FMO Entrepreneurial Development Bank, a Dutch entity investing in the private sector in developing countries for over 45 years, has recently announced that it has awarded National Microfinance Bank Plc (DSE:NMB) with a USD 35 million syndicated loan to boost lending to small and medium-scale enterprises (SMEs) in Tanzania.
The loan is being partially funded by FMO and two more development banks from France and Sweden, the Groupe Agence Francaise de Developpement (PROPARCO) and Swedfund International AB (Swedfund) which are contributing with USD 15 million and USD 5 million respectively.
The fund will be mainly focused on lending to teachers and SMEs from Mwanza, Tanzania’s second largest city in Lake Victoria’s region.
NMB will use the proceeds to develop more packages for public servants as teachers and SMEs, to help them to avoid strict lending conditions established by commercial banks, he added.
Mwanza Regional Commissioner, Mr. Magesa Mulongo, invited the bank to go beyond the islands in the Lake Zone where the majority of the population is concentrated and cannot access financial services.
In Tanzania, only 12% of SMEs currently own a credit lines at a financial institution according to African Development Bank (AfDB) statistics, and 53.3% of them see access to credit as the main constrain to grow their businesses according to a research from the International Institute for Science, Technology and Education (IISTE).
Local commercial banks in Tanzania manage an average aggregate exposure of 37% of loans to SMEs of the total lending according AfDB.
This generates a lending gap of up to USD 2.48 billion annually, with more than 4 million Tanzanian SMEs which represent 40% of employment, according to the International Finance Corporation (IFC).