IDBZ spreads its wings

financial firms in NORSAD Finance Ltd.
Before the transaction, four Nordic countries – Sweden, Finland, Denmark and Norway – owned NORSAD, a regional financial institution focused on small to medium enterprises
A block of 50 percent equity was offered to other financial institutions within Sadc. These are Tanzania Investment Bank, Citizens Entrepreneurial Development Agency of Botswana, Lesotho Postbank, Development Bank of Namibia, Development Bank of Zambia and Instituto de Gestao das Participacoes do Estado of Mozambique, an IDBZ spokesperson said.
The inclusion of the Sadc countries is part of the transformation of NORSAD, which previously operated as NORSAD Fund and Agency.
At its inception, the four Nordic countries owned NORSAD, with Sweden being the single largest shareholder with 36,36 percent.
Other shareholders were Denmark with about 23 percent, Norway with 21,8 percent and Finland 19,36 percent.
All of them contributed the institution’s seed capital of about US$33,5 million.
When it was formed, the institution’s objective was to provide funding to Sadc private sector projects with a Nordic investment component.
NORSAD funding was advanced on the back of guarantees from Sadc development finance institutions, who would then take security in the assets of the financed enterprises.
“The NORSAD board of governors approved a transformation plan in which both the NORSAD Fund and agency were to be dissolved as the same time as the establishment of a multilateral Sadc-focused development finance institution, NORSAD Finance Limited,” said IDBZ.
“After careful consideration of various alternatives, a decision was made to have NORSAD Finance incorporated in Botswana under the International Financial Services Centre. That is when development institutions within Sadc were offered a block of shares representing 50 percent shareholding in NORSAD Finance, in line with the privatisation process, while the Nordic block retained 50 percent.”
The deal was sealed in Gaborone, Botswana, last week.
The motivation behind the privatisation of NORSAD was to unlock new sources of funding to support small-to-medium enterprises operating in the rural areas, particularly those with capacity to create positive developmental impacts through employment creation, value addition, fiscal effects, women and youth empowerment.
IDBZ chief executive Mr Charles Chikaura, who was appointed to the NORSAD Finance board, expressed optimism that the partnership with Nordic institutions would create numerous opportunities for resource mobilisation to fund deserving enterprises.
Mr Chikaura added that the Gaborone meeting was a landmark development for IDBZ and the country at large as he used the opportunity to advocate for the lifting of the embargo placed on Zimbabwe, which was granted by all the four Nordic countries.
Mr Chikaura said he was hopeful that the Sadc/Nordic partnership through NORSAD Finance would be realised in 2012 through resource mobilisation and capacity building for small-to-medium enterprises.
NORSAD will continue operating from Zambia for the next two years before relocating to Botswana in line with the licensing requirements of the International Financial Services Centre. The institution will remain focused on funding small businesses through direct and intermediary loans and is expected to play a major role as a development catalyst in the Sadc region.
IDBZ will become the principal resident agent for NORSAD Finance responsible for co-ordinating funding between Zimbabwean entities and NORSAD Finance.
Last year, NORSAD extended a line of credit of about US$3 million to Renaissance Merchant Bank to support small-to-medium enterprises.