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The PTA Bank has signed a US$15 million with the Export Import Bank of India further boosting the Bank’s available resource base.
The deal brings the total lines of credit secured from Exim India to US$65 million, making Exim India PTA Bank’s largest provider of lines of credit todate. The facility will be accessible to the Bank’s clients for importation of equipment and other material destined for the Bank’s 17 member countries in the eastern and southern Africa region.
Dr. Michael Gondwe, the President of the PTA Bank, said that there has been an upward trend in the demand for Indian technology because of its suitability and competitive pricing.
The increased utilization of the lines of credit from Exim India is partly the result of the increased trade between India and Africa, and in particular the Bank’s member states as well as the Bank’s aggressive marketing strategy in the region.
The PTA Bank’s shareholding is spread out among 17 African member countries. In addition, the People’s Republic of China is a non-regional shareholder while the African Development Bank is the institutional shareholder.
The Bank has signed other line of credit agreements with other financial institutions such as The African Development Bank, FMO, and Japan Bank for International Co-operation, Development Bank of South Africa among others.
The PTA Bank has received a financial package totalling US$ 98.6 million from the African Development Bank (ADB), one of PTA Bank’s shareholders.
The facility is in the form of equity participation, a line of credit and technical assistance amounting to US$ 47.6 million, US$ 50 million and US$ 1 million respectively. The equity participation is in the form of payable capital (20 percent) and callable capital (80 percent).
This is by far the single largest financial package ever secured by the regional financier. The financing was approved by ADB’s Board of Directors following a meeting held in Tunis last week.
Dr. Michael Gondwe, the President of the PTA Bank, said that the financial package would further enhance the bank’s ability to lend to businesses in the member states.
“Because the ADB line of credit is untied, it means that we will be able to quickly assist needy and qualifying businesses in the sub-region,” said Dr. Gondwe.
A line of credit which is untied means that there are no attached conditions to the facility, which normally takes the form of conditions as to where a borrower ought to source equipment or material for a project.
The equity participation comes on the back of a General Capital Increase which was given the green light by the PTA Bank’s shareholders during the last annual meeting held in Mauritius last year.
Following the approval, the Bank’s authorised capital will now be US$ 2 billion while the paid-in capital goes up to US$ 256 million.
“The General Capital Increase has improved the Bank’s balance sheet tremendously while entrenching it as one of the leading DFIs on the continent,” said Dr. Gondwe. He added that the Bank will leverage on the new capital to access competitively priced funds from the international markets for on-lending to customers.
The facility comes a few months after the PTA Bank signed a US$ 20 million line of credit facility with EXIM India, bringing the cumulative lines extended to PTA Bank by EXIM India to US$ 70 million to date. PTA Bank is one of the largest beneficiaries of the Lines of Credit from EXIM India in the region.
“The lines of credit facilities further strengthens the ties between India and Africa through technology transfer that comes about as a result of importation of Indian machinery and equipment,” says Dr. Gondwe.
“We are now seeing a trend within our member states where demand for Indian technology is on the increase, and the reasons for this is that the technology is not only suitable for Africa, but it is also competitively priced with the added benefit of world class stature,” added Dr. Gondwe.
Since the Bank’s inception slightly over 2 decades ago, the Bank’s cumulative financial support to businesses in the sub region, through its project and trade finance windows, stands at over US$ 3.12 billion.
Last year alone, the Bank’s project and trade finance approvals stood at close to US$ 500 million.
The Current Shareholders of the Bank are: Burundi, China, Comoros, Djibouti, Egypt, Eritrea, Ethiopia, Kenya, Malawi, Mauritius, Rwanda, Seychelles, Somalia, Sudan, Tanzania, Uganda, Zambia and Zimbabwe. The ADB is an institutional shareholder.