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Tunis, 5 July 2007 – The African Development Bank (AfDB) Group will support micro-, small- and medium-size enterprises in Tanzania through a private sector equity investment of €600,000 in the Access Bank of Tanzania approved by the Bank Group’s Board of Directors on Thursday in Tunis.
The objective of the invesment is to provide clients in the lower income group, with a broad range of financial services. The core target group will be growth oriented in the upper micro and lower SME segment.
The project is based on the model of an investment holding company where a microfinance operator in this case, Access Holding AG, a financial institution established in Germany, with the help of the Bank and other like – minded investors, establishes a microfinance commercial bank in this case Access Bank of Tanzania (ABT) that will provide financial services to low income people in Tanzania.
The project involves the subscription by the Bank of 15.8% shares in the rights issue of new shares of Access Bank of Tanzania (ABT). The initial core capital of ABT will amount to € 3.8 million, which will consist of ordinary registered non-bearer shares designated as common stock. The company intends to raise additional shares once established to strengthen its capital base.
Access Bank will be initially endowed with an equity capital in Tanzanian Shillings (TSH) equivalent of € 3.8 million in order to meet the minimum capital requirements for a commercial bank (currently approx. € 3.2 million).
Access Bank is expected to serve at least 24,000 low income microenterpreneurs with appropriate and sustainable financial services. The MFIs outreach is expected to continue to grow from there, unencumbered by the funding limitations that usually face specialized microfinance institutions.
The project, which is in line with the Bank Group’s Strategy for Tanzania for the period 2006-2010, will have a very high development impact. Microfinance has been proven to have a major positive role in alleviating poverty and unemployment in developing countries. The project will support and facilitate the introduction and transfer of management expertise, new financial products and lending methodologies that allow commercial banks to enter and sustain microfinance on commercial terms, the project has the potential to generate a massive increase in the availability of financial service for the poor.
The Bank Group commenced operations in Tanzania in 1971. To date the Bank has committed a total of UA 1.2 billion, about US$ 1.8 billion, in 103 operations. The AfDB is among Tanzania’s top four major development partners.
* UA 1 = US$ 1.51286 = TZS 1948.37 as at 28 June 2007
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