eBusiness Weekly
Business Writer
The African Development Bank (AfDB) has approved a US$15 million Trade Finance Transaction Guarantee facility for NMB Bank, the AfDB announced on Wednesday.
This marks AfDB’s first line of credit to NMB, a registered commercial bank renowned for its unwavering support for small and medium-sized enterprises (SMEs).
This facility will provide 100 percent guarantee to international confirming banks (CBs) for the non-payment risk they take on NMB’s trade finance transactions conducted on behalf SMEs and local corporates active in agri-business and distribution value chains in Zimbabwe.
According to the AfDB, the facility is projected to support more than US$100 million in total trade volumes by 2026 and by extension reduce the continent’s trade finance gap. It will also increase access to finance and support intra-Africa trade between Zimbabwe, SADC and the rest of Africa.
AfDB country manager, Moono Mupotola, noted that SMEs and other domestic firms have a harder time accessing trade finance than multinational corporates and large local corporates.
“This transaction guarantee facility is therefore a timely and strategic tool that will enhance correspondent banking relationships for NMB and, in the process, help reduce Zimbabwe’s trade finance gap,” she said.
Lamin Drammeh, head of trade finance at the AfDB emphasised that this trade intervention aligns directly with the bank’s broader mission to support small businesses, women entrepreneurs, farmers and local corporations across the continent. This will be achieved by integrating them into key regional and global value chains.
“This trade intervention speaks to the AfDB’s trade finance programme objectives to support SMEs, women-owned businesses, farmers and local enterprises/local corporates on the continent by connecting them into key value chains regionally and globally,” said Drammeh.
According to World Economics, the SME’s and the informal economy accounts for 61 percent of the gross domestic product. The International Labour Organisation estimates that the sector employs about 5,2 million or 34 percent of the population.
However, the SMEs in Zimbabwe are facing significant challenges due to erratic and insufficient support from various stakeholders. The lack of assistance hinders their growth and development, limiting their contribution to the country’s economic recovery.
A major obstacle faced by SMEs is the limited access to affordable financing.
Traditional banks often impose stringent requirements, making it difficult for small businesses to qualify for loans. This lack of access to capital hinders their ability to invest in expansion, innovation and job creation.
Many SME owners also lack the necessary technical and business skills to effectively manage and grow their businesses.
This lack of expertise limits their ability to develop sound business plans, implement effective marketing strategies and manage their finances efficiently.
NMB was established in 1992 by a group of Zimbabwean entrepreneurs and is listed on the Zimbabwe Stock Exchange.
It’s a sole subsidiary of NMBZ Holdings Limited, a Zimbabwean based investment holding company involved in banking, microfinance, real estate and bancassurance.
It offers a comprehensive suite of banking services to corporates, SMEs and individuals and has been recognised with multiple awards for its service excellence and innovative approach.
NMB is slowly growing as a systemic bank in Zimbabwe with 13 branches and 102 agencies via a partnership with Zimpost.
