Zambia’s largest bank by asset size and in the top profitability tier, Zanaco Plc, has secured a $50 million credit line with British International Investment Company for onward lending to the small and medium sized businesses. This was done in Washington DC on the sidelines of the World Bank and International Monetary Fund meetings on 14 October.
Speaking during the signing ceremony British Minister of State and Development Vicky Ford applauded Zambia for taking strides to restore confidence into its economy.
“On behalf of the United Kingdom government, I am extraordinarily excited to witness this signing today. Zambia has been on the most remarkable journey and what you have achieved in the last one year has been phenomenal. Not only trying to stabilize an economy, agree a future economic journey that the whole governments been working on to include renegotiating your debt but also to keep thinking towards the future but this is also about investing in the backbone and unlocking opportunities. Thank you BII for making this investment,” Ms. Ford said.
The copper producers Finance Minister Dr. Situmbeko Musokotwane said the $50 million line for onward lending to SME’s coincides with the governments agenda at a time when the country was exiting debt stress. “Zambia has young population and is feeling the pressure to create employment. We have a good history with BII (former Commonwealth Development Corporation) following historical investment into crown jewel companies in Zambia so of which are still operational. We would like to urge you to invest more as we change the climate that is attracting more investments which will drive profits higher, create sustainable jobs which then pay taxes to the treasury,” Dr. Musokotwane said.
“I listened to the President Hakainde Hichilema in his speech in Glasgow where he made it very clear that now was the best time to invest in Zambia and we committed that we could whatever we could, BII Chief Executive Officer Nick O’Donohoe said.
Zanaco Plc Chief Executive Officer Mukwandi Chibesakunda said, “this is a privilege for us to be the first institution to sign this kind of agreement with BII and we believe that it will set the right tone for growth for the Zambian economy. Economies grow because SMEs grow. They create employment and opportunities, particularly at this point in time we are also focusing on women led SMEs and we will also focus on those that have a climate agenda because that is what the future looks like. We believe that this partnership is one that will form the foundation for further growth,” Mrs. Chibesakunda said.
Access to finance is said to be a hurdle in Africa let alone the cost of capital, reflective of fiscal posture, remains fairly high. Banks nonetheless have continued to innovate through tapping cheaper funding lines to lower lending costs to key economic sectors. With the world transitioning into decarbonization and addressing more social inequalities such as gender imbalances, cheaper pools of funds are becoming readily available to financial institutions as they seek to partner in growing economies. Disbursement of the facility is expected before the end of the year.
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