The African Development Bank (AfDB) has approved a private sector equity investment of €600,000 in the Access Bank of Tanzania (ABT), as part of a project with an objective “to provide clients in the lower income group with a broad range of financial services,” according to AfDB resident representative in Tanzania, Dr. Sipho Moyo. According to an AfDB press release, the core target group will be growth oriented in the upper micro and lower SME (small and medium enterprise) segment.
The project is based on the model of an investment holding company where a microfinance operator, in this case, Access Holding AG, a financial institution established in Germany, with the help of AfDB and other investors, establishes a microfinance commercial bank—ABT—that will provide financial services to low income people in Tanzania. Access Bank is expected to serve at least 24,000 low income micro-entrepreneurs with start up capital of €3.8 million.
Access Microfinance Holding AG (AccessHolding), established in 2006, is a commercial microfinance holding company. Its business purpose is to invest in microfinance institutions (MFIs) and concentrates on start-up and early-stage MFIs. It has fund assets at €2.7 million and 3 active microfinance investments as of end February 2007.
The African Development Bank commenced operations in Tanzania in 1971. To date the Bank has committed about € 1.3 billion in 103 operations. The AfDB is among Tanzania’s four major development partners.
AccessHolding is the primary shareholder of ABT, with shareholdings of 38%, while the rest of the investors each hold 15.8%. Other investors include Belgian Investment Company for Developing Countries (BIO), IFC (International Finance Company), and KfW (German Development Bank). The project will support and facilitate the introduction and transfer of management expertise, new financial products and lending methodologies that allow commercial banks to enter and sustain microfinance on commercial terms.
–Monica Sharma, Research Assistant
Additional Resources:
ADB Press Story: Tanzania: AfDB Approves €600,000 Equity Investment in Access Bank of Tanzania.
Mix Market: www.mixmarket.org. Washingtion, D.C.
AdfB: www.afdb.org.
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