AfDB SME Program: Enhancing Inclusive Growth and Job Creation in Africa

24/04/2014
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The Board of Governors of the African Development Bank Group (AfDB) through its private sector window has approved a US $9 million line of credit (LOC) equivalent in Mozambique metica (MZN) to Moza Banco.

Moza Banco S.A. is one of Mozambique’s fastest-growing financial institutions with strong focus on SMEs. Moza Banco is actively present in almost all of Mozambique’s 11 provinces with business including (i) corporate, (ii) SMEs and (iii) retail.

The LOC will support SME sub-projects and these are well-diversified spanning all economic sectors including manufacturing, commerce/trade, services, tourism, construction, agriculture and transport, etc. Economic benefits likely to accrue from the 70 SME sub-projects to be financed under this facility and these SMEs currently have approximately 2,000 employees and are going to add 400 new employees in rural and urban areas of Mozambique. In addition, the project will induce transfer of technology, development of local entrepreneurship and enhancement of technical skills. The sub-projects will contribute to Government revenues in the form of value-added, income and corporation taxes.

Moza Banco is part the AfDB’s Africa SME Program to develop and expand its SME financing activities and provide medium- to long-term financing options to local SMEs in Mozambique.

Approved by the AfDB’s Board of Directors in July 2013, the Africa Small and Medium Enterprises (SME) Program is a four-year, US $125-million funding program combined with a US $3.98-million technical assistance package granted by the Fund for African Private Sector Assistance (FAPA), which aims to supporting micro, small and medium enterprises (MSMEs) in Africa. SME Program will provide the necessary longer term finance and a technical assistance package to address a number of constraints faced by around 25 target financial institutions and their SME clients across Africa.

The SME Program has already approved the first two of the 25 financial institutions that will benefit from the program’s funding and technical assistance in Tanzania and Zambia. These projects are:

  • The DCB Commercial Bank PLC (DCB), a community bank in Tanzania that will benefit from a US $5 million LOC to uplift the standard of living of low-income people by providing loans to disadvantaged Tanzanians who cannot access financial services through normal banking channels, and
  • The CETZAM financial services PLC in Zambia, a registered deposit-taking micro-financing institution, which will receive a US $1.5 million LOC to increase its loans to Zambia’s micro and small entrepreneurs.

CETZAM will also be benefited from FAPA technical assistance supported by the governments of Japan and Austria.

Throughout its ongoing selection process, the SME Program will avail further longer-term resources to thousands of SMEs, including women and youth, thus contributing to job creation, poverty reduction and inclusive growth on the continent.

About the Fund for African Private Sector Assistance

The Fund for African Private Sector Assistance (FAPA) is a multi-donor thematic trust fund that provides grant funding for technical assistance and capacity building to support implementation of the Bank’s Private Sector Development Strategy. The Government of Japan, African Development Bank, the Austrian Development Bank and the Government of Austria are the contributors to the fund, which to date has provided US $42 million to 47 projects across the African continent. The FAPA portfolio includes regional and national projects in sectors such as business enabling environment, financial intermediation, infrastructure, trade and micro, small and medium enterprises.