The African Development Bank Group (AfDB) through its private sector window last week approved a $50 million (P475 million) multi-currency line of credit (LoC) with a seven-year tenure to ABC Holdings and its subsidiaries in Botswana, Mozambique and Zimbabwe.
The AfDB LoC will enable ABCH and its three selected subsidiaries to reach a larger number of SMEs across a wide range of sectors by offering medium to long term loans, which are not currently accessible for local SMEs. The AfDB will provide local currencies, Botswana Pula and Mozambique Metical to support local currency lending and promote development of the financial sector in these countries. This facility will also cover Zimbabwe where many enterprises face liquidity challenge.
The facility is expected to support at least 200 SMEs and generate 800 jobs, including 400 jobs for women, during the period of the project. Leveraging the relatively long tenor of the AfDB facility, it is expected to increase the average loan tenor for SME clients who can consequently expand their business, which will promote inclusive growth of these countries.
ABC Holdings Ltd.
(ABCH) is a rapidly growing financial institution targeting local small and medium enterprises (SMEs) in these countries covering various sectors such as construction, agriculture, manufacturing, transport and services. ABCH, which was recently bought by London stock exchange listed Atlas Mara, is gradually increasing its SME portfolio share targeting 30 percent by end 2018 as it plans to expand its retail network across countries. Last year, the bank also entered the agriculture financing market with ABC Holdings Limited, unveiled a $25 million (P220million) financing package to shore up its lending to the agriculture sector.
Following an agreement with the Africa Agriculture and Trade Investment Fund (AATIF), lending to the agricultural sector was increased at the bank’s operating bases - Botswana, Mozambique, Tanzania, Zambia and Zimbabwe.
BancABC is managing the entire credit assessment and lending relationship with beneficiaries, while sharing the risk equally with the AATIF. The Africa Agriculture and Trade Investment Fund (AATIF) is a public-private partnership founded in August 2011 and dedicated to uplift Africa’s agricultural potential for the benefit of the poor.
It targets small, medium and large-scale farmers as well as agricultural businesses along the entire value chain that will be financed either directly or indirectly through financial institutions such as BancABC.