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Bank loan deal aims to boost Tanzanian infrastructure and SME projects


The African Development Bank (AfDB) has signed a $120 million loan agreement to boost finance infrastructure and support small and medium enterprise (SME) projects in Tanzania.

The AfDB said the agreement with Tanzania’s CRDB Bank will have a “particular” focus on developing infrastructure to enhance the country’s power and transport sectors, which is currently “a major constraint for Tanzania’s economic diversification and growth”.

According to the AfDB, “the SME sector is also key to creating more jobs and this project will support a wide range of SMEs across agriculture, construction, manufacturing, education and services in order to promote inclusive growth in the country”.

The line of credit “will also help to scale up lending to SMEs and women enterprises in both urban and rural areas, to create more jobs and promote inclusive growth for Tanzania’s economy, by leveraging CRDB’s network of branches and banking agents”, the AfDB said.

“The line of credit will potentially support regional trade and thus promote regional integration through expanding capacity of the country’s port and airport as well as stimulate tourism and government revenues in coming years,” the AfDB said.

Established in 1969, the CRDB was listed on the Dar es Salaam Stock Exchange in 2002. The AfDB said the CRDB has expanded its SME loan portfolio since 2008 “and partnered with more than 1,739 agents, or non-banking intermediaries to widen its reach”. “This is ‘agency banking’ for which the CRDB obtained a licence from the Bank of Tanzania and the model has enabled the bank to provide services in far-flung areas, where establishing branches may be uneconomical hence efficiently allowing the financially excluded to access banking services,” the AfDB said.

The latest round of financial support from the AfDB for Tanzania follows two loans amounting to more than $141m announced last year.

The loans were granted to finance the second phase of the Dar es Salaam Bus Rapid Transit System Project in the country’s commercial hub. A $97.42m loan from the AfDB and a $44.29m loan from the Africa Growing Together Fund, a Chinese trust fund managed by the AfDB, were awarded to support Tanzania’s efforts to decongest the city”, the AfDB said. “The bank’s contribution to the project represents 88.9% of the total estimated cost of $159.32m while the government of Tanzania will provide the remaining 11.1%.”

A recent report said foreign direct investment to East Africa grew over the last year, despite an overall fall across the continent, from $87 billion to $66.5bn. The report by Analyse Africa indicated 705 projects were backed by foreign investors throughout Africa in 2015, with infrastructure taking about 44% of the inflows.

Research by UK-based business intelligence firm Visiongain has said Eastern Africa is “fast becoming one of the world's most interesting oil and gas hotspots” and can be expected to attract “tens of billions of dollars of investment over the next decade”.

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