Development financial institutions FMO of the Netherlands and Swedfund of Sweden have agreed to together provide NMB Bank with a $15 million line of credit for lending to small and medium enterprises (SMEs).
FMO, which is partly owned by the Netherlands government, and Swedfund, which is the Swedish Government’s development finance institution, signed the loan agreement with NMB Bank yesterday (26 September) at a ceremony in the Netherlands.
The line of credit, which is for four years, is intended to enable NMB Bank to provide much needed support to Zimbabwe’s SME sector. The bank will particularly target specific disadvantaged groups by, for instance, lending to small or medium businesses run by women.
NMB Bank Chief Operating Officer Gerald Gore, who signed the agreement on NMB’s behalf, said the line of credit should help promote Zimbabwe’s economic growth, given the importance of SMEs to the country’s economy.
“We are excited about this development,” he said. “It will certainly go a long way in supporting economic growth in the country.”
“SMEs are the backbone of the Zimbabwe economy and as NMB we have been aggressive in sourcing cheaper and long-term finance to support this critical sector of the economy,” Mr Gore said.
“Further, the line will also provide the much-needed nostro funds to support critical imports by our customers,” he added.
FMO Chief Investment Officer Linda Broekhuizen, said the line of credit should help strengthen the position of SMEs in Zimbabwe.
“The role of SMEs is crucial to economic growth. Through this transaction, FMO aims to further strengthen their position within Zimbabwe. It also shows our long-term commitment to NMB, a well-respected client of FMO,” she said.
Expressing similar sentiments, Swedfund chief executive Anna Ryott stressed the importance of job creation and inclusive growth, as well as of supporting businesses run by women.
“We see this loan as a great way to support NMB and particularly their important work to target SMEs, with special focus on businesses run by women. Job creation and inclusive growth will be crucial for coming development steps in Zimbabwe,” she said.
NMB Bank has been leveraging on its strong foreign shareholding to access lines of credit, mostly from foreign development financial institutions (DFIs). FMO is one of the shareholders in NMBZ, the holding group that owns NMB Bank.
Recently, FMO and Norfund, which is also a shareholder in NMB, decided to form a partnership with Rabobank, a Dutch bank. These three entities will, through the creation of a new entity Arise, combine their investments in Africa. That means that their shareholding in NMB will be taken over by Arise, when it becomes operational on January 1 next year. The partners are committed to strengthening and developing effective inclusive financial systems in Africa.
Arise will have a presence in 20 African countries. Capital will be allocated to support current investee companies as well as new minority investments in the market.
“FMO has been supporting NMB for the past five years and we are excited to have Swedfund join them for this syndicated loan,” Mr Gore said.
“We believe our strong shareholder profile and corporate governance structures make the bank an attractive option for external funders,” he added.
Besides FMO and Norfund, other NMB shareholders include AfricInvest of Tunisia, African Century of the United Kingdom and Old Mutual, which together with FMO and Norfund own about 60 percent of the bank.
FMO is one of the largest DFIs in the world, with a portfolio in excess of 8,9 billion euros in more than 85 countries. Swedfund has a portfolio of 3,6 billion Swedish krona in 27 countries., Swedfund’s goal is to eliminate poverty by creating sustainable businesses in some of the world’s toughest but most promising markets.