Africa Exim Bank enters Kenya

NAIROBI, Tuesday  –  The Africa Export-Import Bank has announced plans to open a regional office in Nairobi next month as it seeks to decentralize its coverage of the continent, a senior bank official said Monday.

Samuel Mugoya, the senior manager at the Specialized Funding Unit of the African Export-Import Bank (Afreximbank) said Africa’s growing economies have triggered need for more funding within the private sector especially for companies involved in intra-regional trade.

“Our office in Kenya will serve the Eastern Africa region and should be up and running before the end of this year,” Mugoya told Xinhua in an interview in the capital Nairobi on Monday.

The bank has its headquarters in Cairo, Egypt, and has branches in Harare, Zimbabwe, and in Abuja, Nigeria. Its core mandate is to offer direct and indirect financing to African companies to finance exports, business expansion, imports of equipment and raw materials and provide insurance and guarantee services.

Mugoya said the bank is eying renewable energy and port infrastructure projects in Kenya, adding that it is in the process of closing a deal on funding a wind power project in Kenya whose identity cannot be disclosed until the deal is signed. The bank is rated as having sound structural asset quality despite its risky business environment by Fitch Ratings. Among its 122 shareholders is the Exim Bank of China.

By opening local offices, the bank wants to take advantage of growing intra-Africa trade, driven by increasing trade within the respective blocs. For example, trade within the East Africa Community has been growing at 25 percent every year. Intra-COMESA (Common Market for Eastern and Southern Africa) trade increased to 17.4 billion U.S. dollars by the end of 2010 from 12.7 billion dollars in 2009. “An increasing number of companies in the continent are generating their revenue from regional rather than foreign trade indicating the growing consumer power,” Mugoya said.

The growing consumer purchasing power in Africa is also influencing other companies like private equity fund Catalyst Principal Partners to invest exclusively in companies that offer consumer goods within the East Africa trading bloc. “The impact of current inflation in East Africa is short term. So our common thread is that we are not interested in export oriented businesses but those that are involved in intra-regional trade. We see full economic rebound in the next one and a half years,” said Catalyst CEO Paul Kavuma in an interview.

The 100 million dollar fund recently invested in ChemiCotex, a leading Tanzanian fast moving consumer goods business that has strong brands in oral, skin and hair care, including its flagship “Whitedent” toothpaste that has attained Superbrand status.  Prospects for improved intra-Africa trade are expected to be boosted next month when the first round of negotiations to establish the one trillion dollars Tripartite Free Trade Area (FTA) covering 27 countries in eastern and southern Africa are scheduled to start on Dec. 8-9 in Nairobi.

The intention is to merge the three trading blocs of Southern Africa Development Community (SADC), COMESA and the EAC. According to the Tripartite Taskforce chairperson Sindiso Ngwenya, the first round of the negotiations to create the grand SADC-COMESA-EAC free market will take place in Nairobi on Dec. 8-9. (Xinhua)