Dar es Salaam — The National Microfinance Bank (NMB) NMBseeks to raise Sh20 billion in a retail bond in an effort to boost its capacity for increased loan issuance.
"With the bond in question, we will be in position to strengthen our deposit base so that we can issue more loans to customers," the bank's investor relations manager, Ms Anna Mwasha, said yesterday. The bond will start trading Tuesday next week.
A retail bond works in such a way that various investors issue loans to a business entity (in this case to NMB) and in returns the entity (NMB) pays the debtor interest on the credit.
NMB's bond, which has been approved by the Capital Markets and Securities Authority (CMSA), carries a rate of interest of 13 per cent per annum. The trading of the bond closes on June 8. All individuals aged 18 and above are eligible for participation in the retail bond so long as they can invest a minimum of Sh500,000 into it.
She said CMSA had given NMB the green light to borrow up to Sh25 billion through the retail bond and hoped that the Sh20 billion target would be easily reached.
The bank's corporate affairs manager, Ms Joseline Kamuhanda, told journalists that once successful, small and medium enterprises as well as employees of large businesses whose salaries pass through the bank would benefit from the bond.
Farmers will also enjoy it.