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Pride Mahlangu, Business Reporter

THE Trade and Development Bank (TDB) (formerly PTA Bank) has issued a three-year guarantee of $1 million scalable up to $6 million to Untu Capital Microfinance to bolster lending to the small to medium enterprises (SMEs) in Zimbabwe.

It is estimated that SMEs contribute to more than half of the country’s GDP, employ over 75 percent of the workforce and contribute significantly to the tax data-base but receive small sums in terms of loans from Zimbabwean banks.

“TDB has issued a three-year guarantee of ZWL$1 million — scalable to up to ZWL$6 million to Untu Capital in favour of NMB Bank, blended with a technical assistance grant of ZWL$250 000 to enhance Untu’s lending capacity to SMEs in Zimbabwe,” said TDB in a statement.

“The guarantee is the first of its kind to be extended under TDB’s SME programme launched in 2018. The programme’s approach consists in leveraging TDB’s seed capital, blending it, and directing it through partner financial institutions, such as Untu Capital, who target SMEs from micro-enterprises to missing middle SMEs as their client-base.”

In 2018, TDB, a regional financial arm linked to Comesa, in partnership with Untu Capital, a local microfinance institution, launched a two-year pilot SMEs programme, which was valued at $3 million. 

The arrangement was a blended finance and business support programme aimed at supporting SMEs in their quest to get access to finance and capacity building.

The development financial institution said commercial banks found it challenging to understand and lend to MSMEs, hence there was a significant opportunity for institutions such as Untu Capital to provide the “firepower” these enterprises needed, to enable them to become vectors of change and sustainable development in Zimbabwe. 

It added that the SMEs financing gap was valued in Sub-Saharan Africa at US$331 billion, including US$42 billion for women entrepreneurs, adding that access to finance, alongside other challenges, hinder micro-small to medium enterprises (MSMEs) from flourishing and even surviving. TDB president and chief executive, Admassu Tadesse, was quoted as saying:

 “We appreciate the value of MSMEs in our economies and are thus delighted to extend this facility to Untu Capital in favour of NMB Bank, under our SME Programme. 

“It complements our regular operations, which, among other priorities, also target SMEs and mid-cap companies, namely via dedicated lines of credit with various partners around the globe.”

NMB chief executive Mr Ben Washaya said the bank was delighted to play a crucial role in this transaction, which resonates very well with its model of capacitating SMEs, which are the future of the Zimbabwean economy.

“We are particularly pleased to be working with these key long-standing partners, TDB and Untu in supporting the SMEs sector. This guarantee facility enhances our lending capacity to this crucial sector and augments our current efforts to support SMEs,” he said.

Untu Capital’s chief executive, Mr Clive Msipha, said Untu has supported SMEs in Zimbabwe for the past 10 years and will use its knowledge of the sector to play a crucial intermediation role of directing funding to SMEs.

“The lender is excited at this opportunity to work with TDB and NMB in supporting SMEs in Zimbabwe. 

“This facility recognises that there are internal resources that are available within the banking sector and aims to catalyst further lending to the SME sector.” — @pridesinstinctz