NMB secures US$15m trade finance guarantee
NBM Bank has secured a US$15 million trade finance transaction guarantee from the African Development Bank (AfDB) to support local companies.
According to the two parties, the strategic collaboration is aimed at unlocking significant trade finance opportunities for Zimbabwean businesses, particularly small and medium-sized enterprises (SMEs) and local corporates engaged in agribusiness and trade distribution value chains.
Ms Moono Mupotola, AfDB country manager, said at the signing ceremony last week that the partnership was a significant step forward in supporting the growth and competitiveness of Zimbabwean businesses.
“By mitigating risk and facilitating access to trade finance, we are empowering SMEs and local corporations to participate more actively in regional and international trade,” she said.
The transaction guarantee is an uncommitted trade finance facility granting NMB Bank access to a maximum of US$15 million with a tenure of up to 36 months.
It offers up to 100 percent coverage for confirming banks, effectively mitigating non-payment risks linked to NMBZ trade transactions on a per-transaction basis.
“Tailored to support intra-Africa trade and trade between Africa and the rest of the world, this facility serves as a versatile and responsive financial solution.
“Its existence significantly diminishes the risk for international financial institutions, encouraging them to actively engage in trade finance activities with Zimbabwean businesses,” said Ms Mupotola.
She said the facility accommodated various trade instruments, including confirmed letters of credit, trade loans to African banks, irrevocable reimbursement undertakings (IRU), availed bills, and promissory notes.
“By reducing the necessity for cash collateral and offering up to a 100 percent payment guarantee on the transaction value, it presents an alternative risk management strategy, ensuring the security of trade transactions,” said Ms Mupotola.
NMBZ chief executive, Mr Gerald Gore, said the agreement is important for Zimbabwe’s economic development.
“This facility will be instrumental in enabling NMB Bank to provide crucial trade finance support to a wider range of Zimbabwean businesses.
“This will not only unlock new trade opportunities but also contribute to job creation and economic growth,” he said.
Mr Gore said the agreement aligns perfectly with AfDB’s broader trade finance programme objectives, with a specific focus on supporting the vital role of SMEs in Africa’s economic development.
“SMEs often face challenges in accessing trade finance compared to their larger counterparts. This initiative directly addresses this gap, fostering a more vibrant and inclusive business environment in Zimbabwe,” he said.
NMB Bank Zimbabwe is a registered commercial bank and the principal subsidiary of NMBZ, a Zimbabwean-based investment holding company listed on the Zimbabwe Stock Exchange.
The bank has among its top shareholders strong international and regional entities such as African Century, Arise, Old Mutual, and AfricInvest, all of which have a very strong African footprint.
“By mitigating risk and facilitating access to trade finance, we are empowering SMEs and local corporations to participate more actively in regional and international trade,” she said.