European Union shows financing opportunities for private sector and signs grant for Tanzanian micro-enterprises

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The European Union (EU) held an information session in Tanzania entitled ‘Grow with the European Union Finance’, focusing on financial opportunities for local businesses under the Global Gateway Strategy. This session built on the discussions of the Tanzania-EU Business Forum in February 2023, which highlighted the need for better access to finance.

The European Union (EU) recently held a highly productive information session entitled ‘Grow with the European Union Finance’, aimed at enabling Tanzanian businesses to seize numerous financial opportunities offered by the EU and its Member States under of the Global Gateway strategy.

Building on the successful private sector dialogue initiated during the Tanzania-EU Business Forum in February 2023, this session focused on addressing one of the key barriers identified at the time: access to finance for scaling up emerging businesses , trade and investment opportunities. During the forum in February, several financing agreements were signed between European Development Banks and local Tanzanian banks (NMB, CRDB, KCB), expanding the credit offering for Tanzanian MSMEs. Since then, the range of European financing instruments for the private sector has steadily increased.

The primary purpose of this information session was to provide concrete guidance on the available financing instruments and the process to access these funds. A major highlight was the signing of a new Financial Instrument grant contract worth TZS 11.23 billion (EUR 4 million) between the EU and the Financial Sector Deepening Trust (FSDT), aimed at promoting inclusive financing for small and medium-sized enterprises (SMEs). run by women and young people.

More than 100 representatives from the banking sector, SMEs, MSMEs and several large corporations participated, highlighting the crucial demand from local businesses to connect with EU-catalyzed financiers through the Global Gateway financing instruments.

Cedric Merel, Head of Cooperation of the EU Delegation in Tanzania, emphasized the EU’s comprehensive support for the Tanzanian business environment. “A favorable business environment is essential to the success of companies, and finance is their lifeblood,” Merel commented and added: “The European Union has provided a 360-degree approach to investment in Tanzania, from supporting the Blueprint agenda for regulatory reform, strengthening domestic resource mobilization, to strengthening capital markets and green and alternative finance, as well as attracting international funding.”

Edward Claessen, Head of the East Africa Regional Hub at the European Investment Bank (EIB), reinforced this message by highlighting the EIB’s significant support for private sector initiatives in Tanzania.

“Last year, Tanzania was the largest recipient of EIB support in Sub-Saharan Africa, with TZS758 billion (EUR 270 million) in new investments to support businesses through partnerships with Tanzanian banks such as CRDB, NMB and KCB-Tanzania,” Claessen stated.

“Of what we have signed, EUR 166 million has already been disbursed by the EIB to the banks and lent to more than 10,000 final beneficiaries, including over 3,000 women-led enterprises and over 900 blue economy enterprises and cooperatives. in Zanzibar, “ he added.

The information session provided insights into the EU’s Global Gateway Strategy, which aims to tackle global challenges such as climate change, healthcare system improvements and strengthening global supply chains. This strategy includes a variety of financial products, such as grants, loans, equity and guarantees, designed to benefit companies of all sizes.

A key part of this strategy is the European Fund for Sustainable Development Plus (EFSD+), which encourages sustainable investments in partner countries by offering risk-sharing instruments through partner financial development institutions. With up to TZS 112,340 trillion (EUR 40 billion) in financial commitments, EFSD+ aims to mobilize up to TZS 379,150 trillion (EUR 135 billion) in public and private financing globally in support of the Sustainable Development Goals (SDGs).

In addition to the EFSD+, the EU also supports start-ups and early-stage SMEs through initiatives such as the Funguo Innovation Programme, the PesaTech Accelerator Program and the Serengeti Business Angels Network, which provide grants and investment opportunities. In addition, the EIB, the EU’s lender, provides credit lines to local banks, which then provide loans to SMEs, allowing them to grow and innovate.

Gasper Mdee, a representative of the Tanzanian Private Sector Foundation, said the financial opportunities provided by the EU are crucial in promoting a thriving entrepreneurial ecosystem in Tanzania.

“Working with local private sector organisations, by focusing on inclusive growth, the EU ensures that diverse segments of the population, including under-represented groups such as women and youth, have access to the resources they need to to succeed. This support not only stimulates individual businesses, but also contributes to the overall economic development of the country.” Mdee said.

Distributed by APO Group on behalf of the European Union Delegation to the United Republic of Tanzania and the East African Community.