Bank simplifies access to long-term finance

NBM Development Bank says it is geared to ease access to long-term financing for small and medium enterprises (SMEs) by providing debt and equity capital to both start-ups and existing businesses.

NBM Development Bank, a subsidiary of Malawi Stock Exchange-listed National Bank of Malawi (NBM) plc which has been in operation since 2019, provides capital of between K20 million and  K250 million to SMEs in agribusiness, education, information and communications technology, manufacturing, health, energy and tourism sectors.

Speaking in an interview on Friday in Blantyre, the bank’s general manager Bernard Masi said they want to bring meaningful social and development impact to the economy.

He said: “We were set up to support SMEs by providing long-term funding. We have provided funding  to a number of SMEs, including start-up businesses where we have disbursed about K3.5 billion to entrepreneurs of which over K1 billion has been given to women entrepreneurs and close to K500 000 has been set out to youth entrepreneurs.

“Our goal is to achieve development of exports, import substitution, women and youth empowerment, access to clean and affordable energy sources and reduction in carbon footprint, access to world-class health facilities and job creation.”

World Bank figures show that majority of SMEs  in the country fail  to access finance despite the sector being a significant source of employment, providing jobs to 1.6 million people.

The figures further show that only 10 percent of medium enterprises, five percent of small enterprises and three percent of micro enterprises have credit from commercial banks.

While admitting that there has been a mismatch in the financial sector as people borrow from commercial banks for long-term investment, Masi said NBM Development Bank is there to provide flexibility to SMEs.

“Our loans have repayment periods of between two and 10 years and attract interest rates of between 11 percent and 18 percent. We also understand that collateral is an issue for most SMEs, therefore, our bank is giving these loans without any collateral.”

Chamber for Small and Medium Businesses Association executive secretary James Chiutsi said SMEs have been facing challenges to access finance due to strict collateral requirements.

“Despite the country having several entrepreneurs with sound business ideas, accessing loans has and continues to be a challenge for SMEs.

“Not many people have acquired assets that can be used as collateral, but the fact is that this bank is giving out loans even just for a business idea is a huge relief,” he said.

Indigenous Business Association of Malawi Mike Mlombwa said the development bank is an answer to the SMEs who lack a variety of financial instrument.