By Business Insider Reporter
Small and medium-sized enterprises (SMEs) in Tanzania are set to benefit significantly after the African Development Bank (AfDB) approved a US$10 million trade finance guarantee facility for Exim Bank Tanzania Limited.
The guarantee will enable Exim to secure trade lines from international banks by covering the risk of non-payment, a challenge that has long constrained Tanzanian businesses seeking to participate in cross-border trade.
The facility is expected to support up to US$60 million in trade transactions over three years, unlocking opportunities for SMEs that often face barriers due to stringent collateral requirements.
“SMEs and corporates are vital engines of industrialization, innovation, and job creation, and this facility will remove barriers to cross-border trade while opening doors for new partnerships,” said Jaffari Matundu, CEO of Exim Bank Tanzania.
Boosting SME competitiveness
SMEs make up over 90 percent of Tanzania’s businesses and contribute nearly a third of the country’s GDP.
Yet, they face an estimated US$1.3 billion annual trade finance gap, according to AfDB figures.
The new facility is designed to directly address this bottleneck by reducing Exim’s reliance on scarce foreign exchange collateral, thereby freeing liquidity for lending to SMEs.
Trade experts say the facility could transform how SMEs access finance for both imports and exports, particularly in priority sectors such as agriculture, health, energy, and manufacturing.
Imports of fertilizers, pharmaceuticals, and farming equipment are expected to increase, while exports of Tanzanian commodities such as coffee, cashew, and cotton could gain a stronger foothold in regional and global markets.
Strengthening Tanzania’s private sector
For SMEs, one of the biggest hurdles in trade has been the high cost of borrowing and limited trust from foreign banks. By de-risking trade transactions, AfDB’s support will lower financing costs and improve Tanzania’s attractiveness as a trading partner.
“Trade finance is essential for Africa’s economic development, facilitating both domestic and international trade, boosting economic growth, and promoting regional integration,” said Lamin Drammeh, AfDB’s Head of Trade Finance.
The deal also aligns with the Tanzania Vision 2025, which seeks to build a strong, competitive, and export-driven economy.
It further supports the AfDB’s Ten-Year Strategy (2024-2033) and the Tanzania Country Strategy Paper (2021-2025), which emphasise expanding access to finance for private enterprises.
Regional reach
Exim Bank, Tanzania’s fourth-largest bank, operates not only domestically but also in Uganda, Djibouti, and Comoros. Analysts say this regional presence could help Tanzanian SMEs tap into wider East African and Indian Ocean trade networks, leveraging the AfDB guarantee to expand markets beyond national borders.
As the facility begins implementation through agreements between Exim and confirming banks, observers expect to see improved cash flow for SMEs, greater participation in regional trade, and more jobs created in Tanzania’s private sector.
“This partnership demonstrates the African Development Bank Group’s commitment to reducing Tanzania’s trade finance gap, empowering local businesses to compete globally,” Drammeh added. With SMEs at the heart of Tanzania’s growth story, the facility marks a critical step in transforming finance from a barrier into a bridge for small businesses with big ambitions.
