Products

Project Description

This is a medium to long-term loan facility under which the Bank provides finance for new, modernization, rehabilitation, diversification, rationalization and expansion projects in the manufacturing, processing, tourism, haulage, mining, and quarrying sectors of the economy. The facility is also available for large-scale agriculture, ranching and agro-industrial projects.

Medium term loans are for periods of 2-5 years and Long-term for 6-10 years. Loans can be provided in local or foreign currency.

Objectives

The mandate of DBZ is to contribute to the development of economically viable enterprises in Zambia. The broad objectives are to select projects that contribute towards:

  • Foreign exchange savings and / or earnings.
  • Development of local technology and of manpower skills.
  • Creation and expansion of permanent employment.
  • Use of local raw materials.
  • Development of a robust indigenous Private Sector.

Terms and Conditions of the Facility

(terms subject to change without notice)

A. ELIGIBLE BORROWERS

The Bank will consider applications from any Private sector company.

The Bank will consider applications from any Private sector company / parastatal organization / cooperative. The Bank does not lend to individuals. It is mandatory that the promoters make a contribution of 30% of the total project financing requirement.

C. LOAN AMOUNT

Currently, the minimum loan amount is US$200,000 in foreign currency or Kwacha equivalent. The minimum loan amounts are reviewed by the Bank from time to time. Loans can be financed in two modalities:

  • The Bank as the single financier and / or
  • The Bank co-financing as member of a syndicate of financiers.

E. INTEREST RATES

Foreign currency loan - interest rates cost may vary depending on the cost of funds. A margin of up to 5% above cost of funds will be charged.

Loans in Kwacha - Floating Based on BOZ policy rate plus a margin of up to 9%.

G. LOAN REPAYMENT PERIOD

Repayment periods vary for medium term loans and long term loans. Medium term loans are repayable over 2-5 years and 6-10 years for long term loans. The Bank will consider grace periods for capital repayments of up to 2 years. The repayment schedule will be determined by the nature of the project and the cash-flow projections. The loan grace period shall, however, not exceed the net grace period on the line of credit at the time of the Bank approval for foreign currency loans. The loans will be repaid in the currencies of disbursement.

B. INVESTMENT CRITERIA

The Bank has great latitude in terms of investment criteria and expects to be involved in a variety of economic sectors. The Bank will only finance projects which are technically feasible, economically viable and capable of yielding an acceptable rate of return on investment.

D. SECURITY

The Bank's security requirement will normally consist of one or a combination of the following:

  • First mortgage on land and buildings.
  • Specific / floating charge on company's fixed assets.
  • Pari-passu charge with other lenders.
  • Joint and several guarantee of the shareholders.
  • Key man life insurance.
  • Insurance over the pledged assets with DBZ noted as loss payee.

OUTSIDE THE PROJECT

  • Unencumbered property or assets acceptable to the Bank.
  • Commercial bank guarantee.
  • Holding company guarantee.

In case of a foreign currency loan, the promoter is expected to bear the foreign exchange risk.

F. FEES

  • Appraisal fee - 1% of the loan amount payable upfront, non-refundable if the Bank does not approve the project.
  • Facility fee - 2% of the loan amount payable before or at the time of signing the loan agreement.
  • Commitment fee - 3% of the undisbursed loan amount after 90 days from date of approval by the Bank.

PROCEDURE FOR APPLICATION

To assist us in evaluating your project and financial requirements, we will require the following information:

  1. Company name and profile.
  2. The names of shareholders/directors and copies of their identities. This should also include the directors track record and resumes.
  3. Copy of certificate of incorporation together with copy of memorandum & articles of association.
  4. Copy of Vat and Tax payers identification number certificates.
  5. A complete feasibility study (business plan) with profit and cashflow projections.
  6. Audited financial statements for the past three years and latest management account.
  7. Any information in regard to other borrowings, security given etc Bank and Trade/Supplier references which the Bank will be authorised to contact for verification of details.

Apart from the above the full format of what is required is available from the Bank

Project Description

Trade Finance is a short term facility through which the Bank meets short term liquidity requirements of importers and exporters. Through the Trade Finance Facility, the Bank will be actively involved inpromoting trade finance activities.

Objectives

The mandate of DBZ is to contribute to the development of economically viable enterprises in Zambia. The broad objectives are to select projects that contribute towards:

  • Foreign exchange savings and / or earnings.
  • Development of local technology and of manpower skills.
  • Creation and expansion of permanent employment.
  • Use of local raw materials.
  • Development of a robust indigenous Private Sector.

Terms and Conditions of the Facility

(terms subject to change without notice)

A. EXPORT FINANCING FACILITY

Using the Export Financing Facility in Kwacha or foreign currency, the Bank is able to meet an exporter's temporary liquidity requirements pending the receipt of payment.

The facility could be used for the following purposes;

  • Raw materials that may be required to fulfill export orders.
  • Processing of commodities.
  • Purchasing packaging materials for exports.
  • Meeting freight charges of commodities.
  • Financing a local purchase of exportable commodities.

C. INVOICE AND BILL DISCOUNTING

The Bank's bill discounting facility serves to provide liquidity to an exporter by advancing the exporter a portion of the face value of the trade bill drawn by the exporter accepted by the buyer and endorsed to the Bank. The discount covers interest costs and all bills are purchased with recourse to the exporter.

E. ADMINISTRATION OF TRADE FINANCE FACILITY

The trade finance facilities will be administered in the following manner:

  1. AMOUNT
    The minimum amount to be extended under the Trade finance facility will be varied at the discretion of the Bank. Currently the Bank will consider applications for trade financing with a minimum value of $250, 000 or Kwacha equivalent.
  2. TENOR / PERIOD
    The Bank's trade finance facilities are for short term periods which range from a week to 180 days.
  3. CHARGES
    a. Interest on foreign currency facilities will be based on Cost of funds plus a margin of up to 5%.
    b. Floating rate on Bank of Zambia policy rate with a margin of up to 5%.
    c. Appraisal fee of 1 %, payable upfront.
    d. Facility fee of 1% of the facility amount payable on approval. A commitment fee of 3% on undrawn balance.

B. IMPORT FINANCING FACILITY

The Bank will finance an importer's working capital requirement using this facility in Kwacha for the following purposes :

  • Warehousing costs such as bond warehousing, general warehousing of stocks I imported commodities.
  • Transport costs from source to local market.
  • Clearing costs of goods imported, this would normally include VAT, duty etc.
  • Purchase of inputs, spares and raw materials to be used in the manufacture of finished goods.

D. CONTINGENT LIABILITY INSTRUMENTS

The Bank will provide additional support to businesses in the form of bonds and guarantees. The main type of guarantees and bonds the Bank will issue are as follows:

  • Tender Guarantee / Bid Bonds.
  • Performance Guarantees.
  • Advance payment Guarantees.
  • Retention Guarantees.
  • Maintenance Guarantees.
  • Custom Bonds.

Contingent liability instruments will also be used by the Bank to support transactions involving construction such as roads, buildings and manufacturing projects.

F. SECURITY

The Bank will require Trade Finance transactions to be covered by one or a combination of the following security:

  1. Assignment of proceeds of underlying commodities.
  2. Bank Guarantee.
  3. Cash cover.
  4. First legal charge on fixed assets.
  5. Quasi cash instruments such as Treasury Bills,GRZ Bonds, quoted shares etc.

Project Description

Bonds and Guarantees can assist businesses in tendering and negotiating better contract terms. In fact, it is common for parties to a business transaction to insist on the provision of a guarantee or bond as a standard means of securing the terms of a contract. The Bank has the ability to provide such guarantees or bonds in favour of third parties, to support the trading activities of businesses.

Objectives

The mandate of DBZ is to contribute to the development of economically viable enterprises in Zambia. The broad objectives are to select projects that contribute towards:

  • Foreign exchange savings and / or earnings.
  • Development of local technology and of manpower skills.
  • Creation and expansion of permanent employment.
  • Use of local raw materials.
  • Development of a robust indigenous Private Sector

 

Terms and Conditions of the Facility

(terms subject to change without notice)

A. TENDER GUARANTEE (BID BONDS)

Mainly, a bank guarantee will be required by buyers and tender committees to support a tender for a contract. The guarantee is usually for an amount between 1 % and 5% of the contract value.

The bank's support in the form of a guarantee is an indication to the buyer and tender committee that the tender is a serious offer and the party submitting it is financially competent to enter the contract. The guarantee also indicates that on award of the contract, subsequent guarantee requirements to secure performance and/or advance payments will be forthcoming.

C. ADVANCE PAYMENT GUARANTEE

This type of guarantee is usually required for money released where, under the terms of the contract, an advance payment has to be made to cover the initial costs of commencing contractual work. The amount of an advance payment varies between 10% and 20% of the contract value.

E. MAINTENANCE GUARANTEE

The Maintenance Guarantee is intended to ensure that once construction has been completed, the obligation of the contractor will be fulfilled during the maintenance period. This type of guarantee is common with construction contracts.

G. TENOR / PERIOD

All guarantees issued by the Bank will indicate a fixed expiry date after which the Bank will not accept any claims. Normally, guarantees will be for periods between 90 days and 365 days.

B. PERFORMANCE GUARANTEE

A performance guarantee is an undertaking to pay a specified sum of money to a third party in the event of failure to carry out the terms of the contract. This type of guarantee is commonly required to secure performance and amount between 5% and 10% of the contract value.

D. RETENTION MONEY GUARANTEE

There are contracts which require that a percentage of each payment should be withheld until the project has been completed and accepted. This type of guarantee enables your business the total amount of each payment while assuring the other party that funds will be payable in the event of failure of performance.

F. ZAMBIA REVENUE AUTHORITY(ZRA) CUSTOMS BONDS

Payments to ZRA Customs and Excise need to be confirmed before the relative merchandise can be moved from any port. This requirement can cause delays in shipments and business transactions, but guarantees issued by the Bank are acceptable to the ZRA and allow merchandise to be transported more expeditiously. Additionally, guarantees can be arranged for customs authority to permit the temporary import/export of samples or exhibits without payment of customs duty.

H. SECURITY

Collateral is required and will be considered on a case by case basis.

Project Description

Our Business Advisory Service is intended firstly to give support to foreign based financial institutions lending to Zambian businesses and secondly to provide ordinary businesses accessibility to financial resources available outside DBZ.

Objectives

The mandate of DBZ is to contribute to the development of economically viable enterprises in Zambia. The broad objectives are to select projects that contribute towards:

  • Foreign exchange savings and / or earnings.
  • Development of local technology and of manpower skills.
  • Creation and expansion of permanent employment.
  • Use of local raw materials.
  • Development of a robust indigenous Private Sector

Terms and Conditions of the Facility

(terms subject to change without notice)

A. PRE AND POST LENDING SUPPORT

Pre and post lending services are designed for foreign-based financial institutions that may not have the resources within Zambia. Under this service the Bank will undertake the following activities:

  • Providing relevant information.
  • Screening of applications.
  • Carrying out due diligence studies.
  • Portfolio monitoring and control.
  • Undertaking site visits to projects.
  • Providing periodic progress reports.
  • Making available audited accounts and management accounts.
  • Advising on loan restructuring and exit strategies.
  • Providing services such as shadow management and board representation.

C. TECHNICAL SUPPORT

The Bank will provide Technical assistance in the form of Preparation business proposals for submission to other financial institutions other than DBZ This service is intended for business owners lacking the resources or expertise to prepare business plans.

E. APPLICATION FOR BUSINESS ADVISORY SERVICES

Requests for Business Advisory Services should include the following information

  • Company name and profile.
  • The names of shareholders I directors and copies of their identities. Also include directors track record and resumes.
  • Copy of certificate of incorporation together with copy of memorandum & articles of association.
  • Copy of Vat and Tax payers identification number certificates.
  • Type and details of service required : Audited financial statements for the past three years and latest management accounts.

Apart from the above the full format of what is required is available from the Bank.

B. FINANCIAL INTER MEDIATION

As financial intermediary, the Bank will link potential borrowers with lending institutions. The Bank, if so required, will also negotiate terms with the lending institutions and facilitate loan disbursements. This service is intended for the local business owners I wanting to raise funds from financial institutions other' than the DBZ.

D. CHARGES

Our charges will be negotiable dependent on the complexity of support required and time. As a guide charges will be as follows:

  • Pre Lending - negotiable flat fee payable upfront.
  • Post Lending - negotiable flat fee.
  • Financial Inter mediation upfront fee of equivalent of $1000 and 1% to 2% of the amount raised technical Support - flat fee.

Project Description

Various projects currently operate in the country to build up the capacity of farmers and farmer groups and associations, and to link them to firms providing credit and access to markets. Currently, the strategy to intensify smallholder production relies largely on the increased outreach of the input credit and marketing services provided by commercial companies or out growers under contract farming arrangements.

However, many of these companies if not all, are constrained by limited resources and face considerable difficulties in accessing finance required to expand their out grower/contract farming activities. This has placed a limit on the extent to which contract farming can contribute to agricultural production.

Objectives

The mandate of DBZ is to contribute to the development of economically viable enterprises in Zambia. The broad objectives are to select projects that contribute towards:

  • Foreign exchange savings and / or earnings.
  • Development of local technology and of manpower skills.
  • Creation and expansion of permanent employment.
  • Use of local raw materials.
  • Development of a robust indigenous Private Sector

 

 

Terms and Conditions of the Facility

(terms subject to change without notice)

A. THE LINE OF CREDIT

The line of credit, presently amounting to United States Dollars Four Million (US$4, 000, 000.00) will be availed through PFls. The amount is subject to annual review and will be increased with demand. The maximum exposure to a single borrower or group is US$500, 000 or its Zambian Kwacha equivalent.

C. TENOR

Twelve (12) months or less on a renewable basis. This may be extended to twenty four (24) months in special circumstances.

E. INTEREST RATES

The interest rates will be determined by the PFls, which will reflect the cost and risk of the project. The PFI is free to determine its mark-up on the loan or advance to the final beneficiary. The Apex w i I I , however, provide the funds to the PFIat the 12 months London Inter-bank Offer Rate (LiBOR) plus 1 % to the PFls. For local currency, the funds will be availed at the 364 days.

Applicants are encouraged to negotiate the interest rates at which they will borrow the funds from the PFls.

G. FUTURE PROSPECTS

The Credit Facility is a conduit for participation by local financial institutions in rural development and extension of their services to hitherto unbanked clientele, which should assist them explore new opportunities for providing other financial services.

B. ELIGIBILITY

Private contracted small scale farming, agricultural marketing and processing companies and out growers covering:

  • Activities that will lead to expansion or intensification of smallholder based contracted production.
  • Operations in agriculture, livestock or fisheries sub-sectors, handicrafts and other rural activities.
  • Procurement of seasonal inputs that the agro-companies or bodies will deliver on credit to their contracted smallholders. Procurement of small investment items such as irrigation pumps and livestock that the agro-com- ponies or bodies will deliver on credit to their contracted small holders.

D. CURRENCY OF LOANS

PFls can access the loans for on lending to private entrepreneurs in either US Dollars or Zambian Kwacha. 

F. COLLATERAL

The PFI is free to call for collateral as it deems fit.

H. PROCEDURE FOR APPLYING

Contracting/out-grower companies and marketing/agro-processing companies are required to prepare bankable business plans for the project requiring financing.

 The proposal, together with the application, should be submitted to the PFI, with a copy to the Apex Unit at the Development Bank of Zambia. The PFI will evaluate the application and may request for additional information.

 The Apex will work closely with the PFI and may link potential sub-borrowers and PFls at the lending stage.

 On approving the application, the PFI will request the Apex for the disbursement of funds.

Project Description

This is an asset financing facility allowing customers the use but not the ownership of a wide range of assets where the full capital cost of the asset is amortised byway of lease rentals.

For customers who may wish to acquire the use of equipment without the initial burden of cost of purchase, the Bank will offer a leasing facility. This is an advantageous option because it will not affect the company's own capital and credit facilities while the new equipment improves the company's operating efficiency as expected.

Leasing finance is a medium term facility with tenure spread in periods of between 1-3 years or more in exceptional cases. The Bank will buy assets or equipment required by the customer and will lease it at an agreed rental and period.

 

Objectives

The mandate of DBZ is to contribute to the development of economically viable enterprises in Zambia. The broad objectives are to select projects that contribute towards:

  • Foreign exchange savings and / or earnings.
  • Development of local technology and of manpower skills.
  • Creation and expansion of permanent employment.
  • Use of local raw materials.
  • Development of a robust indigenous Private Sector

 

 

 

 

 

Terms and Conditions of the Facility

(terms subject to change without notice)

A. FEATURES

  • Medium term finance which enables the customer to acquire the use of assets without initial burden of the cost of purchase.
  • Rental costs and period of the lease are agreed by the Bank and customer at the outset.
  • The primary lease period provides for full recovery of the cost of equipment/asset.
  • The primary rent period is usually less than or equal to the estimated life of the assets on lease.
  • A secondary lease period could be considered after the primary lease.
  • Customers using the assets are responsible for their insurance and maintenance.
  • Equipment is sold at the end of the lease period(s) to a third party.

C. SECTORS TO BE CONSIDERED FOR LEASING FINANCE

The Bank will review lease finance requests from the following economic sectors: 

  • Agriculture and agro-processing industry.
  • Manufacturing.
  • Mining & quarrying.
  • Tourism.
  • Forestry & wood processing.
  • Transport.

B. BENEFITS TO THE CUSTOMER

  • There is no immediate cash outflow from the business leaving the working capital intact.
  • A lease can be tailored to suit most requirements and hence it is a flexible arrangement.
  • Lease rentals are tax deduct able.
  • Customer's credit facilities remain unaffected while the new equipment should improve the customer's operating efficiency.
  • It creates budgetary advantages for the customer as the lease rental is known from the outset.

D. SECURITY

Although a lease facility is self securing, depending on the asset purchased, the Bank may seek additional security.

Project Description

Equity Investment involves the Bank taking up an equity stake into other companies / project companies as opposed to providing loan finance. The total investment in any individual company which the Bank will take up is restricted to 25% of the total equity of a company.

Objectives

The mandate of DBZ is to contribute to the development of economically viable enterprises in Zambia. The broad objectives are to select projects that contribute towards:

  • Foreign exchange savings and / or earnings.
  • Development of local technology and of manpower skills.
  • Creation and expansion of permanent employment.
  • Use of local raw materials.
  • Development of a robust indigenous Private Sector

 

 

Terms and Conditions of the Facility

(terms subject to change without notice)

The Bank shall review each proposal for equity participation on its own merit.

Investment Criteria

The main criteria the Bank will consider are that the company

  • Must be privately owned.
  • Must have been in existence for a minimum of five years.
  • Must have been profitable for the last three years.
  • Must have acceptable debt/equity ratio, and sound capital base.
  • Must have dividend history of the past three years.
  • Must have acceptable earning ratio.
  • Projections of future income streams must be positive.
  • If not listed, it must have the potential to be listed or quoted on the Stock Exchange.

In all cases of equity investment, the Bank will exit between 5 - 10 years through direct sale to existing shareholders or through the Stock Exchange. Please see application guidelines for procedure on how to apply. For further information and clarification, please contact the Projects Department.