EU support to unlock Sh1.4 trillion SMEs financing

Dar es Salaam. The European Investment Bank (EIB) is set to enter into an agreement with commercial banks in Tanzania to unlock new business financing valued at 540 million euros (Sh1.4 trillion).

The initiative will provide additional capital to small and medium-sized businesses in Tanzania, which in turn will help to support growth of the private sector, which is crucial for economic development.

EIB vice president Thomas Östros said yesterday the financing would also benefit women-led businesses as well as blue economy investments.

He spoke in Dar es Salaam on the opening day of the two-day Tanzania-EU Business Forum.

The meeting has drawn over a thousand participants from Tanzania and EU member states.

Apart from delegates networking and exchanging experiences, participants from the EU will also have an opportunity to engage with decision-makers, and identify the available opportunities for investment in both the public and private sectors in Tanzania.

“EIB’s financing and technical support for new investment will strengthen the impact of the European Union’s new Global Gateway engagement,” Mr Östros said.

The EU Global Gateway is a new European strategy to boost smart, clean and secure links in digital, energy and transport sectors and strengthen health, education and research systems worldwide.

Also in attendance were Vice President Philip Mpango and Investment, Industry and Trade minister Ashatu Kijaji.

The event also witnessed the signing of three memorandums of understanding between the French government and the Tanzania Civil Aviation Authority (TCAA); Port of Antwerp-Bruges International and Tanzania Ports Authority (TPA), and on investment for the construction of a hydropower plant in Kagera Region.

There was also an announcement by Knauf Gypsum Tanzania Limited Company on the tripling of production in the country to the value of 47 million euros by 2025.

Explaining why Tanzania is a top investment destination in Africa, Dr Mpango said the country had been proactive in attracting new investments by putting in place the right policies.

He said Tanzania was able to rebound from the impact of Covid-19 and increase the number of tourist arrivals and exceed macroeconomic targets.

“The level of liquidity is good as credit extended to the private sector has grown by 22 percent and this can be attributed to the normalisation of economic activities following the Covid-19 pandemic coupled with supportive monetary policies.

“The country was able to beat the economic growth target of 4.7 percent to grow at 5.2 percent by the end of the third quarter in 2022, while maintaining the inflation rate below five percent,” Dr Mpango said.

These factors, he added, made Tanzania among fastest growing economies in sub-Saharan Africa and a suitable investment destination for European businesses.

Dr Kijaji said Tanzania welcomed European investment in areas such as agriculture, value-addition and pharmaceuticals.

“We also need new investment to drive the fourth industrial revolution by focusing on artificial intelligence and the internet. The government is more than willing to offer the necessary support,” she said.