PTA bank in $160m loan deal for SMEs

Regional financier PTA Bank has signed two loans worth $160 million to finance small and medium enterprises in the region.

The East and Southern African 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 executives 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 shareholders 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.

READ: AfDB stake in PTA Bank rises

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 underpin 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 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 long-term loan guarantees or direct loans to finance US exports to sub-Saharan Africa that target both diaspora businesses in the US and PTA Bank member states.

PTA Bank has 16 Comesa members: 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 indicated 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 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 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 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 partnerships 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.