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NMB Bank Secures US$15 Million Trade Finance Backing

NBM Bank Secures US$15 Million Trade Finance Guarantee from African Development Bank

In a significant move to bolster local businesses, NMB Bank has clinched a trade finance transaction guarantee worth US$15 million from the African Development Bank (AfDB). The collaboration between the two entities aims to open up substantial trade finance opportunities for Zimbabwean enterprises, with a particular focus on small and medium-sized enterprises (SMEs) and local corporates involved in agribusiness and trade distribution value chains.

Speaking at the signing ceremony, AfDB country manager Ms. Moono Mupotola emphasized the importance of this partnership in advancing the growth and competitiveness of Zimbabwean businesses. She highlighted that by mitigating risk and facilitating access to trade finance, SMEs and local corporations would be empowered to actively participate in both regional and international trade.

The transaction guarantee provided to NMB Bank is an uncommitted trade finance facility, granting access to a maximum of US$15 million over a tenure of up to 36 months. This facility offers up to 100 percent coverage for confirming banks, effectively mitigating non-payment risks associated with NBMZ trade transactions on a per-transaction basis.

Ms. Mupotola noted that this facility, tailored to support intra-Africa trade and trade between Africa and the rest of the world, serves as a versatile and responsive financial solution. Its existence significantly reduces risk for international financial institutions, encouraging them to engage actively in trade finance activities with Zimbabwean businesses.

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She further explained that the facility accommodates various trade instruments, including confirmed letters of credit, trade loans to African banks, irrevocable reimbursement undertakings (IRU), availed bills, and promissory notes. By minimizing the need 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.

NBMZ Chief Executive Mr. Gerald Gore emphasized the importance of the agreement for Zimbabwe’s economic development. He highlighted that this facility would enable NBM Bank to provide crucial trade finance support to a wider range of Zimbabwean businesses, thereby unlocking new trade opportunities and contributing to job creation and economic growth.

Mr. Gore underscored the alignment of this agreement with AfDB’s broader trade finance program objectives, particularly focusing on supporting the vital role of SMEs in Africa’s economic development. He noted that SMEs often face challenges in accessing trade finance compared to larger counterparts, and this initiative directly addresses this gap, fostering a more vibrant and inclusive business environment in Zimbabwe.

NBM Bank Zimbabwe, a registered commercial bank and principal subsidiary of NBMZ, boasts strong international and regional shareholders, including African Century, Arise, Old Mutual, and AfricInvest, all of which have a robust African footprint.

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