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Business Reporter
NMB Bank Limited is looking to raise about US$5 million from investors such as pension funds to provide loans for Small and Medium Enterprise companies that have the capacity to pay back the money, an official in the bank confirmed last week.
The money will be an addition to the US$4 million which the bank managed to raise during the floatation of the first tranche of its two-year US$50 million mortgage-backed Small to Medium Enterprises bond issue which opened during the last quarter of 2013.
The bond is being issued in US$10 million tranches. In an interview with The Herald Business, NMB Bank Executive Director (Treasury) Mr Felix Mangozho said in the first quarter of 2014 the bank has lined up investor funds that will provide the capital for small and medium companies that have the capacity to pay back the loans.
“For this quarter we have lined up investors to raise another US$5 million.
“We are currently, and will continuously monitor the operating environment to ensure that the targeted clients are viable and that they are able to repay the money,” Mr Mangozho said.
He said the bank has a list of companies and clients that are likely to benefit from the arrangement.
Mr Mangozho added that as and when the bank identifies deserving enterprises, they will approach investors to raise more funding so that the SME sector gets the required support to boost its economic development potential.
“At the moment, a list has been drawn and once our sanctioning committee is satisfied with the candidates, then the investors will be approached to raise the funding.
“The general trading environment has been challenging but we hope to allocate more funds to the bonds.
“The Proparco Line of Credit for US$10 million is a good sign that the First World is beginning to view our country in favourable light and that many more doors may open for our economy.”
Mr Mangozho added that the US$5 million earmarked will only benefit small and medium enterprises.
The bank is keen to help SME via this bond but bigger businesses are catered for under different structures.
He said as a pre-condition for lending by NMB Bank, borrowers should show commitment to their projects and businesses by providing collateral in the form of property which will be ceded to the trustee in terms of the Trust Deed.
The first US$10 million tranche opened in October and closed in early December.
This year, the bank’s managing director Mr Benefit Washaya said the institution intends to raise US$50 million in the long run for Small to Medium Enterprises but the facility is drawn down on an “in-need basis”.
He said in the last quarter, after a careful analysis of the trading environment they identified a number of qualifying small businesses and raised about US$4 million for them.
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