NBC targets SMEs group involved in state mega strategic investment

15Dec 2021
Geoffrey Nangai
Dar es Salaam
The Guardian
NBC targets SMEs group involved in state mega strategic investment

NATIONAL Bank of Commerce has announced plans to finance Small and Medium Enterprises (SMEs) taking part in the country’s mega strategic investment project as part of its efforts to support the government's local content agenda.

NBC’s director for business development, Elvis Ndunguru.

Speaking during the third National Local Content Forum held at University of Dar es Salaam (UDSM) on Monday, NBC’s Director for Business Development, Elvis Ndunguru said the bank has come up with two tailor-made products that include ‘supplier finance’ and ‘purchase order finance’ to cater for the interests of SMEs which need cash flow to support their business.

“As a bank, we realised that many SMEs are having trouble securing finances to support their supply chain involving the mega projects due to many terms and conditions set by various financial institutions that include a requirement to deposit assets in order to secure loans,” Ndunguru said.

He added that with the bank's new products that support local content drive, SMEs will only need to produce Local Purchase Orders or service agreements as a guarantee to secure loans from NBC. “We have finally listened to the long time outcry of SMEs and decided to accept LPO agreements and service agreements as guarantees for loans to ensure SMEs without assets can get the required finances to support their secured business contracts,” he said.

He encouraged SMEs to embrace the bank’s tailor-made product adding that the bank will be offering short-term loans of 90 days to three years depending on the interest of the potential borrower. “We will continue to invest in research so as to come up with many banking products to address the needs and interests of various SMEs in the country,” the NBC Director of Business Development added.

Minister of State at Prime Minister’s Office (Investment), Geoffrey Mwambe who attended the meeting, commended the bank for coming up with the special SME products and urged other financial institutions to follow suit.

Mwambe urged banks to consider lowering interest rates charged on loans to SMEs adding that high interest rates not only make loan repayment difficult but also ultimately affects the borrower's profit margin.

Mwambe noted that the Government has already come up with a Credit Reference System at the Central Bank that can be used by the banks to get details of various bank customers. “The practice globally is that business is not financed from personal savings but through loans. Banks should consider coming up with various banking products to cater for the needs of various customers,” he advised.