A newly launched loan guarantee program in Zambia has the potential to significantly impact the lives of small- and medium-sized enterprise (SME) owners, thanks to a partnership between USAID, Absa Bank Zambia, and the U.S. International Development Finance Corporation (DFC). On June 16, Zambia’s Minister of Finance and National Planning, Dr. Situmbeko Musokotwane, launched the USAID-DFC Loan Guarantee during an event held in Lusaka, Zambia. The scheme will provide up to $20 million in loans to SMEs and back 50 percent of each loan’s value.
This momentous day was made possible, in part, by facilitation from the USAID/Zambia Enterprise Development and Growth Enhanced (EDGE) Activity. Led by ACDI/VOCA, the EDGE Activity is a five-year activity that aims to create jobs and increase the profitability of SMEs by improving their competitiveness and access to finance. This partnership is a leap in that direction.
Often, providing loans and investing in SMEs is too risky for traditional banks. “Access to affordable finance is a significant barrier to SMEs to establish their operations as well as expand them,” Dr. Musokotwane said. Yet, SMEs are the backbone of any economy, including Zambia’s. The USAID-DFC Loan Guarantee will strengthen Absa Bank’s ability to offer loans to SMEs in agriculture, manufacturing, tourism, and clean energy, thereby stimulating economic development through enterprise growth.
Dr. Musokotwane described the scheme as a landmark program in the financing of SMEs in Zambia.
“As ambitious as the government plans are, we cannot achieve everything on our own and to achieve the kind of success we envisage, it is essential that we are able to collaborate with private sector players to achieve the success we envisage for our people.”
— Dr. Situmbeko Musokotwane, Zambia’s Minister of Finance and National Planning
Also in attendance during Thursday’s launch event were Elias Mubanga, Zambia’s Minister of Small and Medium Sized Enterprises, Mizinga Melu, Managing Director of Absa Bank Zambia Limited, and Sheryl Stumbras, U.S. Embassy Chargé d’Affaires.
“With these resources, businesses will be able to mobilize, expand and grow. We all know that growing businesses are the drivers for economic growth. These investments will help women and youth realize their business dreams of greater market participation. I would like to acknowledge the special role of [EDGE] in fostering this agreement. [EDGE] stands ready with a strong pipeline of SMEs for Absa to consider and will support these entities after the loans are provided. [EDGE] really is a connector for agriculture SMEs to reach their full potential as key market players in Zambia.”
— Sheryl Stumbras, U.S. Embassy Chargé d’Affaires
The EDGE Activity, through its facilitatory approach, partners with innovative financiers with established agricultural lending portfolios to broaden SMEs’ access to financing.
Learn more about the USAID/Zambia EDGE Activity.
Learn more about our work in Zambia.
