Through its private sector window, the Board of Directors of the African Development Bank Group (AfDB) has approved a US$50 million (P501 million) multi-currency line of credit (LoC) with a seven-year tenor to ABC Holdings Ltd (ABCH). The approval was made this past Monday at the bank’s headquarters in Abidjan, C├┤te d’Ivoire.
The money is extended to the bank’s subsidiaries in Botswana, Mozambique and Zimbabwe. The bank, which has its primary listing in Botswana, has operations in Zimbabwe, Zambia, Tanzania and Mozambique and plans to expand its retail network across the continent.
AfDB says that its 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 challenges. 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,” AfDB says.
Trading as BancABC, ABC Holdings Ltd is a rapidly growing pan-African financial services group that operates in five countries namely Botswana, Mozambique, Tanzania, Zambia, and Zimbabwe. It is developing a new business line focused on retail banking and lending to micro, small, and medium-sized enterprises (MSMEs). It covers various sectors such as construction, agriculture, manufacturing, transport and services. ABCH is gradually increasing its SME portfolio share targeting 30 percent by end of 2018 as it plans to expand its retail network across countries. Its 100 percent mortgage facility was the first of its kind in Botswana.
Speaking at an SME Banking press launch last year, BancABC Botswana Managing Director, Jitto Kurian, said that the bank deemed it important to provide support to smaller SME’s because there has been a tendency in the market to focus on the upper tier of the SME sector.┬áAccording to Kurian, “in Botswana, 35 percent of SME’s have between 5-30 employees and 45 percent of SME’s have less than four employees.┬á This demonstrates that the majority of SME’s in Botswana are actually very small, and do not have access to advisory services and relationship management.”┬á
In July last year, the European Investment Bank extended a LoC of an undisclosed sum to ABCH. This LoC was intended to support the small, medium and midcap-sized enterprises and commercially-run public entities that contribute to private sector development and other priorities under the EIB’s mandate such as social and economic infrastructure.