Standard Bank Malawi, the Malawi Stock Exchange (MSE)-listed financial institution, yesterday signed a $25 million (over K10.5 billion) export credit facility with a UK development finance institution, CDC Group Plc, targeting local exporting companies.
The bank’s corporate and investment banking head, Frank Chantaya, said at the agreement’s signing ceremony in Blantyre, the facility will be provided to businesses in foreign currency and at an interest rate of less than 10 percent.
The country’s commercial bank’s lending rates are hovering at around 40 percent.
“In terms of pricing, the facility’s interest rate will be based on the dollar economy which is generally below 10 percent. We are targeting customers that export their goods and services who will be able to repay in dollars.
“The facility will consider those clients that have longer tenure requirements because banks by their nature are able to fund short-term loans,” he said.
Chantaya said by supporting the export sector, Standard Bank sees that the facility will support economic growth, noting that one of the strategies for government is to expand the country’s export base.
CDC Group Plc investment director for debt and structured finance Jeremy Burke said the loan will allow Standard Bank to provide much-needed funding in hard currency, thereby expanding their financial services to businesses in Malawi.
“Today’s loan is a result of CDC’s broader strategy to provide debt to businesses through local banks. Standard Bank have a strong management team and a sound balance sheet, and they are a key player in Malawi’s financial system,” he said.
Burke said CDC is mandated to provide development capital in Africa and has existing working relationship with Standard Bank Group.
He noted that the facility will help companies that have been holding back on longer term projects to proceed with the projects and Standard Bank will decide on whom they lend to.