In a significant development aimed at bolstering Zimbabwe’s trade sector, the African Development Bank (AfDB) and NMB Bank Limited Zimbabwe have sealed a groundbreaking US$15 million trade finance facility. This landmark agreement, signed amid the backdrop of NMB’s headquarters in Harare, is set to usher in a new era of economic growth and trade competency within the country, particularly benefiting small and medium-sized enterprises (SMEs).
The ceremony, attended by key figures including AfDB’s country manager Moono Mupotola and NMB’s chief executive officer Gerald Gore, marked the beginning of what is poised to be a transformative partnership. Mupotola expressed excitement over the initiative, highlighting its potential to significantly enhance the growth and competitive edge of Zimbabwean businesses in the international arena. By mitigating trade finance risks and broadening access to crucial financial services, the AfDB aims to empower SMEs to engage more actively in regional and global trade markets.
Gore, on his part, underscored the pivotal role of the facility in advancing Zimbabwe’s economic prospects. He envisioned the agreement as a crucial stepping stone for NMB Bank in extending vital trade finance support to an expanded roster of local businesses. The initiative is expected not only to unlock new trade opportunities but also to spur job creation and stimulate economic growth across the nation.
This collaboration introduces an innovative uncommitted trade finance facility, granting NMB Bank access to as much as US$15 million over a span of 36 months. Tailored to enhance the trade finance landscape for Zimbabwean businesses, especially those within the agri-business and trade distribution value chains, this facility aligns seamlessly with AfDB’s overarching goals within its trade finance program. By fostering the development of SMEs, the program aims to propel Africa’s economic growth forward.
One of the facility’s core features is its offer of up to 100% coverage to confirming banks, mitigating the risk of non-payment in NMB Bank’s trade transactions. This measure is designed to stimulate a more robust participation from international financial institutions in Zimbabwe’s trade finance activities, addressing a critical gap in the market. The facility is versatile, supporting a variety of trade instruments and reducing the reliance on cash collateral by providing comprehensive payment guarantees. This approach not only secures trade transactions but also ensures a safer and more inclusive trading environment for SMEs, which often face hurdles in accessing finance.
NMB Bank, a prominent commercial bank in Zimbabwe and the main subsidiary of NMBZ Holdings, is recognized for its pivotal role in the financial sector. With significant backing from international and regional shareholders known for their strong African presence, NMB is uniquely positioned to leverage this facility in making a substantial impact on the country’s trade finance sector.
The agreement between AfDB and NMB Bank represents more than just a financial pact; it’s a beacon of hope for Zimbabwe’s SME sector and a key driver of economic revitalization. By easing access to trade finance, this initiative is poised to unlock the potential of Zimbabwean businesses, propelling them toward greater success on the global stage and contributing to the country’s overall economic development.
