US$400m boost for Zimbabwe, Africa SMEs
Local small to medium enterprises (SMEs) have an opportunity to benefit from the US$400 million facility from China Development aimed at boosting the sector across the region.
This comes as China Development Bank (CDB) and the African Export-Import Bank (Afreximbank) have joined forces to provide a substantial boost to SMEs across the continent with CBD extending the long-term loan facility to Afreximbank.
The facility is to capacitate the sector that oils most African economies, Zimbabweans included. According to the National Research and Development Survey on SMEs and Co-operatives October 2019, SMEs in Zimbabwe contribute over 50 percent of GDP and employ over 60 percent of the productive workforce.
They also contribute to the country’s export earnings and help to reduce poverty.
On a regional scale, SMEs are major job creators in Africa employing about 70 percent of the workforce, which is about 180 million people.
Now the partnership between CDB and Afreximbank is expected to address one of the challenges that the sector faces, that is funding to boost their businesses.
The agreement, sealed by CDB president Tan Jiong and Professor Benedict Oramah, president and chairman of the board of directors of Afreximbank, sets the stage for Afreximbank to utilise the funds to bolster the financing options available to African SMEs engaged in both intra-African and extra-African trade, as well as those contributing to the productive sectors within Afreximbank Member States.
Under the terms of the agreement, the seven-year loan facility will be channelled either directly to qualifying African SMEs that meet Afreximbank’s criteria or indirectly through local financial intermediaries.
The injection of funds comes at a crucial juncture, as African SMEs have been grappling with the challenge of securing affordable and adequate financing to nurture their growth ambitions.
Oramah, speaking after the signing ceremony held at Afreximbank headquarters recently, emphasised the continuous struggle faced by African SMEs in their pursuit of suitable financing solutions for expanding their operations.
He expressed optimism that the CDB facility would substantially amplify the available financing for these businesses, catalysing economic progress across the continent.
What sets this agreement apart is Afreximbank’s commitment to pass on the advantageous terms of the facility to the end beneficiaries.
With the bank securing medium to long-term funding at favourable rates, these benefits will flow through to the SMEs, fostering a conducive environment for their growth and sustainability.
“This facility further strengthens the strategic partnership we have developed with the China Development Bank over the last six years, which has seen CDB make three previous interventions in support of our work at Afreximbank.
“It will also enable our two institutions to achieve our respective mandates and developmental outcomes, which include job creation, increased economic activity and increased extra-African trade with China,” said Oramah. — Business Weekly.
