Afreximbank has secured a US$400m loan from a state-owned Chinese bank to finance small to medium enterprises (SMEs) in African countries, including Zimbabwe.
The facility, signed between China Development Bank (CDB) and Afreximbank in Cairo on Monday, comes as SMEs on the continent have been struggling to access funding due to stringent conditions by banks.
The development-focused agreement was signed by CDB president Tan Jiong and his Afreximbank counterpart Benedict Oramah at the pan African bank’s headquarters in Cairo, Egypt.
The facility has a seven-year tenor and will be deployed either directly to eligible African SMEs that meet Afreximbank’s requirements or indirectly through local financial intermediaries, Afreximbank said in a statement.
It will be deployed either directly to eligible African SMEs that meet Afreximbank’s requirements or indirectly through local financial intermediaries.
Oramah said the CDB facility would help increase the level of financing available to SMEs that continue to struggle to access adequate and affordable financing for growing their businesses.
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He added that since Afreximbank was receiving the facility as medium to long-term funding at relatively affordable pricing, it would transfer the financial advantage in pricing and tenor to the end beneficiaries.
“This facility further strengthens the strategic partnership we have developed with the China Development Bank over the last six years, which has seen CDB make three previous interventions in support of our work at Afreximbank,” Oramah said.
“It will also enable our two institutions to achieve our respective mandates and developmental outcomes, which include job creation, increased economic activity and increased extra-African trade with China.”
Established in 1994, CDB is a state-funded and state-owned development finance institution.