WHAT YOU NEED TO KNOW ABOUT THE DBZ LOAN APPLICATION PROCESS

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1 WHAT YOU NEED TO KNOW ABOUT THE DBZ LOAN APPLICATION PROCESS i) Which Zambian Sectors Does DBZ Finance? DBZ finances projects in all sectors of the Zambian economy which include, inter alia: Agriculture, Agro Processing, Manufacturing, Construction, Mining, Services, Real Estate, Medical, Education, Transport and Energy sectors. ii) Who Is Eligible To Apply For These Funds? The applicant should be a Zambian Registered Limited Company with a shareholding structure of at least 50% Zambian owned. iii) Which Business Categories Does DBZ Finance & What Is The Cost Of Funds? The Bank finances businesses which fall in the Small, Medium and Large scale categories. The table below shows these categories: Organization Size Employee Assets Turnover KWACHA KWACHA Small ,000,000-6,000,000-18,600,000 18,600,000 Medium ,600,001-93,000,000 18,600,001-93,000,000 Large >300 >93,000,000 >93,000,000 - Small and Medium Enterprises - Which according to the DBZ classification are Registered Limited Companies with an annual turnover between K6 million to K93 million and employing up to 300 people. Depending on the availability and cost of funds, SMEs are given incentivized low interest rates. For instance, the US$20 million euro bond proceed received by the Bank from government was lent out at interest rates based on inflation rate plus a margin of 2%, i.e 9% to SMEs. - Large Enterprises These are registered companies which have an annual turnover of above K93 million and employing more than 300 people. Large

2 enterprises are normally funded from the DBZ funds which are pegged at BoZ Policy rate plus a margin of 9%. iv) Do I Need To Pledge Security To Access These Funds? Security is required and the Bank usually prefers landed property of good value with a minimum Loan: Security Ratio of (1:1.5 or more). v) What Is The Minimum Loan Amount That One Can Apply For? Minimum Loan Amount is K1 million vi) What Tenure Is Applied On DBZ Loans? DBZ loan tenures are classified as short term, medium term or long term as follows: Short term: 12 months Medium term: 1 to 5 years Long term: above 5 years vii) What Information Does DBZ Need To Process My Application The Bank requires that the applicant submits a Business Plan/Business Proposal with all supporting documentation. Examples of supporting documentation includes inter alia; - Zema clearance certificate for certain agricultural, mining & construction projects - ZRA tax clearance certificate - Audited financials & management accounts for established businesses For a complete list of supporting documentation, refer to the application guideline. viii) Are There Any Fees or Service Charges Payable By The Applicant?

3 There are two types of fees payable by an applicant at application and after approval and these are: - Appraisal Fee this is a Non-Refundable Fee of 1% of the loan amount which is payable upfront for assessment of the viability and profitability of the project before approval. - Facility Fee This is 2% of the loan amount which is payable upon the client accepting the loan offer by virtue of signing the facility letter. Simply put, a facility fee is a service charge which the Bank will use to service and manage the loan over its life span. ix) Where And How Do I Submit My Application? The application or business plan should be submitted in hard copy and addressed to the Managing Director as follows: THE MANAGING DIRECTOR DEVELOPMENT BANK OF ZAMBIA DEVELOPMENT HOUSE P.O. BOX 33955, KATONDO STREET, LUSAKA Alternatively, an application can be submitted to our regional office in Ndola and should be addressed to the Managing Director as shown above. This application will immediately be channeled to the Regional Office in Ndola.

4 KEY DEVELOPMENT STATISTICS & DATA The development Bank of Zambia continues to lead the way in providing affordable development finance to all sectors of the Zambian economy. It is the Banks desire to provide equitable growth opportunities to both men and women, aid government in its process of fostering financial inclusion across the country and provide the most affordable project finance to the Zambian economy. Below are some key development statistics which reinforce the Banks commitment to meeting its mandate as stipulated above: JOB CREATION DBZ has continued to stimulate growth in the Zambian economy by providing affordable development finance across all sectors of the economy which is a catalyst for job creation. The Bank estimates that from January 2012 to October 2014, its interventions in the Zambian economy through project finance has catalyzed the creation of approximately 6,698 (direct & indirect) jobs. It is also estimated that 2,493 and 4,205 of these jobs were estimated to be females and males, respectively. It was discovered that the skewedness of jobs towards men has been mainly due to the construction, financial and agricultural sectors which employees mostly males over females. The table below summarizes these statistics: S/N JOBS CREATED GENDER Sector Direct Jobs Indirect Jobs Female Male 1 Education Agriculture Manufacturing Construction 290 1, ,947 5 Financial 93 1, ,033 6 Tourism/Hospitality Service Health Energy Real Estate (Direct) Real Estate(Apex Lending) Telcoms Subtotal ,670 2,493 4,205 Grand Total 6,698 6,698

5 FINANCIAL INCLUSION & GENDER SENSITIVITY The Bank has continued to lend to all the specified sectors crucial to the country s economic development, with an approach of inclusion ensuring that women entrepreneurs also have access to the credit facilities the bank is offering. The Chart below gives a percentage distribution of the direct lending portfolio by province. Although the Bank is currently funding projects in all 10 provinces, there is still need to ensure that more projects are funded in all other provinces other than Lusaka which currently enjoys 65% of the total portfolio. Furthermore, the Bank acknowledges the importance of gender balance and the inclusion of women entrepreneurs in national development. It is for this reason that the Bank has deliberately decided to increase the number of women ownership within these projects by, for instance, advocating for deliberate inclusion of women partners within business shareholding structures (jointly run businesses) and giving priority to female entrepreneurs who approach the Bank for funding. Despite these measures the Bank acknowledges that there is still need for more women to become enterprising and narrow the playing field with their male counterparts. The Chart below gives a summary of the gender distribution under the direct lending portfolio:

6 CONSOLIDATED DBZ PORTFOLIO & DIRECT LENDING EXPOSURE BY SECTOR The consolidated DBZ portfolio consists mainly of 3 sub-portfolios namely: Direct Lending, Wholesale lending (Enterprise Development Program) and the Rural Finance Programme (RFP). The direct lending portfolio is the largest portfolio with 91% of the total banks exposure, followed by wholesale lending and RFP with 6% and 3%, respectively. The chart below gives a graphical representation of the banks current consolidated exposure.

7 An in-depth analysis of the sectorial distribution of the Direct Lending portfolio reveals that the Bank top 3 exposures are in the Construction (31%), Manufacturing (17%) and Financial Services (15%) sectors. It is not surprising to note that the Bank is highly exposed to the construction sector given the priority the sector has received from government in recent past, which has seen several established companies and SME s approach the bank for funding to purchase machinery and equipment. The Agriculture and Agro-Processing Sectors have also been vibrant sectors particularly for SME s who engage in deferent forms of Agriculture production and Agro-Processing such as egg production, aqua culture, commercial maize farming and pig farming among other things. The chart below summarizes all of the above:

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9 FINANCIAL DEVELOPMENT INDICATORS The Development Bank of Zambia continues to lead the way in providing affordable finance in the required quantities to the Zambian businesses and entrepreneurs. With interest rates from as low as 9% for SME s (depending on the availability of funds) the Bank continues to fulfill its mandate of been Zambia s premier development finance partner by providing low cost and flexible credit. The Bank s loan portfolio is skewed towards low quantity borrowers who are mostly SME s with 40.7% of the entire portfolio borrowing below K2 million across all sectors. The chart below summaries this distribution: The Banks exposure in foreign currency which is predominantly the US Dollar is minimum with 85% of the entire portfolio been Kwacha dominated. This is simply because most of money is used locally for purchase of machinery and equipment, construction and working capital purposes hence it is kwacha dominated. Firms which require dollar disbursements use that money for importation of specialized equipment and machinery which cannot be acquired locally. The chart below gives a summary of this distribution:

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