NBS Bank gets $7 million AfDB guarantee for SMEs

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NBS Bank Chief Executive Officer (CEO) Kwanele Ngwenya

NBS Bank Plc will get a USD 7 million Trade Finance Transaction Guarantee facility from the African Development Bank (AfDB) Group to support small businesses in Malawi.

This follows the AfDB Board of Directors’ approval on December 4, 2023.

Trade Guarantee is one of the trade finance instruments offered by AfDB  to support local banks in Africa, and covers an array of trade finance instruments, including confirmed letters of credit, trade loans, irrevocable reimbursement undertakings, avalized bills and promissory notes, among others

According to a statement by AfDB announcing the development through their website, the facility will provide 100% guarantee to international confirming banks (CBs) for the non-payment risk taken on NBS’ trade finance transactions conducted on behalf SMEs, local corporates, and women-led businesses in Malawi.

“It will enable NBS Bank to support the importation of fertilizer, medical supplies, and other strategic commodities. The facility is expected to support about USD 40 million of trade over the next three years and promote intra-Africa trade in line with the aspirations of the Africa Continental Free Trade Area (AfCFTA),” reads the statement.

AfDB’s Malawi country manager Macmillan Anyanwu is quoted stressing the importance of unlocking trade financing to support and scale up trade flows for a land-linked low-income economy like Malawi.

“The facility is expected to promote the integration of Malawi’s economy into regional and global trade networks which are critical for the country’s growth,” he said.

NBS Bank Chief Executive Officer (CEO) Kwanele Ngwenya said: “NBS Bank has always been passionate about Malawi’s economic development, and I am pleased with this milestone because the transaction underscores the commitment of NBS Bank and AfDB to the advancement of trade in Africa. Additionally, on our part, we are committed to an ongoing cordial relationship with AfDB for the benefit of our clients and Malawi at large.”

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