The Eastern and Southern African Trade and Development Bank (TDB) is rolling out a credit programme in six African countries to support women-led export-oriented SMEs.
Among the first to benefit are Ethiopian businesses, following an agreement between TDB and Ethiopia’s Enat Bank.
Under a memorandum of understanding, the two have agreed to set up a credit enhancement facility and work together to build a pipeline of SMEs which qualify for export credit support. Focusing on women-owned and managed businesses, the parties will run the programme in partnership with the Ethiopian Women Exporters Association.
The facility will make available loans, guarantees and capacity-building interventions, mainly within the financial services, agribusiness, mining, leather and tanning, and manufacturing sectors.
TDB and Enat Bank will also enlist a local SME advisory partner to support participating firms on export readiness requirements.
The agreement is part of a larger programme that TDB is rolling out to specialist financial institutions in its member countries. It launched its first facility in Zimbabwe in October and will be expanding it further in the coming months, starting with Burundi and Kenya, and then Zambia and Malawi. The bank has allocated US$3mn to pilot the programme over the next two years in these countries.
According to TDB president Admassu Tadesse, Enat Bank was selected as a partner for this facility because of its “unique ethos”.
The local bank is known as “the first women’s bank” in Ethiopia. It was initiated in 2013 by 11 Ethiopian women, with a 64% women ownership, and has a special focus on providing financial services to women.
“This instrument is aimed at helping Enat Bank scale up its impact, share their risk and reach out to more SMEs, particularly women-led and women-owned SMEs. We also hope that Enat will use this instrument to reach more young entrepreneurs and those companies employing youth,” Tadesse says.
According to the World Bank, Ethiopia lags behind the rest of Sub-Saharan African and other developing countries when it comes to lending to SMEs. In fact, it has reported that SME lending in the country comprises only 7% of banks’ lending portfolios.