NBM Plc in loan guarantee partnership with African Guarantee Fund to support SMEs

In a move to scale up its lending activities for various micro, small, and medium enterprises National Bank of Malawi (NBM) Plc has entered into a five-year loan portfolio cover partnership with the African Guarantee Fund (AGF).

The cover will support start-ups, women led businesses and green funding initiatives.

AGF is a pan-African guarantee provider that promotes economic development by providing financial institutions with partial credit guarantees and capacity development programs specifically intended to support Small and Medium-sized Enterprises in Africa.

The signing ceremony was held in Nairobi, Kenya on October 2, officiated by AGF Group Chief Executive Officer Jules Ngankam and NBM Plc Chief Executive Officer (CEO), Harold Jiya.

In his remarks, Jiya said the guarantee will leverage untapped emerging sectors, enabling the Bank to expand its products and service offerings to various sectors, create business synergies, increase the overall number of beneficiaries, and enhance financial inclusion.

“The Loan Portfolio Guarantee will cover 75 percent of net losses for financing grant to women and green businesses and 50 percent for others not covered under these. All loans under ‘Amai Angathe’ product including top-up loans repaid up to 50 percent will be covered under this guarantee,” said Jiya.

Commenting on the partnership, Ngankam said: “One of the challenges that many SMEs face in accessing credit, is lack of adequate collateral to qualify their borrowing. This collaboration is part of AGF’s continued efforts to empower SMEs, drive economic growth, and support sustainable development across our continent. By utilizing AGF’s Loan Portfolio Guarantee facility, NBM plc will benefit from risk-sharing arrangements, enabling the Bank to extend credit to SMEs that otherwise face significant barriers to accessing finance.”

A key highlight of the partnership is its leverage of the African Development Bank’s Affirmative Finance Action for Women in Africa (AFAWA) initiative through the AFAWA Guarantee for Growth program.

NBM plcwill therefore provide targeted financial support for women-led and women-owned businesses, thus empowering female entrepreneurs and fostering gender inclusion in Malawi’s business landscape.

Melissa Basque-Roux, AFAWA Coordinator underlined: “This loan guarantee partnership will improve access to finance for women entrepreneurs, breaking down structural barriers and empowering them to grow their businesses, thereby contributing to sustainable economic development.”

Additionally, through AGF’s Green Guarantee Facility, NBM plc will increase financing for businesses investing in sustainable, low-carbon technologies. To compliment the guarantee products, AGF is at an advanced stage in structuring a Capacity Development program that will enhance NBM plc’s technical capacity to foster financial inclusion for its SME segment.

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