East Africans and foreign investors in the region are to benefit from a US$10mn credit facility from the
PTA Bank has received approval for the US$10mn credit guarantee facility from US Ex-Im Bank. Allfirst Bank of Baltimore is the guaranteed lender to PTA Bank.
The credit guarantee is under the framework of the master guarantee agreement signed between PTA Bank and US Ex-Im Bank last year.
The facility is expected to boost the regional development bank’s funding capacity.
PTA Bank’s finance director Alex Gitari says that approval for the funding will accrue benefits to investors in the region, and in particular businesses operating under the African Growth and Opportunity Act (Agoa).
The bank, he says, will also fund investors in infrastructure, agriculture, manufacturing, tourism and mining sectors.
The credit guarantee will support the purchase of various capital goods and services from the US. The guarantee is targeted at businesses based in member countries with trade ties with the US.
“This facility will ease the importation of capital goods and services into the sub-region,” adds Gitari.
Under the Master Guarantee Agreement (MGA) with US Ex-Im, PTA Bank will extend financing guaranteed by Ex-Im to its borrowers, involving transactions that relate to the export of goods and services from the US.
PTA Bank will be the designated bank for processing transactions under this facility.
Gitari says that negotiations for facilities have been going on since early last year. Jeffrey Miller, vice-president at Ex-Im signed the MGA in Nairobi last year with the president of PTA Bank, Michael Gondwe.
At the time of the signing of the agreement, Gondwe said that a key mandate of the bank was to boost trade in the sub-region to enable higher economic growth. Agoa, he said, had contributed to an increase of 15% in trade with America since its introduction, and is expected to increase further as more investments are made.