P-ZM-HAZ-002

Project Details
ID: P-ZM-HAZ-002 Name: INVESTRUST ZAMBIA Status: Closed Country: Zambia
Sector: Finance Approval date: 24-sep-2008 Task Manager: SAKALA Mdaniso Ernest, PISD2
Total cost: 2315737.5
Currency: UAC
Source(s) of financing
AfDB: 2161361.04
FAPA: 154382.93
Implementing Agency: INVESTRUST BANK PLC Location: COUNTRY-WIDE

Description

The Investrust project is part of SME financing assistance being provided to two banks (Zanaco and Investrust) in order to enhance access to finance by the SME sector and thus contribute to financial deepening in Zambia.The project has two components: financial assistance and technical assistance. The financial assistance to shall include: a)A 5 year USD 3.5 million line of Credit to Investrust to provide affordable medium term liquidity to Investrust for the benefit of qualifying target SMEs The FAPA funded technical assistance will: a)Support Investrust to strengthen its SME credit and environmental assessment capacity by training its staff on SME credit assessment.Investrust staff will also be trained on environmental assessment and monitoring b)Support BDS providers in the market in order to enhance their SME support capacity through training, gender sensitive SME tools and materials. The support shall also enhance the marketing, reach and effectiveness of BDS to target SMEs through linkages and synergies with other initiatives and partners c)Enhance capacities of SME associations to support their members through better governance, SME materials, networking and awareness raising activities and support referencing systems

Benefits

The proposed project will provide financial assistance to Investrust for the direct benefit of about 12 SMEs project in its pipeline. Under the technical assistance the project will strengthen i) Investrust and Zanaco in SME lending through SME credit scoring tools and training about 30 members of their staff; ii) 5 umbrella business associations and 8 local or sectoral member business associations, including associations of women entrepreneurs and; iii) 15 BDS providers in the market.The impact expected of the project implementation are listed below : a)Improved SME lending systems, tools and staff skills will increase understanding of SME sector and lead to new and SME products; better marketing and reach of SME financial services.b)Improved capacities of BDSPs will improve service delivery, tools and reach and awareness of BDS among target SMEs including women-owned SMEs. This will contribute to more relevant and appropriate BDS products; generate SME demand for and use of BDS, and in turn lead to improved SME capacities and creditworthiness.c)Business associations will have better governance systems and structures; be able to attract and retain new members and offer better and more effective services to their members.d)The Project's "holistic" approach will improve SME productivity, competitiveness and profitability; ease the uptake of SME lending among banks and facilitate mainstreaming SME lending into bank's operations.The complementary TA will address capacity constraints facing target SMEs and will lead to more qualifying for SME loans.e)Project shall contribute to the reversal of declining lending to SMEs witnessed between 2006 and 2007 in Investrust.

Rational

Access to finance in Zambia is hampered by both financial and non financial constraints at the SME supporting institutions as well as the SME levels. Therefore, the Investrust project seeks to: a)Address Investrust's limited access affordable medium term liquidity which in turn limits its ability to provide much needed financing to target SMEs on competitive terms (tenor and cost).b)Strengthen SME credit assessment skills and systems in Investrust which limits the volume of SME loans processed; makes the loan processing costly and time consuming, not transparent and compromises credit quality.c)Strengthen SME support institutions such as SME associations and BDS providers whose limited SME and gender blind product offering limits the chances of improving the creditworthiness of the target SMEs including women-owned SMEs.d)Address target SMEs' limited awareness of BDS services and the limited reach of BDSPs (concentrated in urban areas) which limit target SMEs access to much needed support to enhance their credit worthiness and growth capacity.