21 April 2014

Zimbabwe: NMB to Issue Another SME Bond

NMBZ is set to issue another tranche of Small to Medium Enterprises bond following interest from investors and will use other financial sources to beef up the purse to finance targeted enterprises, a senior official has said.

The bank, however, is approaching the sector with caution in light of the liquidity challenges the economy is facing.

Targeted SMEs go through vetting and the bank will issue additional bonds when more eligible SMEs are identified.

NMBZ floated a $50 million bond in the third quarter of 2013 which raised $4 million and the bank is now raising funds from other sources to finance SMEs.

"The bank raised $4 million in its first allotment but there is still interest from investors so we hope to issue another tranche in the short term," said Mr Felix Mangozho, NMBZ Treasury Executive Director.

"The bank managed to raise funds from other sources so currently the bank's liquidity position is strong and quality SME businesses have been and will continue to be funded from the available resources.

"As you are aware the bank raised funds this year from offshore partners at relatively lower interest rates and already some of the funds have been lent out to some SMEs," said Mr Mangozho.

The funds are meant for working capital to "good" SME businesses across the board spanning from manufacturing, distribution, transport among other sectors.

"Please note given the current challenges facing our local economy and SMEs in particular the bank has approached this sector with caution," said Mr Mangozho.

The funds are for two years and the interest rates are dependent on the creditworthiness of the borrower but the bank's minimum lending rate for this facility is around 12 percent.

The bank is considering mortgages of urban properties for security.

"Loan disbursements to SMEs from the raised funds have already been done.

"We still continue to fund the sector from our other sources," said Mr Mangozho.

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