GOVT, NMB SIGN 18.5BN/- LOAN DEAL TO EMPOWER SMALL BUSINESS OWNERS

The Government has set aside TZS 18.5 billion for financing small business owners in the country, which will be issued as soft loans by NMB Bank.

The lender and the Ministry of Community Development, Gender, Women, and Special Groups on behalf of the government signed the deal to facilitate the soft financing arrangement at the bank’s head office in Dar es Salaam today.

Speaking before the signing of the agreement, Minister Dr. Dorothy Gwajima said the soft loans from the new government credit facility will be extended to micro, small, and medium-sized enterprises (MSMEs) at an interest rate of seven percent.

“TZS 18.5 billion is a lot of money to start with, but more funds will be allocated in the future since the intention of the government is to make this lending sustainable,” she noted in her remarks, calling upon borrowers to fully repay the loans for that to happen and benefit more people.

Dr. Gwajima said that if the loans are invested diligently and used for the intended purposes, they have the potential to not only stir up the national economy but also help boost household incomes.

According to her, the novel lending arrangement is part of the government’s new approach to empower special groups and ensure only the intended beneficiaries gain from such support.

“The MSMEs sector plays a pivotal role in national development, hence the government’s decision through the ministry to embark on various initiatives to empower it, including making available the soft loans NMB has started providing today.”

Permanent Secretary Dr. Seif Abdallah Shekalaghe said signing of the agreement with NMB culminates the ministry’s process to pick the partner bank in extending soft loans to special groups.

Noting that the credit facility will be replenished annually, he added that the exercise to identify and register all eligible MSMEs has started and all those qualifying are provided with special IDs to enable them to access the loans.

On her part, Chief Executive Officer of NMB, Ruth Zaipuna said the contractual engagement with the ministry was a good example of NMB Bank’s contribution to efforts of the Sixth Phase Government to improve the business environment for all enterprises in the country, including MSMEs.

She said the bank’s MSMEs financing experience that has won it international accolades such as Best SME Bank in Tanzania and the Best SME Financier for the year 2024 qualifies it to better manage the soft loans facility.

“Between 2020 and 2023,” the seasoned banker noted, “NMB Bank issued 129,540 loans worth about TZS 2 trillion to SMEs to cater to their various financing needs. That was an average of TZS 42.3 billion and 2,699 loans a month.”

She told Dr. Gwajima that the financing deal extends the bank’s scope of reaching out to more SMEs whose empowerment is part and parcel of the success story of NMB and its rich impactful history.

The NMB leader thanked the government for engaging the bank in SMEs’ prosperity initiatives to enable them to contribute meaningfully to national building efforts, saying the sector plays a decisive role in the growth of African and other economies in the world.

Composing 95 percent of all formal businesses globally, she explained, SMEs account for 50 percent of GDP in sub-Saharan Africa and 80 percent of all the jobs in the whole of Africa.

“Apart from the soft loans, the targeted entrepreneurs will also benefit from other financial services provided by our bank to grow commercially,” Ms. Zaipuna noted.

She said eligible SMEs for the new credit line will be those approved by the ministry, and the loans will be available according to need. To ensure fiscal discipline, the borrowers will be thoroughly enlightened on money matters, she added.