For Online E-newspaper
The East African : May 19th 2014
The EastAfrican BUSINESS MAY 17-23,2014 A SHOT IN THE ARM FOR SMES IN EAST AFRICA PTA bank in $160m loan deal for SMEs The deals cement the bank’s ≥ole as an eme≥ging fund≥aise≥ fo≥ SMEs in the ≥egion By STEVE MBOGO Special Correspondent million to finance small and medium enterprises in the region. The East and Southern African R trade and development bank last week signed a $60 million agreement with the China Development Bank (CDB), and a $100 million deal with Export-Import Bank of the United States. The two deals, the bank’s execu- tives said, will cement its role as a leading emerging fundraiser for SMEs at a time when such enterprises have become employment creators in the regional economies. The deal with CDB was signed by the PTA president Admassu Tadesse and Wang Yongsheng, the executive vice president for CDB, at State House Nairobi during the visit by Chinese Premier Li Keqiang on May 11. Among the the PTA Bank share- holders are 17 African countries in addition to China and the African Development Bank, the institutional shareholder. It is the financial arm of Comesa but membership is open to non-Comesa states and other institutional shareholders. China is a member country of the bank, meaning it is a shareholder of the bank, with a subscribed capital of $77 million. CDB has to date lent PTA Bank $62.9 million . The newest loan is based on the agreements made during the Forum on China-Africa Co-operation where the Chinese government pledged to promote the development of the region. “There is no doubt that SMEs un- derpin Africa’s development. As a trade and development bank in the eastern and southern Africa as well as in the Comesa region, PTA Bank will continue to grow the region’s SMEs and hence promote economic PTA president Admassu Taddesse and Wang Yongsheng of CDB after signing the loan agreement in Nairobi. Picture: File development,” said Mr Admassu. According to the MoU, PTA Bank and Ex-Im Bank will explore options for using up to $100 million Ex-Im Bank medium- and longterm loan guarantees or direct loans to finance US exports to subSaharan Africa that target both diaspora businesses in the US and PTA Bank member states. PTA Bank has 16 Comesa mem- bers: Burundi, Comoros, Djibouti, Egypt, Eritrea, Ethiopia, Kenya, Malawi, Mauritius, Rwanda, Seychelles, Sudan, Tanzania, Uganda, Zambia and Zimbabwe. China becomes the first non-regional member state to join the PTA Bank in 2000. Successive surveys have indi- cated the growing role of SMEs in the expanding intra-regional trade. The deals also come at a time when local commercial banks have been on fundraising spree to boost their $62.9m By KENNEDY SENELWA Special Correspondent KARSAN RAMJI & Sons, a firm that supplies construction materials in Kenya, plans to set up a cement manufacturing plant in Nairobi. The Ksh426 million ($4.9 million) plant is expected to produce an average of 700 tonnes of cement daily for sale both locally and within the regional market. This plant and several others lined up for construction in the region are expected to raise production capacity, potentially pushing down cement prices. Imara Africa Securities, a stockbroker, said new and old players are jostling for a share of the market as East Africa’s cement demand is expected to reach 14.4 million metric tonnes by SME lending kitties. Last year, four commercial banks in Kenya raised new funds for that purpose, with demand being driven by the annual growth of intra-EAC trade at a rate of 25-30 per cent. “PTA Bank has been growing its financing by about 30 per cent per annum of which close to half has gone into infrastructure and energy in the renewable sub-sector in Kenya, Mauritius, Tanzania, Uganda and Zambia. We are looking to make more of a push on big infrastructure and energy projects,” said Mr Admassu. PTA and Ex-Im Bank intend to share information on trade and business opportunities to further the goals of facilitating procurement of US goods and services by enterprises and development of the private sector in sub-Saharan Africa. “We reached an agreement to Amount that China Development Bank has so far lent PTA Bank work with members of the sub-Saharan African diaspora in America who wish to export US goods and services to their home countries. The agreement aligns with the White House’s ‘US Strategy Toward sub-Saharan Africa,’ which focuses egional financier PTA Bank has signed two loans worth $160 41 EA fi≥ms look to diaspo≥a fo≥ talent By SCOLA KAMAU Special Correspondent COMPANIES IN East Africa are toincrease their search for top executives from the diaspora. A study by EY, the consulting firm, shows demand for talent from diaspora will rise to 29 per cent from the current 23 per cent The study said firms are in- creasingly seeking staff instead of developing their own talent to match the rising demand, pushing up the cost of labour. The “subSaharan Africa Talent Trends and Practices” study featured 44 organisations from Kenya, Uganda, Tanzania, Rwanda, Ethiopia and South Sudan out of the 224 African organisations. Multinational companies’ ris- MEMBER COUNTRIES PTA Bank is owned by 18 member countries from the tripartite region (Comesa, EAC and SADC), China, the AfDB, the National Pensions Fund (Mauritius), Mauritian Eagle Insurance and Paritetbank (Belarus). China, a member country of the bank, meaning it is a shareholder of the bank, with a subscribed capital of $77 million on growth in the region,” said Mr Hochberg. “By engaging diaspora-owned businesses, the arrangement will help US companies capitalise on unique opportunities abroad and support jobs here at home while contributing to the development of sub-Saharan Africa,” he added. This is one of the many partner- ships that PTA Bank has witEx-Im Bank over the past 15 years. Ex-Im Bank has authorised more than $4 billion in financing for US exports to sub-Saharan Africa in the past four years. Ka≥san to build $4.9m cement plant in Nai≥obi 2017. Kenya’s per capita consumption of cement averages 55 kgs, Tanzania 45 and Uganda 40 kgs compared with Egypt’s 506 kgs, South Africa’s 230 kgs and Angola which stands at 80 kgs. Karsan’s factory will be located in Athi River near ARM Cement Ltd, Savanna Cement Ltd, East Africa Portland Cement Company and Bamburi Cement Ltd. Envasses Environmental Consultants Ltd said in environmental impact assessment report that Karsan will produce ordinary portland cement manufactured by intergrinding clinker, pozzolona and gypsum. Simon Nzuki, the lead lonsultant of Envasses, said the government will earn revenue from levies on importation of machines, operational licences and increased tax remittances when cement production starts. A bag of cement in Kenya goes for between Ksh700 ($8) and Ksh750 ($8.5). The price in Tanzania is $5.3 to $6 plus 18 per cent value added tax and the cost of transport, depending on destination, from Dar es Salaam. Uganda’s average price was Ush32,000 ($12) in December. Customers expect to benefit from lower pric- es as new players enter the region including a firm owned by Nigerian millionaire Aliko Dangote. Cemtech, a subsidiary of Sanghi Group of India is building a $137.2 million cement factory in Kenya. Lake Cement Ltd in which Banco of India acquired 51 per cent equity is investing $12.5 million at Lindi in Tanzania. Lake’s Cement is expected to produce 500,000 tonnes of cement per annum. ing investments across the East African region are driving local companies to compete with the new investments, hence increased demand for management and technical experience. “The work force is not growing in tandem with investment requirements and GDP growth. Organisations are eyeing the already experienced talent that can help them match global competition sinceour education system does not provide skills in oil and gas,” said Celestine Munda, EY east region leader, advisory services, sice during the release of the study on Wednesday in Nairobi. Da≥’s ABG fi≥m in need of $15m By KENNEDY SENELWA Special Correspondent AFRICAN BARRICK Gold Plc needs $15 million to buy equipment for mining in northern Tanzania. The London Stock Exchange listed firm expects initial production from the zone to start in the next three months and an additional funding of $15 million will be required to procure the equipment in the second half of 2015. ABG chief executive officer Brad Gordon said capital expenditure will allow the first ore to be mined in the Upper East Zone of Bulyanhulu within three months and the rate will increase to over 250,000 tonnes per annum from next year. He said the area is expected to be cash flow positive with production of 1.7 million ounces of gold, averaging 60,000 ounces per annum over 25 years as Bulyanhulu is a world class high grade underground mine. Upper East Zone was accessed in 2001 but was not developed.
May 12th 2014
May 26th 2014