Development finance institution the International Finance Corporation (IFC) is providing a $100-million loan to CRDB Bank Tanzania, half of which will be in local currency, and a $5-million loan to CRDB Bank Burundi to support lending to smaller businesses, especially women-owned businesses, in both countries.
The investment will increase access to finance for small, medium-sized and microenterprises (SMMEs) in Tanzania and Burundi, helping strengthen both countries’ recovery from the economic effects of the Covid-19 pandemic.
The partnership will increase the availability of longer-tenor financing, which is not readily available in the market and has been scarce since the outbreak of the Covid-19 pandemic.
Small businesses are critical to the economies in Tanzania and Burundi. In Tanzania, an estimated 3.2-million SMME businesses contribute 27% of the country’s gross domestic product and employ more than five-million people.
However, about 81% of these businesses lack access to finance.
“This line of credit comes at an opportune time and will boost our support to SMMEs, while promoting gender diversification across the value chain. At CRDB Bank, we believe gender equality and women's empowerment are central to development,” says CRDB Bank Group CEO and MD Abdulmajid Nsekela.
“Women have been disproportionately affected by the Covid-19 pandemic, facing economic hardships that directly affect their families and communities' livelihoods. Through this partnership, we will help women-owned small businesses and entrepreneurs recover from the pandemic,” he notes.
The IFC's financing will support the development of productive sectors of the economy, including agribusiness, health, education, affordable housing and infrastructure. Other sectors include climate change mitigation and adaptation, small and medium-sized enterprises, as well as women-owned small businesses, he adds.
“The partnership between the IFC and the CRDB will support the growth of smaller businesses in countries where their contribution to jobs and economic activity is immense.
“The financing will also include a special focus on supporting women-owned businesses and advancing gender inclusion, a key part of the IFC’s strategy in Tanzania and Africa more broadly,” says IFC Africa VP Sérgio Pimenta.
The loans are part of the IFC’s Base of the Pyramid Program, which helps financial services providers deliver funding to small businesses that have been hit the hardest by the Covid-19-induced slowdown.
The IFC’s financing is also supported by the International Development Association’s Private Sector Window.