Last week some good news for Zambia’s MSMEs was released when it was reported that the Zambia Credit Guarantee Scheme-ZCGS and FNB have signed an agreement to enhance credit access cost of debt capital.
It is therefore, in order for me to put our series from the ten elements from the Law of MSMEs Success Foundations-LMSF that we have been discussing on this column and consider some important things to note for action by us the MSMEs owners in country!
Don’t worry we shall pick up our LMSF elements story next week, “Deo Volenti”-DV, promise!
To begin with, a comprehensive breakdown of the role of credit guarantees for MSMEs in Zambia is needful.
What are Credit Guarantees & why do they matter for MSMEs?
• Definition & Purpose
The Zambia Credit Guarantee Scheme (ZCGS), established in 2017 under the Ministry of Finance, provides partial credit guarantees to MSMEs that have viable business plans but face constraints such as insufficient collateral or poor financial histories  .
This model helps de-risk loans, enabling Partner Financial Institutions (PFIs) to extend affordable financing to eligible MSMEs .
• Addressing Financing Barriers
MSMEs in Zambia often struggle with limited access to formal credit—due to high collateral requirements, lack of credit history, and information asymmetry  .
Credit guarantees mitigate these barriers by sharing default risk, thereby encouraging lending to underserved groups including women, youth, and rural entrepreneurs.
Impact & Scope of ZCGS
• Funding Growth
In the 2023 budget, guarantee funding was ZMW 150 million, which was increased to ZMW 386 million for 2024—a more than 100% increase .
By 2025, the government allocated K852 million, almost double prior funds, signaling continued confidence in the scheme’s role .
• Loan Reach
In 2024 alone, ZCGS backed over 9,000 loans totaling over K400 million—a 170% jump compared to the previous year .
• Inclusive Targeting
The scheme dedicates around 30% of its portfolio to women and youth entrepreneurs .
• Sectoral Focus
A substantial portion (~71%) of guaranteed loans in 2023 benefitted the agricultural sector, though other industries like mining, logistics, retail, and trade also gained support .
• Institutional Reach & Partnerships.
As of late 2023, ZCGS partnered with eight financial institutions, with plans to onboard five more.
For instance, a K100 million partnership with FNB Zambia included a K50 million partial guarantee for MSME loans; similar arrangements exist with First Alliance Bank.
Broader Credit Guarantee Initiatives Beyond ZCGS
• UNCDF–FINCA Portfolio Guarantee
The UN Capital Development Fund (UNCDF) launched a portfolio guarantee (US$360,000) to support FINCA Zambia, aiming to unlock at least US$600,000 in MSME financing. This targets groups like women-owned businesses, youth, small-scale cross-border traders, and persons with disabilities .
• Proparco & AB Bank Zambia Guarantee
In 2021, Proparco extended a EUR 1 million guarantee (approx. ZMW 22.8 million) to AB Bank Zambia, supporting microfinance lending to MSMEs and job creation.
As can be seen above if one has a clear business plan and is confident in the same this is the time to make an appointment with your banker who is already in agreement with the ZCGS. One of the drawback to scaling our operations as Zambian businesses is the apparent unwillingness to formalize and get to institutions like ZCGS, Insurance Companies to ensure that our businesses become legacy type. Well, it’s time to make a move beginning with a visit to the ZCGS/participating bank!
Na pita mukwai!
The author is Victor Nyasulu of VNc!
