The African Development Bank (AfDB) has signed a US$10mn credit agreement with the Zambia National Commercial Bank (ZANACO), aimed at providing long-term financing to small and medium enterprises (SMEs).
ZANACO is a majority Zambian-owned bank which was privatised three years ago and is currently controlled by Rabobank of the Netherlands.
The line of credit will provide long-term financing to SMEs to enhance their access to finance on more favourable terms and conditions. It also aims at providing a partial credit guarantee facility to ZANACO. It is targeted at SMEs in a number of sectors, including mining, manufacturing, agriculture and agri-business, tourism and information technology.
Speaking during the event, Zambian field office resident representative, Freddie Kwesiga, said he hoped the line of credit would reach its intended target and extend the facility to the non-traditional and under-served SMEs, which include women and the youth, as well as contributing to efforts at creating jobs, thereby reducing poverty. He also expressed satisfaction with AfDB’s collaboration with USAID which will guarantee US$0.5mn, while the bank guarantees US$2mn to a 10-year non-revolving 50% partial credit guarantee facility to ZANACO.
Speaking after the signing in early February, ZANACO managing director, Mark Wiessing said that ZANACO already had over 20,000 SME customers and had created an SME division to cater to this sector. He expressed his gratitude to the AfDB for extending the line of credit which will enable ZANACO to assist the SMEs in particular, including those in agriculture with their financing requirements in US dollars. He further thanked the AfDB for its confidence in ZANACO and for opening its doors to the African private sector when many other international lending institutions closed theirs, especially at the peak of the global financial crisis.
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