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FDH Bank, Smea seal K500 million loans package deal for SMEs in Malawi

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One of Malawi’s leading local banks, FDH last Thursday signed a memorandum of understanding with the Small and Medium Enterprise Association (Smea) for a special K500 million loan package targeting small and medium enterprises in the country.

The loan fund, to be administered by the bank through Smea, is meant to help SMEs grow and build a stable capital base.

Speaking to journalists after signing the pact, FDH Bank head of finance Mathias Silumbu said through the fund, SMEs would be accessing loans from the bank upon getting a nod from Smea.

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“We know SMEs are critical for development of the country. We believe that through the fund, we will be in a position to effectively fund the small and medium enterprises and help them grow their business and increase their contribution to the country’s economic development,” said Silumbu.

Smea president James Chiutsi said the revolving fund comes at an opportune time when the majority of small and medium business operators continue to face business-funding woes.

He said the association would be vetting interested members to access the loan to determine the viability of their business plans.

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“This agreement is to address two critical issues: We have noted that most of our members are not banked and they don’t have a good track record. We have now agreed with the bank to make sure that more members have access to the bank’s services,” said Chiutsi.

He expressed optimisms that through the fund, most small and medium enterprises will grow their portfolio and contribution to the economy at large.

While conceding that it has been concerns of funds diversion has been rampant among practitioners of the sector, Chiutsi said various initiatives have been lined up to create a platform for training and advocacy.

Over the years, lack of stable capital and exposure to international trends and markets among local SMEs has been blamed for the sector’s continued low contribution to the economy.

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