What you need to know:
- The AfDB, which has been supporting the growth of Tanzania’s MSMEs in various ways, including through its approval in 2016 of a $120 million line of credit (LOC) to the country, now wants to establish an entrepreneurial bank in Tanzania.
Dar es Salaam. The African Development Bank (AfDB) is considering establishing a development bank that will specifically cater for the funding needs of micro and small and medium enterprises (MSMEs) in Tanzania.
The AfDB, which has been supporting the growth of Tanzania’s MSMEs in various ways, including through its approval in 2016 of a $120 million line of credit (LOC) to the country, now wants to establish an entrepreneurial bank in Tanzania.
Monthly engagement meeting
Speaking in Dar es Salaam on Tuesday evening during the monthly engagement meeting of the CEO Roundtable of Tanzania (CEOrt), the AfDB country manager in Tanzania, Dr Patricia Laverley, said the envisaged Entrepreneurial Development Bank would be established under the AfDB’s Youth Entrepreneurship and Innovation Multi-Donor Trust Fund.
According to the Financial Sector Deepening Trust (FSDT), MSMEs contribute 27 percent of Tanzania’s GDP, and employ over 5.2 million people.
However, growth of MSMEs in Tanzania has for many years been hampered by limited access to finance and effective use of financial products, largely because most MSMEs lack formal registration, collateral, credit history and tailored financial products.
Speaking at the meeting, whose theme was Driving African Economic Recovery from the Covid-19 Pandemic, Dr Laverley said the AfDB had commissioned KPMG to conduct a study on how the new bank could work, and who the beneficiaries would be.
“We are committed to supporting entrepreneurs with focus on women, micro-enterprises and SMEs to have access to finance as well as equipping them with skills development,” she said, adding, “Our targeted goal is to ensure that they have businesses that are sustainable.”
Discussions with banks
Dr Laverley said they were also in discussions with banks in Tanzania to see how they could unleash business potential for women.
“We believe that if we support women, it will be translated into supporting the entire Africa,” said Dr Laverley, who is a former finance deputy minister in Sierra Leone.
The Citizen also understands that the AfDB is working closely with the government, including the Ministry for Finance and Planning and the Dar es Salaam regional administration, to identifying ways of uplifting petty traders through financial access.
Dr Laverley commended the government’s efforts to create a friendly business environment through the implementation of the blueprint for regulatory reforms.
In helping to drive the AfDB’s transformation agenda for Tanzania, Dr Laverley spearheads efforts to attain the “High 5s” in Tanzania – a strategic vision of the AfDB’s five priority areas that are intended to support African countries’ achievement of the Sustainable Development Goals (SDGs).
These are to light up and power Africa; feed Africa; industrialise Africa; integrate Africa, and improve the quality of life for the people of Africa.
“We will continue to work with the private sector and the government to improve the business environment,” Dr Laverley said.
As part of wider efforts to further improve the business climate, she said the AfDB would keep the momentum going on addressing infrastructural challenges.
This would attract investors and eventually boost job creation in the country, she added.
“Political stability and peace at large position Tanzania in the list of the best destinations for investment.
The AfDB has been pivotal in helping the continent overcome various economic challenges, providing access to finance and addressing priority areas.
CEOrt chairman David Tarimo said the overarching objective of the AfDB aligns with the CEOrt purpose of aiming to spur sustainable economic development and social progress.
“We are looking forward to engaging with and learning from Dr Laverley’s vast insights, and exploring how the private sector can support Tanzania’s efforts to foster accelerated growth and development that is sustainable in the long run,” he said.
CEOrt executive director Santina Benson lauded the AfDB’s pivotal role in supporting Africa’s ambitious development priorities.
“We are encouraged to learn of important initiatives being spearheaded by the bank to ensure Tanzania’s youth are well positioned to deliver on the country’s development aspirations,” she said.
Ms Benson expressed business leaders’ readiness to partner and collaborate to guarantee the success of those important initiatives.