PTA Bank Investment Project


Overview

  • Reference: P-Z1-HAA-016
  • Approval date: 08/08/2008
  • Start date: 25/10/2008
  • Appraisal Date: 17/11/2007
  • Status: OngoingOnGo
  • Implementing Agency: PTA BANK - EASTERN AND SOUTHERN AFRICAN TRADE AND DEVELOPMENT BANK
  • Location: Nairobi Kenya

Description

2.1.4 The objective of the proposed financial support package is to assist PTA Bank in its expansion drive and in turn enhance the institution's development impact on the sub-region.

2.1.5 The proposed project consists of three principal components:

(i) a contribution of USD 6.8 million in payable capital and USD 40.8 million as callable capital;

(ii) a line of credit of USD 50 million; and

(iii) Technical Assistance of USD 1.0 million.


Objectives

The objective of the proposed financial assistance to the PTA Bank is to strengthen the Institution so that it can increase its development impact on the sub-region


Rationale

2.1.1 In response to the aforementioned developments, the PTA Bank's Board approved a 2008-2012 Five Year Corporate Plan. The Plan's strategic objectives can be summarized as:

(i) Promoting rapid private sector development in Member States through increased trade and project financing;

(ii) Fostering increased regional economic integration through intra-COMESA trade and investments, and,

(iii) Supporting the development and deepening of local and regional financial markets. Priority intervention sectors have been earmarked as manufacturing, agriculture, mining, infrastructure, tourism, and, private health and education institutions. The objective is to extend USD 775 million in project loans over the Plan period. Cumulative project commitments and disbursements are projected at USD 735 million and USD 545 million respectively over the same period. Annual trade finance is expected to increase from USD 636 million in 2008 to USD 1.11 billion by 2012.

2.1.2 In June 2007, the PTA Bank's Board of Governors approved a General Capital Increase to enhance the Institution's capital base and boost its borrowing capacity to meet the aforementioned objectives and operational targets.

2.1.3 It is against this background that the proposed financial support package has been conceived and designed. It will assist PTA Bank in meeting its operational targets and to enhance its business profile the through provision of the long-term financing required to increase production capacities in the sub-region. A stronger PTA Bank will help increase capital inflows to the sub-region, thereby supporting the Member States' investment drives to create economic activities capable of generating employment and alleviating poverty.


Benefits

The proposed project aims at strengthening the Institution to enable it to increase its development impact in the sub-region. LOC III will yield economic benefits including employment, foreign exchange earning, technology transfer, and acquisition of technical skills. The TA being proposed will help to strengthen the Institution's ability to provide quality services to its Member States by strengthening strategic areas such as risk management, treasury management and corporate governance. The equity capital will help to strengthen PTA Bank's capital base enabling it to increase borrowing to finance growing operations. The ADB package will act as a catalyst for the PTA Bank to mobilise more resources from other sources. It will also attract co-financing arrangements.


Key contacts

JABBA Rafael Jose - OPSD4


Costs

Finance source Amount
ADBUSD 35,267,455
FAPAUSD 620,906
Co-financierUSD 306,727,515
DeltaUSD 2,261
TotalUSD 342,618,138