US$50m lifeline for firms

credit from the Cairo-based Afreximbank for on-lending to companies in Southern Africa.
BancABC will this afternoon also sign a US$7 million line of credit with Shelter Afrique, a regional finance house established by African governments and the African Development Bank.
The mortgage finance facility has a tenure of 10 years.
Mortgage financing had wilted in the last decade.
The US$50 million facility will be extended to large, medium and small firms.
The move comes at an opportune time for local companies, as local industry requires an estimated US$2 billion to retool after a decade in distress.
BancABC country head of marketing Mr Desmond Ali said the Afreximbank facility was meant to promote and facilitate regional trade.
“The deal was sealed at Afreximbank’s 18th shareholders’ Annual General Meeting held in Luanda, Angola, on June 25 2011,” he said.
Mr Ali said the funds will be extended to large, medium and small firms in the mentioned regional countries on a first-come, first-served basis.
The facility is meant for importation of raw materials, semi-processed goods, consumables, spares, purchase of goods or commodities and companies’ working capital requirements to fulfill export orders.
“Companies will also be able to use the funding to improve their cash flow cycles by discounting their export proceeds,” he said.
BancABC group chief operating officer, Mr Francis Dzanya said the trade facility would help boost growth in the regional economies.
He said the combined GDP and population of Botswana, Mozambique, Tanzania, Zambia and Zimbabwe was US$69 billion and 91 million respectively. The economies were growing at an average rate of 7 percent per annum.
“The facility is a shot in the arm for the group which will enhance our capacity to bolster regional trade integration initiatives and exports to international markets, said Mr Ali.
“Therefore there are huge, and in some cases virtually untapped opportunities for trade in these markets and beyond.”
Afreximbank president Mr Jean-Louis Ekra had said: “It gives pleasure for Afreximbank to support a bank such as BancABC with a regional footprint that finances intra-regional trade as this fits well with Afreximbank’s own mandate.
“The facility we have signed today marks the beginning of a long and mutually beneficial relationship between our two institutions.”
Mr Ekra said: “There is no doubt that the ultimate beneficiary will be the importing and exporting businesses in the five countries that BancABC currently operates in, who greatly need access to trade finance.”
Mr Dzanya said he was delighted that the Afreximbank had shown “huge confidence” in the BancABC Group by providing trade finance support.
He said he hope that firms in “Botswana, Mozambique, Tanzania, Zambia and Zimbabwe would take full advantage of the facility to acquire, expand and service export markets regionally and internationally.
The funding will be good news, particularly for local firms that have borne the brunt of capital and liquidity crisis after a decade of economic turmoil, which has made long-term funding elusive.
Critical shortage of affordable funding has constrained companies’ productive capacity, export drive and forced some stop operations altogether.
Some local banks have been quoting short-term funding at rates as high as 35 percent, making it prohibitive to borrow.