TDB and Enat Bank to support SMEs and women exporters
Addis Ababa, December 5th 2018 – As part of its commitment to make entrepreneurship more inclusive in the 22 Member States it serves, the Eastern and Southern African Trade and Development Bank (TDB) is signing today an MOU with Enat Bank. The MOU will support Ethiopian SMEs, with a special focus women-owned and managed export-oriented businesses.
The MOU is signed by Admassu Tadesse, TDB President and Chief Executive, and Wondwossen Teshome, Enat Bank President, in the presence of H.E. Hailemariam Desalegn, Former Prime Minister of Ethiopia, H.E. Rupiah Banda, Former President of the Zambia and Member of the TDB Eminent Panel of Advisors, H.E. Meaza Ashenafi, President of the Ethiopian Federal Supreme Court, Hana Tilahun, Chairman of the Board of Directors of Enat Bank as well as the Board of Directors of TDB.
TDB and Enat Bank will collaborate on developing a pipeline of SMEs which qualify for export credit support involving a loan guarantee or other instruments, through a partnership with various players in the SME space, such as the Ethiopian Women Exporters Association (EWEA). These companies would then benefit from a credit enhancement facility which would be part of the arrangement between TDB and Enat Bank. In addition, a local SME advisory partner will be enlisted to support participating firms on export readiness requirements.
On his part, TDB President Admassu Tadesse commented that “We are pleased to offer a targeted SME partial-risk guarantee support facility to Enat Bank. We have been engaging with Enat Bank in Ethiopia for over a year and now selected it as one of our partners because of its unique ethos. This instrument is aimed at helping Enat Bank scale-up its impact, share their risk and reach out to more SMEs, particularly women-led and women-owned SMEs. We also hope that Enat will use this instrument to reach more young entrepreneurs and those companies employing youth.”
He pointed out that this is only a starting point, and that TDB expects to join forces with other international development partners to extend such facilities to other specialist financial institutions in its member countries. TDB launched its first facility in Zimbabwe in October 2018 and will be rolling out the programme to other Member States in the months to come, starting with Burundi and Kenya.
TDB’s President emphasized that “there is no doubt that enabling and resourcing youth and women entrepreneurs in the COMESA Region is one of the keys to realising several of the sustainable development goals (SDGs), and indeed Africa’s Agenda 2063. More focus is needed and more innovative efforts are required to scale-up, speed up and unlock synergies from financial and non-financial facilities to further enhance the proven capacity of the creative and hard working women and young people of Africa. We know that these are committed, and dedicated role players in society and deserve to be fully supported alongside other entrepreneurs.“
In sub-Saharan Africa, the SME credit gap is estimated by AfDB at US$ 331 billion, including US$ 42 billion specifically in the case of women entrepreneurs. Furthermore, the World Bank reports that 56% of Ethiopian SMEs are credit constrained while SME lending in the country comprises only 7 percent of bank portfolios. According to the same source, among other challenges, the product mix offered by the latter is not large enough to accommodate for the needs of SMEs. The World Bank’s 2015 Enterprise Survey, found that in Ethiopia 36% of the firms surveyed had female participation in ownership, compared to 29% for sub-Saharan Africa as a whole.
Having been initiated by a group of 11 Ethiopian women, and with 64% women ownership as well as many women in senior bank management and Board positions, Enat Bank’s vision is to provide quality banking services with a special focus on the needs of women and to play a catalytic role in stimulating social and economic developments, while creating value. As such, Enat Bank is a great partner for TDB’s SME Programme which was recently launched in October 2018 in Harare.
US$ 3 million have been allocated by TDB to pilot its SME Programme over the next two years in Burundi, Ethiopia, Kenya, Malawi, Zambia and Zimbabwe. Together with partners such as Enat Bank and Zimbabwe’s UNTU Capital, these funds are made available for investment into MSMEs – particularly those led by youth and women – through loans, guarantees and capacity building interventions, in financial services, agribusiness, mining, leather and tanning, as well as in manufacturing.
Ultimately, TDB’s SME Programme shall grow into a unique vehicle, which offers a much-needed alternative source of financing in the SME space while delivering attractive returns and advancing sustainable development perspectives in the Region.