Govt, AfDB sign US$ 51m financing agreement

Sat, 04 Mar 2017 10:11:37 +0000

TWO financing agreements worth over US$ 51 million have been signed by the Government with the African Development Bank (AfDB) for the provision of lines of credit to the Development Bank of Zambia (DBZ) and University of Zambia for the promotion of education for sustainable development in mineral resource management.

Over US$1.6 million would support UNZA’s capacity to run an in-house Master’s degree programme in sustainable mineral development among other initiatives while a total of US$50 million sovereign- guaranteed line of credit was given to DBZ to enhance access to finance by the private sector.

This brought the total amount provided to Zambia by AfDB in the past months to US$237 million.

Speaking at the signing ceremony yesterday, Minister of Finance Felix Mutati observed the need for the private sector to have the discipline to pay back the loans obtained from DBZ.

“Access to money and cost of money are critical obstacles to private sector growth but Government is addressing that through accessing loans such as this one.

“The private sector should use the money to generate growth because this is commercial money being lent and we are stressing the economy to dedicate the money to the private sector. The rate of default is increasingly worrying us,” he said.

He also expressed concern that some entrepreneurs submitted bankable proposals to DBZ but later diverted the funding accessed to non-income generating projects, adding that DBZ needed to tighten the appraisal framework to ensure genuine entrepreneurs accessed funding.

“DBZ needs to effectively monitor so that the money works for Zambia through job creation,” he said.

Speaking earlier, AfDB country representative Damoni Kitabire said the support to DBZ, whose tenure of 10 years, would be disbursed in US dollar and Kwacha. Mr Kitabire explained that the areas which would benefit from the technical assistance programme were expected to include credit underwriting, credit scoring, corporate and capital planning,

“US$0.5 million, will be used to fund the technical assistance programme to strengthen the capacity of DBZ and its SME clients,” he said.