EU and EIB Support Tanzanian SMEs with 15 Million EUR Grant and 350 Million EUR Credit Line

A significant financial boost is on the horizon for Tanzanian SMEs, particularly those led by women and operating in the blue economy sector. The European Union (EU) has granted 15 million EUR (43 billion TZS), which will be combined with up to 350 million EUR (1 trillion TZS) of European Investment Bank (EIB) (EIB) credit lines to local banks.

The Funding Package

The European Investment Bank Vice-President, Mr. Thomas Östros, and the Deputy Ambassador of the European Union to Tanzania, Mr. Emilio Rossetti, signed a statement of intent to blend the EU grant with EIB loans. This blended finance package aims to support Tanzanian SMEs under the EU Global Gateway strategy. The EU grant will provide early-stage financing, helping to de-risk local banks’ lending and thus unlocking or increasing funding to SMEs.

So far, the EIB has signed 270 million EUR (775 billion TZS) with three banks: CRDB Bank Plc (150 million EUR or 430 billion TZS), NMB Bank Plc (100 million EUR or 287 billion TZS), and KCB Bank Tanzania (20 million EUR or 58 billion TZS). The remaining 80 million EUR (229 billion TZS) will be allocated to other financial institutions in Tanzania.

Focus on Women and the Blue Economy

The blended package will primarily focus on businesses led by women and those in the blue economy sector, both of which face significant challenges in accessing finance. This initiative aligns with the Tanzanian Government’s priority sectors and the Sustainable Development Goals (SDGs). The EU’s Global Gateway investment strategy aims to create sustainable jobs and promote financial inclusion for underserved groups such as startups, youth, and women-led businesses.

Mr. Thomas Östros emphasized the importance of small businesses in driving economic development and innovation in Africa. He stated, “At the European Investment Bank, we use a variety of tools that address financing gaps at the various stages of business creation, including the riskiest ones, to develop an efficient entrepreneurial ecosystem driven by entrepreneurs’ skills and expertise.”

Mr. Emilio Rossetti highlighted the joint effort with the EIB to enhance access to finance for SMEs and promote financial inclusion in Tanzania. He noted, “This is part of the EU’s Global Gateway investments for Africa aiming to create new and sustainable jobs.”

Progress and Impact

During the EU-Tanzania Business Forum last year, EIB Global signed a 270 million EUR (775 billion TZS) package to support local businesses through cooperation with commercial banks in Tanzania. This was EIB’s largest investment support to any country in Sub-Saharan Africa in 2023.

Mr. Östros highlighted the progress made so far, stating, “This financing support has already reached over 10,000 final beneficiaries, including over 3,000 women-led enterprises and over 900 blue economy enterprises and cooperatives in Zanzibar, with more to follow.”

Deputy Permanent Secretary in the Ministry of Blue Economy and Fisheries in Zanzibar, Zahor El Kharousy , expressed satisfaction with the partnership, noting that women form 85% of the sector. He said, “I am very happy with the partnership of EIB and EU to support Tanzania and Zanzibar. We have five priority areas in the blue economy, and one of the key ones is support to women.”

Ensuring Proper Use of Funds

Despite the promising outlook, there is always a concern about the misappropriation of funds and loans in Africa. It is crucial that these funds are used efficiently and transparently to achieve the intended goals of supporting SMEs and promoting sustainable development. The EIB’s approach includes providing technical assistance to financial intermediaries and final beneficiaries, ensuring successful project rollouts and creating sustainable enterprises.

This comprehensive support package is a step towards empowering Tanzanian SMEs, fostering economic growth, and ensuring financial inclusion for underserved groups. The collaboration between the EU, EIB, and Tanzanian financial institutions aims to build a resilient and inclusive economy.