MICROCAPITAL BRIEF: FMO Loans $33m in Local Currency to Exim Bank Tanzania for Micro-, Small, Medium-sized Enterprise (MSME) Financing

The Netherlands Development Finance Company, a public-private bank also known by its Dutch acronym FMO, recently loaned TZS 75 billion (USD 33 million) to Exim Bank Tanzania Limited, a commercial bank active in Tanzania, Comoros, Djibouti and Uganda. The bank has allocated the funds for lending to micro-, small and medium-sized enterprises (MSMEs) primarily in rural Tanzania. Of the total, Exim Bank plans to disburse TZS 23 billion (USD 10 million) over the next 17 months. The firm’s deputy CEO, Jaffari Matundu, explains that the agreement with FMO is “part of the bank’s strategy to support [small and medium-sized enterprises] thereby generating employment and reducing poverty in the country.”

Established in 1997, in Dar es Salaam, Exim Bank offers in-person and online services such as deposits, credit cards and lending – including trade-finance – via 45 branches in Tanzania, Comoros, Djibouti and Uganda. As of December 2017, it reports total assets of TZS 1.6 trillion (USD 702 million), loans to customers of TZS 912 billion (USD 399 million) and customer deposits of TZS 1.2 trillion (USD 523 million). For the year ending 2017, Exim Bank reported return on equity of 2 percent and return on assets of 1 percent.

FMO, which was established in the Netherlands in 1970, is 51-percent owned by the Dutch government. The bank’s vision is to help abolish extreme poverty, increase equality and support measures that reduce climate change. For 2017, FMO reported total assets of EUR 8.3 billion (USD 10 billion) and pre-tax earnings of EUR 292 million (USD 350 million) from operations in approximately 70 countries. As of year-end 2017, FMO reports EUR 3.3 billion (USD 4 billion) in investments outstanding to financial institutions.

By Nicholas Galimberti, Research Associate

Sources and Additional Resources

FMO press release
https://www.fmo.nl/news-detail/571d6a05-9ba8-45d5-bee7-e289a4c4ae06/tzs-75-billion-(usd-45-mn)-loan-for-exim-bank-to-boost-lending-to-smes-in-tanzania

Exim Bank background
https://www.eximbank.co.tz/AboutUs/CorporateProfile.aspx

Exim Bank annual report
https://www.eximbank.co.tz/images/Brochure/EXIM%20BANK%20GROUP%20AUDITED%20ACCOUNTS%20FOR%20THE%20YEAR%20ENDED%2031%20DEC%202017.pdf

MicroCapital Brief; June 5, 2018; FMO Issues $586k Convertible Grant to Milan InnoVincy to Support Smallholder Farmers in Rwanda, Tanzania, the Netherlands
https://www.microcapital.org/microcapital-brief-fmo-issues-586k-convertible-grant-to-milan-innovincy-to-support-smallholder-farmers-in-rwanda-tanzania-the-netherlands/

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