Dar es Salaam — IT has been a critical question among the small and medium enterprises in the country that banks and microfinance institutions are not friendly in terms of their interest rates.

The issue is not whether loans are available, but rather if the interest rates are affordable to ordinary people. The NMB recently announced that it will provide Juhudi Loans to entrepreneurs from 5m/- to a maximum of 500m/- to facilitate their business needs.

Many small traders have commended NMB for the new facility but the concern of the majority of the people is if such loans are helping the business people who sometimes make profit below the interest rates that they are required to pay upon borrowing from the banks.

The Chief Commercial Officer, Mr Kees Verbeek said recently that something unique is that beneficiaries of Juhudi Loans will get business skills training by NMB and partner organisations. He also said that the interest rate charges is far below that charged byother banks.

NMB Juhudi loans are small loans to micro and small entreprenuers with a purpose to expand small and sustainable business. It charges 15 per cent and it has even more concessions. The customers will enjoy this lower interest rate which has already a discount of three per cent.

The current interest rates among the microfinance institutions and other banks is between 18 to 25 per cent. Mr Verbeek says that this is a great offer by NMB which ranges from a normal interest rate which will be lower and attractive.

Mr Verbeek further said that beneficiaries of NMB Juhudi loans scheme must be a member of partner organizations which include the Business Development Gateway (BDG), Small Industries Development Organsation (SIDO) and Enablis Tanzania Limited non-profit organisation.

He explained that these partner organisations support entrepreneurs with business skills, financial management, business registration and facilitate after care services. Also access to guarantee schemes being provided by partner organizations to facilitate collateral will be available, he added.

He also said that customers who will take NMB Juhudi Loan can also use the loan as seed money for working capital and capital expansion. The good news is that the partners will offer qualifying entrepreneurs a platform for networking, capacity building and access to a pool of advisors and to technology compared to support infrastructure.

The launch ceremony took place at NMB Sabasaba pavilion. The CCO reminded the customers that NMB's mission is to provide access to full range of financial services in a sustainable and viable way. "We pay special attention to micro entrepreneurs, small and medium size enterprises, rural enterprises and agriculture," he added.

Some of the customers who attended the ceremony said that it is a blessing that the bank has gone an extra mile to offer personalised learning, mentoring and coaching programmes in collaboration with its partners. "Networking opportunities and financing will help them to develop to their full capacity," they said.

It is important to note that banks will continue to be a savior of many people once they tailor their products to suit the low income people. In many developed economies people depend on the loan schemes that are offered by such financial institutions to address their needs and financial problems, which is still a far fetched dream in low income countries.

Could this interest rate of 15 per cent offered by the NMB be the new catalyst to make loans affordable to the marginalized groups?