The Eastern and Southern African Trade and Development Bank (PTA Bank) is to provide support for letter of credit (L/C) business written by small- and medium-sized enterprises (SMEs) in its member states.

The support is available because PTA Bank has signed a US$15 million trade finance facility signed with the Dutch Development Finance Company (FMO).

Short-term finance

The agreement was signed in Nairobi by PTA Bank president Michael Gondwe and FMO senior credit analyst Guido Boysen. PTA Bank will use funding made available under the facility to provide short-term financing to its clients.

The funding will be used to arrange L/C facilities, import facilities, pre-export and post-shipment finance facilities and lending to small- and medium-sized banks to support trade finance business.

Availability

"This facility will be available to the bank's clients in Zambia and also in other member states," according to Gondwe.

PTA Bank member states in Africa include Burundi, Comoros, Djibouti, Egypt, Eritrea, Ethiopia, Kenya, Malawi, Mauritius, Rwanda, Somalia, Sudan, Tanzania, Uganda, Zambia and Zimbabwe.

Uncommitted funds

PTA Bank has intensified its lending activities in member states. It says it has done this because of increased demand for funding, but the bank is also eager to make more commitments.

"We are in a position to meet...funding requirements as the bank has a substantial amount of uncommitted funds," according to Gondwe.

International support

PTA Bank's line of credit from FMO comes after a US$30 million financing package secured from the African Development Bank and a US$10 million agreement with the Export Import Bank of India last year.

The bank also has lines of credit with BankMuscat of Oman, KBC Bank and Bank Belgolaise of Belgium, the Export-Import Bank of China and a Master Guarantee Agreement with the US Export-Import Bank.

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