“Signing this loan agreement with DEG asserts the confidence of these International DFIs in this ‘argest local Tanzanian bank,” Chief Finance Officer, Selemani Ponda told East African Business Week.

 

He said last week, the money is for supporting Tanzania’s small and medium-sized enterprise sector (SMEs).

 

It is in the form of a senior loan will be disbursed in two tranches based on the progressive growth on lending assistance to the SMEs.

 

In technical terms, a senior loan is a debt financing obligation that holds legal claim to the borrower’s assets above all other debt obligations.

 

“The senior loan assistance comes at an opportune time when the economy continues to remain buoyant and businesses are graduating to the next rung of the ladder – small players looking to be there in the ‘medium’ category,” Ponda said.

 

DEG is a subsidiary of KfW, a German government-owned development bank, based in Frankfurt. 

 

DEG finances investments of private companies in developing and transitioning countries. 

 

It has been active in East Africa since 1962, and runs its own representative office in Nairobi. The current portfolio in East Africa covers a financing volume of over 220 million euro ($245.01 million).

 

“DEG is proud to be financing the EXIM BANK SME portfolio. The loan facility will support the further development of the small and medium-size business segment across Tanzania and help to address a major constraint to economic growth,” Gudrun Busch, the Director of Financial Institutions Africa and Latin America at DEG said.

 

Ponda said the timing is just right for the bank to participate for the required impetus to the sector.

 

He said the bank has always remained focused to the cause of SMEs, understanding their business needs and structuring products and schemes to suit the SMEs.

 

The bank currently has a loan book of Tsh582 billion (about $268. 54 million) out of which Tsh291 billion ( about$134. 27 million) is financed to the SME sector.

 

He said the bank sees an enormous potential for credit assistance to this segment.

 

He said Exim Bank has for more than a decade, maintained strong relations with other leading International Development financing institutions (DFIs) like IFC, PROPARCO, NORFUND and FMO. 

Source : EAST AFRICA BUSINESS WEEK