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AFDB APPROVES FINCORP’S E300M LOAN

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MBABANE – Good news is in the air for SMEs following the approval of an over E300 million loan to Swaziland Development Finance Corporation (FINCORP).


FINCORP Managing Director (MD) Dumisani Msibi has confirmed that the Board of Directors of the African Development Bank (AfDB) gave the greenlight to a Line of Credit (LOC) valued at E355 million (US$26 million) to finance key projects in key priority sectors including manufacturing, transport and logistics, forestry, agri-business, building and construction.


Explained


Msibi explained that the facility would help and scale up support to critical sectors in Swaziland and support efforts to promote private sector development.


He said it would also enhance FINCORP’s liquidity and ability to provide financing on appropriate terms to projects and enterprises in key sectors including lower levels of economic activity.


“The LOC will have positive development impacts including availing scarce long-term liquidity injection and promotion of private sector participation in key sectors as well as contribute to gender and social development through support to projects in rural and underserved communities,” Msibi explained.    

 
Demand


The MD said the AfDB loan comes at a time when FINCORP was faced with a huge demand for business loans which far exceeded their capacity to supply.
Msibi clarified that part of the loan amounting to E235 million was, however, subject to a government guarantee and they had since submitted their request to the ministry of finance. “We are hoping that the guarantee will be issued without any delays so that we can begin to draw down on the line of credit for the benefit of the Swazi SMEs.
The biggest advantage for this facility is its tenure of 10 years which will now enable us to offer extended duration to clients,” said Msibi. 


On top of the loan AfDB has also offered technical assistance to the institution by way of strengthening credit appraisal and risk management.  He said they would also train their staff. AfDB will also work with FINCORP in tracking development outcomes.  It was also added that the financed projects and enterprises were expected to contribute to Swaziland’s economic development, generate employment opportunities and reduced income inequalities.


Mentioned


It should be mentioned that FINCORP realised a profit drop of 34.92 per cent, which amounts to E8.8 million in monetary terms.
The company with two shareholders in the Swazi Government and Tibiyo TakaNgwane holding 80 per cent and 20 per cent respectively reported that the group profit after tax of E16.4 million.
“This is a decline from the profits of E25.2 million made the previous year.  This is largely because the parent company posted a loss of E8.6 million which is largely attributable to foreign exchange valuation losses of 14.8 million,” reported Tibiyo TakaNgwane in the financial year ended April 30, 2016.

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