The undated file photo shows a small-scale farmer (L) at her mushroom growing tent in Lusaka, Zambia. (Xinhua photo)
LUSAKA, Oct. 21 (Xinhua) -- Small and medium business owners in Zambia will have wider access to bank credit to thrive their businesses as a Chinese bank offered a 30 million U.S. dollar loan for them.
The loan agreement was sign recently between the China Development Bank (CDB) and the Development Bank of Zambia (DBZ), meant to pump new energy into small and medium enterprises (SMEs) in the Southern African country.
Speaking at the signing ceremony in Lusaka, Chinese Ambassador to Zambia Yang Youming said SMEs play an important role in the development of any country, and it is important that SMEs have access to finance to help them grow.
Photo taken on Aug. 3, 2015 shows people visiting a trade fair in Lusaka, capital of Zambia. (Xinhua photo)
He said the deal is a new achievement in the field of financial cooperation between China and Zambia following a loan agreement sealed in June seeing CBD offering a 29 million dollar loan to support construction of an industrial park in Zambia.
Zambian Finance Minister Alexander Chikwanda said he is hopeful that DBZ will exhaust the loan and use it for the intended purposes.
He said it is government's hope that as many SMEs as possible will benefit from the loans so that they grow and contribute to the economic development of the nation.
DBZ Managing Director Jacob Lushinga said at the ceremony that the money would be lent to small and medium enterprises in the agriculture, mining, manufacturing and tourism sectors and more than 50 projects were expected to benefit from it.
Representatives from the China Development Bank and the Development Bank of Zambia shake hands at the loan agreement signing ceremony in Lusaka, Zambia, Oct. 16, 2015. (Xinhua photo)
The loan, with concessional terms, will be paid back at an annual interest rate of 5.5 percent.
SMEs are increasingly being recognized as productive drivers of economic growth and source of jobs for African countries. Official statistics show that SMEs sector employs 88 percent of the 4.1 million labor force in Zambia.
According to the African Development Bank, a general consensus has emerged around the key role that SMEs can have in reducing poverty in African countries. But African SMEs historically lack access to finance and in order to make use of their potential, SMEs need increased access to bank credit.
