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EUROPEAN BANK’S E160M BOOST FOR FINCORP

15/11/2019 08:33:00 BY KWANELE DHLADHLA

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MBABANE – FINCORP has signed a line of credit facility of 10 million Euros (about E160 million) with the European Investment Bank (EIB).

The Eswatini Development Finance Development Corporation (FINCORP) Group Managing Director (MD) Dumisani Msibi disclosed that The EIB facility over a period of seven years would be principally targeted at funding local Small and Medium Enterprises (SMEs) who want to start or grow their existing businesses. He said the corporation was highly grateful that EIB would make disbursements in Rands which would eliminate forex risk.

“The line of credit will allow FINCORP to offer financial support to SMEs with extended tenure of up to seven years when on average existing average tenure is five years,” explained Msibi.

Investments

He mentioned that some of the new sectors which they hoped to fund included renewable energy investments and Information, Communication and Technology (ICT) innovations.
Msibi pointed out that the facility meant FINCORP would now be empowered to deliver in terms of the mandate bestowed on the organisation by its shareholders government (80 per cent) and Tibiyo TakaNgwane (20 per cent).

The mandate of FINCORP includes providing access to credit for local SMEs, creating jobs, reducing poverty levels, providing business development and advisory support services to SMEs through mentoring, knowledge transfer and technology transfer.

Msibi further disclosed that EIB had also graciously offered technical assistance support towards strengthening institutional capacity at FINCORP in order to achieve set objectives which would entail intensive staff training on credit management; treasury management; and enhancing the present risk management framework. “All this at no cost to FINCORP,” Msibi explained.

Msibi also assured that they remained ready and committed to support the priority sectors as pronounced by the national road map namely; energy and mining, ICT; tourism; manufacturing and agro-processing. “We look forward to a fruitful, productive and mutually beneficial working relationship with EIB for years to come,” added Msibi.

EIB Head of Financial Sector Division Robert Schofield said they were glad to sign the credit facility with FINCORP soon after the Africa Investment Forum which also greatly emphasised on the empowerment of SME’s within the African continent.

He explained that they were pleased to support FINCORP particularly because the funds would be channeled towards sectors that aligned with their mandate as a bank. In its official website, it was explained that was the lending arm of the European Union.
It was classified as the biggest multilateral financial institution in the world and one of the largest providers of climate finance. The bank helps the economy, create jobs, promote equality and improve lives for EU citizens and for people in developing countries. “We hope the facility will enable SME’s to make meaningful investments without overburdening their cashflow through being expected to pay in the short term,” said Schofield. European Union (EU) Ambassador Esmeralda Hernandez Aragones said the credit facility was proof the EU remained committed to Eswatini government’s objective of growing the private sector.

Aragones said she was delighted the EU’s major area of support, agriculture, also stood to benefit immensely from the credit facility especially the small farmers. “The facility will boost all value chains from production to exportation,” said Aragones.
Principal Secretary in the Ministry of Finance Sizakele Dlamini said government was fully supportive of the collaboration and partnership that was formally established between FINCORP and EIB.

She said they were happy that the main target beneficiaries would be the low end SMEs in the country which would definitely stimulate economic growth.
“Our economy is not doing very well these days and seemingly it will still take us some time for us to come out of the woods but with such investments in the economy as that of EIB, we are optimistic that we will turn the corner,” said Dlamini.