AfDB approves US$ 5 Million line of credit to Mauritania Leasing
Tunis, July 18, 2008 – The AfDB Group approved under its private sector window a US$ 5 million line of credit (LOC) for Mauritania Leasing (ML), a limited liability company incorporated in May 1998.
The primary business of the company is to lease movable and immovable equipment for industrial and professional use. ML’s main market remains SMEs (small and medium enterprises) in the agro-industry, tourism, construction, and transportation sectors.
Leasing is a credit operation based on a Lease Contract1 between a leasing company (the Lessor), and the beneficiary (the Lessee). Leasing is one of the most flexible means to meet the investment requirements of enterprises with respect to the procurement of equipment.
Priority will be given to well-managed high growth and profitable projects with an export earning potential. The line of credit is expected to finance about 60 enterprises.
The LOC will be extended to a well-managed, local institution with a track record of good performance. ML is the sole leasing company in Mauritania. The LOC will enable ML to play a catalytic role in mobilizing project finance in Mauritania.
Economic growth in Mauritania has to date been primarily driven by SMEs. This sector continues to encounter difficulties in accessing financing due to lack of collateral, limited availability of foreign currency and scarcity of long-term funding. Sole leasing represents a viable alternative source of financing for SMEs.
The project fits well into the Bank’s private sector strategy of strengthening local financial markets in Africa and promoting alternative financial instruments to facilitate credit to the underserved SME sector.
The project also aligns well with the Bank’s focus on infrastructure to stimulate an attractive business environment conducive to investments.