Bank of Zambia & Zambia NABII Launch ZMW 5B Facility for MSME Finance

The Bank of Zambia (BoZ) has committed ZMW 5 billion ($190 million) in seed funding to anchor the Small Business Growth Initiative (SBGI), a national facility designed in partnership with the Zambia National Advisory Board for Impact Investment (NABII). Targeted at addressing the longstanding challenge of limited access to affordable financing for Micro, Small, and Medium Enterprises (MSMEs), the initiative leverages central bank capital to incentivize financial intermediaries to expand lending. The facility is developed as a comprehensive approach to MSME financing. It aims to strengthen financial institutions while creating a secure and scalable financing ecosystem that attracts cooperating partners, including development finance institutions (DFIs) and strategic investors.

The SBGI operates through a multi-sleeve architecture anchored by a credit guarantee scheme alongside technical assistance and innovation support. Under the framework developed by NABII, an Apex structure manages the day-to-day operations of the SBGI Debt Sleeve, administering risk-sharing mechanisms to mitigate credit risk for participating financial institutions. Capital execution expands further through an Alternative Capital Sleeve designed to introduce alternative capital instruments. The ZMW 5 billion seed funding from BoZ functions to mitigate credit risk, establishing the foundation to attract additional private sector and institutional partners.

The initiative addresses a critical market gap within Zambia’s economy, where MSMEs serve as vital drivers of economic growth, job creation, and innovation, yet face severe financing constraints. High collateral requirements and elevated yields on government securities have historically directed commercial bank credit away from small business lending. Traditional financing channels routinely bypass growth-stage MSMEs due to perceived risk and high transaction costs. By mitigating credit risk through a credit guarantee scheme, the SBGI aligns private-sector-led development goals with sustainable financing for the real economy.

At the microeconomic level, the facility targets the financing gap facing MSMEs—enterprises seeking to expand but constrained by limited access to affordable finance. SBGI deploys partial credit guarantees and alternative capital structures to improve financing terms, support enterprise growth, and increase MSME productivity. These tools enable small businesses to strengthen operational capacity, scale infrastructure, and participate in large-scale regional projects, including the Lobito Corridor. Concurrently, technical assistance and innovation support build the capacity of MSMEs, financial institutions, and business service providers.

Rollout execution follows a structured timeline managed by the Apex structure, which rolled out the SBGI Debt Sleeve pilot in Q1 2025 ahead of full launch in Q4 2026. A feasibility study for the Alternative Capital Sleeve is being conducted to support fund design and establish selection criteria for pipeline enterprises. Primary targets focus on formalizing the informal sector, increasing MSME productivity, and building a sustainable financing model to achieve Zambia’s private-sector-led development goals.