanzibar’s Sh2.84 trillion budget for the financial year 2023/2024.

Zanzibar’s Finance and Planning minister, Dr Saada Mkuya Salum, said in the House of Representatives in June that out of the Sh2.84 trillion, the government would source Sh717.21 billion in form of “special loan” for implementation of development projects across the Isles.

And in the $200 million syndicated loan – which will be repaid within an eight-year period – NBC is the Mandated Lead Arranger (MLA) while NMB is Co-lender.

The loan will fund social services and infrastructure development initiatives that aim to enhance livelihoods, drive economic growth, and foster sustainable development in Zanzibar.

NBC Bank managing director Theobald Sabi said the loan was testament to the bank’s pivotal role in realising the Government of Zanzibar's vision of inclusive growth and development.

He said the credit arrangement represents a significant milestone toward shared goals of sustainable development and positively impacting people's lives.

“NBC Bank remains committed to fostering economic progress and social welfare through responsible financial practices, catalyzing sustainable economic growth,” he said.

NMB chief finance officer Juma Kimori described the syndicated loan as a landmark achievement for the banking and finance industry in the country.

 “We are honoured to be part of this significant undertaking to support the Revolutionary Government of Zanzibar. Our participation in this arrangement underscores our deep commitment to support the development and well-being of the Zanzibar community,” Mr Kimori said.

He exuded his confidence that the loan will help to enhance social services and foster sustainable economic growth thereby creating lasting benefits for the people of Zanzibar and contribute to their prosperous future.

Meanwhile, Dr Saada Mkuya Salum said at the weekend that the successful acquisition of the syndicated loan was testament to the Zanzibar Government’s commitment to continue securing alternative local sources to fund development projects.

“We approached all the local financiers in our quest to secure alternative sources of funds and we are glad that NBC and NMB showed interest. We are glad that today we are signing the syndicated loan agreements after almost six months of negotiations,” Dr Mkuya said, assuring that the money will be spent in accordance with the rules and regulations for financial policy management.

Speaking during the event, Zanzibar President Dr Hussein Ali Mwinyi – who also witnessed the signing ceremony - expressed gratitude to the banks for availing the loan to his government.

Dr Mwinyi said the credit facility would have a transformative impact on social services and infrastructure, leading to improved living standards, increased employment opportunities, and sustainable economic development, aligning perfectly with the government's strategic development vision.

The loan proceeds will be directed towards various social services and infrastructure projects, encompassing healthcare facilities, educational institutions, transportation networks, and community development programmes.

By investing in these vital sectors, the Government of Zanzibar aims to enhance the overall quality of life, promote access to essential services, and facilitate long-term economic growth in the region.

He said after securing the loan, his administration will double the amount spent on development projects in the Isles this year as compared to last year.

He said his administration has already put in place strategies to ensure that the loan is paid within the stipulated time.

 “Our plan is to continue working around the clock to ensure that we finalise all the priority development projects that have been earmarked before the 2025 elections,” Dr Mwinyi added.