Global Gateway: Tanzanian Businesses to Benefit from EU Grant to Boost EIB Global Credit Lines to Local Banks

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Global Gateway: Tanzanian Businesses to Benefit from EU Grant to Boost EIB Global Credit Lines to Local Banks

05.07.2024 Press and information team of the Delegation to TANZANIA

• A grant of 15 million EUR (43 billion TZS) from the European Union (EU) will be blended with up to 350 million EUR (1 trillion TZS) of European Investment Bank (EIB) credit lines to local banks.

• Package will focus on businesses led by women and those operating in the sector of blue economy.

© EU DELEGATION TO TANZANIA

The European Investment Bank Vice-President, Mr. Thomas Östros, and the Deputy Ambassador of the European Union to Tanzania, Mr. Emilio Rossetti, have today signed a statement of intent to blend a grant of 15 million EUR (43 billion TZS) from the European Union with 350 million EUR (1 trillion TZS) loans from the European Investment Bank to provide credit to Tanzanian banks. This financing will go towards supporting Small and Medium-Sized enterprises (SMEs) in Tanzania, under the EU Global Gateway strategy.

The EU grant will contribute to early stages of financing to prepare businesses for subsequent commercial investment. This will help de-risk local banks' lending to unlock or increase funding to SMEs.

So far, out of the 350 million EUR, the EIB has signed 270 million EUR (775 billion TZS) with three banks: CRDB (150 million EUR equivalent to 430 billion TZS), NMB (100 million EUR, equiv. 287 billion TZS) and KCB Tanzania (20 million EUR, equiv. 58 billion TZS). The remaining 80 million EUR (229 billion TZS) will be provided to other financial institutions in Tanzania.

The blended package will primarily focus on women and the blue economy sector, for which SMEs access to finance is particularly strained. This package under the EU's Global Gateway investment strategy is aligned with the Tanzanian Government's priority sectors and Sustainable Development Goals.

Mr. Thomas Östros highlighted that "Small businesses are a key part of the African economy. They create jobs and drive economic development and innovation. At the European Investment Bank, we use a variety of tools that address financing gaps at the various stages of business creation, including the riskiest ones, so as to develop an efficient entrepreneurial ecosystem driven by entrepreneurs' skills and expertise."

Mr. Emilio Rossetti added that "We are working jointly with the European Investment Bank to enhance access to finance for SMEs and promote financial inclusion of underserved people such as startups or youth and women-led businesses in Tanzania. This is part of the EU's Global Gateway investments for Africa aiming to create new and sustainable jobs".

Last year, during the EU-Tanzania Business Forum, EIB Global signed a 270 million EUR (775 billion TZS) package to support local businesses through co-operation with commercial banks in Tanzania, its largest investment support to any country in Sub-Saharan Africa in 2023.

Highlighting the good implementation progress that has been made so far, Mr. Östros added that "This financing support has already reached over 10,000 final beneficiaries out of which over 3,000 are women-led enterprises and over 900 are blue economy enterprises and co-operatives in Zanzibar, with more to follow."

Deputy Permanent Secretary in the Ministry of Blue Economy and Fisheries in Zanzibar, Zahor El Kharousy, said: "I am very happy with the partnership of EIB and EU to support Tanzania and Zanzibar. We have 5 priority areas in the blue economy and one of the key ones is support to women, who form 85% of the sector.

Financial intermediaries benefit from the EIB's favourable financial terms notably longer tenures than commonly available in local markets. In conjunction with the credit lines, EIB Global provides technical assistance to financial intermediaries as well as to the final beneficiaries to roll out successful projects. This provides substantial added value to EIB counterparts for the creation of sustainable enterprises.