National Bank of Malawi (NBM) plc has signed a five-year loan portfolio cover partnership with the African Guarantee Fund (AGF) meant for start-up businesses.
NBM plc chief executive officer Harold Jiya and AGF group chief executive officer Jules Ngankam signed the deal yesterday in Nairobi, Kenya.
Through the deal, NBM plc will be able to support start-ups, women led businesses and green funding initiatives who lack collateral, with the risk partly covered by the fund.
officials after signing
In a statement after signing the deal Jiya, who was accompanied by NBM Development Bank general manager Bernard Masi, said: “The guarantee will leverage untapped emerging sectors, enabling the bank to expand its products and services offerings to various sectors, create business synergies, increase the overall number of beneficiaries and enhance financial inclusion.”
Commenting on the partnership, Ngankam said in the statement, one of the challenges that many SMEs face in accessing credit is lack of adequate collateral to qualify their borrowing.
“This collaboration is part of AGF’s continued efforts to employ SMEs drive economic growth and support sustainable development across our continent,” he is quoted.
National Association for Business Women executive director Barbara Banda yesterday welcomed the initiative, saying it will enable the bank reach out to SMEs that otherwise are regarded as highly risky.
“Most of our members have no valuable collaterals hence most financial institutions are more cautious in dealing with them, but I think if banks become this innovative, the SME sector could benefit.”
Through its guarantee facility, AGF helps financial institutions partially cover the risks associated with SME financing and enable them increase their portfolio in that asset class.
Through its capacity development facility, AGF helps financial institutions enhance their SME financing capabilities and thus be able to execute their growth strategies in that sector with ease.
