AFREXM, PTA bank sign $50m deal for mining services firms
AFREXM, PTA bank sign $50m deal for mining services firmsBy Fridah Zinyama
Tue 24 Nov. 2009, 04:00 CAT
AFRICAN Export and Import Bank (AFREXM) and Eastern and Southern African Trade and Development Bank (PTA) Bank have signed a US$ 50 million facility for mining services companies in Zambia.
And Bank of Zambia (BoZ) governor Caleb Fundanga has revealed that Zambia has been providing finances to Zimbabwe during the difficult period that the neighbouring country has been going through.
Meanwhile, finance minister Situmbeko Musokotwane said poverty in Africa can only be eradicated through improved trade by African countries.
The facility which has been structured and originated by ALS Capital Limited, a leasing and corporate financial advisory company and Calag Capital Limited, an investment banking firm of Lagos Nigeria, is expected to assist major players in the services and supplies sub-sector of the copper mining industry to execute contracts with the major mining companies.
During the 2009 AFREXIMBANK annual seminar on advanced structured trade finance in Lusaka, Dr Fundanga who was the chairperson for the seminar, said the mining services facility would be administered by Investrust Bank Plc.
“The facility will allow eligible companies access financing by assigning receivables for the execution of contracts such as extraction and transportation of waste materials, fuels, copper ore from pits to the smelting plants and contract mining,” he said.
Dr Fundanga said the facility would mark a milestone in the provision of financial services to the mines services contracting sector and would be availed at very competitive terms and interest rates in relation to current lending rates obtaining in the Zambian financial market.
“The first local company to benefit from the facility is Keren Motors Limited who have been granted a credit facility of US$ 20 million to purchase trucks and fuel tankers and mining equipment,” said Dr Fundanga.
And Dr Musokotwane said the answer to economic growth in African countries lay in improving trade in individual countries which had seriously been lagging behind in trade compared to other developing continents.
“And the only way companies in Africa can improve on trade is if commercial banks in their respective countries realise the importance of lending to trade related companies,” he said. “It is only when you start trading that you realise the major constraints which are involved like reducing the cost of doing business which is a challenge in most African countries.”
Dr Musokotwane gave an example of Zambia, a landlocked country which had a high cost of production making its products quite uncompetitive on the international or regional markets.
“For example, a Zambian company incurs 20 per cent transportation costs when it is either exporting or importing products,” he said. “This is why as government we have passed the Private Public Partnership law which is going to allow stakeholders to build modern facilities at our border areas to ease the trading process.”
Dr Musokotwane encouraged the banks represented at the seminar to consider investing in Zambia as a way to ease trading in the country, among other projects.
And Bankers Association of Zambia (BAZ) chief executive officer David Chewe said the business environment in the world had changed due to the global financial crisis.
He added that there was pressure by companies to survive owing to the global financial crisis.
“The marketplace has not only put pressure on lending margins, but a rising number of borrowers have also faced severe liquidity strains diminishing the possibility to access finance,” said Chewe.
“As bankers we need to be sensitive and aware of the changes in technology, globalisation of finance, shifting patterns of international trade and to the evolving needs of customers.”
Labels: AFREXM, CALEB FUNDANGA, MINING, PTA BANK
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