Investment firm DEG seals $50 million partnership to bolster Tanzanian companies headed by women.
The European Fund for Sustainable Development Plus (EFSD+) is a financial guarantee mechanism that supports sustainable development and private sector growth in partner countries, including Tanzania. The EFSD+ aims to improve access to finance, particularly for micro, small, and medium-sized enterprises (MSMEs), by sharing risks and leveraging additional funds from public and private investors.
One example of EFSD+'s impact in Tanzania is its collaboration with Swedfund, a Swedish development finance provider. Swedfund has extended loans to financial intermediaries in East African countries, including Tanzania, with up to 50% guarantee coverage from EFSD+. This support allows these intermediaries to provide credit to MSMEs, facilitating their growth and strengthening local economies.
The financing initiatives often prioritise vulnerable groups like women and youth enterprises to promote inclusive economic development and financial inclusion. This approach diversifies the local economy and fosters employment opportunities in Tanzania and the wider East African region.
Separately, the German development finance institution, DEG, is providing a $50m loan to Tanzania's Cooperative Rural Development Bank (CRDB). The loan aims to help close the financing gap for small businesses in Tanzania, as few of these businesses have access to formal financing.
DEG's portfolio companies supported around three million jobs last year, according to its 2024 Development Report. The report also highlights ways DEG has supported private companies in developing and emerging markets to become more resilient amid global challenges such as climate change and geopolitical instability.
In addition, DEG provides funding to fintech and mobile payment startups in Tanzania through the develoPPP Ventures programme, making financial services more accessible and supporting financial inclusion.
It's worth noting that DEG has been working in East Africa for over 60 years, supporting new businesses through its subsidiary, DEG Impulse. The initiatives align with key United Nations Sustainable Development Goals (SDGs), particularly SDG 1, 5, and 8, which focus on poverty eradication, gender equality, and decent work and economic growth, respectively.
The European Union's Global Gateway Initiative, through EFSD+, aims to intensify cooperation with the private sector and enable projects relevant to development policy. However, the specific details of the EU's involvement in the Tanzania-focused financing initiatives have not been discussed in this context.
In summary, the European Fund for Sustainable Development Plus (EFSD+) and DEG are working together to increase funding for MSMEs in Tanzania, particularly for those owned by women and young adults. This collaboration helps de-risk loans to intermediaries, enhances access to formal credit for these businesses, and diversifies and strengthens local economies and employment in Tanzania and the wider East African region.
- The European Fund for Sustainable Development Plus (EFSD+) and development finance providers, like Swedfund and DEG, invest in financial intermediaries to facilitate access to development finance, promoting social impact through improving financial inclusion, particularly for MSMEs in Tanzania.
- EFSD+ aims to prioritize vulnerable groups such as women and youth enterprises for loans, fostering inclusive economic development and financial inclusion in Tanzania and the wider East African region.
- DEG's initiatives support around three million jobs, promote key United Nations Sustainable Development Goals, like poverty eradication, gender equality, and decent work and economic growth, and help small businesses close the financing gap through loans and collaboration with fintech and mobile payment startups.
- By leveraging the EFSD+'s financial guarantee mechanism, intermediaries can extend loans to MSMEs, facilitating their growth, developing local economies, and creating employment opportunities in Tanzania and the East African region.
- Priority is given to personal-finance and wealth-management education-and-self-development, career-development, and job-search programs to strengthen businesses and local communities, ensuring long-term sustainability and resilience amid global challenges.
- In addition to EFSD+, DEG's long-standing presence in East Africa, through its subsidiary DEG Impulse, has helped new businesses grow while aligning with the United Nations Sustainable Development Goals.
