Out-Law / Your Daily Need-To-Know

New line of credit fuels ‘pipeline of infrastructure projects’ in East Africa

Out-Law News | 29 Oct 2014 | 2:38 pm | 1 min. read

The African Development Bank Group (AfDB) has approved a $40 million 10-year line of credit for a series of projects including infrastructure and manufacturing in the East African Community countries of Kenya, Rwanda, Tanzania and Uganda. 

The East African Development Bank (EADB) said it has a “pipeline of 49 projects”, at “various stages of appraisal”, valued at a total of $361 million.

EADB said: “A dedicated sub-pipeline linked to AfDB's line of credit has been selected. EADB intends to tap into both debt and equity sources from both development finance institutions and commercial financial markets for long-term financing to obtain the remaining funding required.”

The EADB said the latest line of credit has tenure of 10 years and will help EADB “to fulfil its mandate by funding projects that need long-term funding, such as infrastructure work, schools, agricultural and manufacturing projects, as long-term finance can be difficult to source in the East Africa region”.

In 2013, the EADB received $24m in additional equity investment from the AfDB to further strengthen EADB’s capital and enhance its creditworthiness, resulting in an AfDB shareholding of 11%.The equity was supported by a $900,000 technical assistance support facility, which the EADB said is now being implemented.

Earlier this month, the EADB said a €623m Kenyan wind energy project it is co-financing will expand power distributed via that country’s national grid by one fifth.

The EADB said the loan signing for the ‘Lake Turkana Window Power Project’, which took place last March, represented the “largest private investment in the country’s history”. The project includes building 365 wind turbines and adding an estimated 42 kilometres of transmission lines to connect and supply power to the national grid. The facility is expected to start generating energy in early 2016 and add around 300 megawatts electric to Kenya’s overall generating capacity.

The EADB was established in 1967 under the treaty of the then East African Cooperation. Its mandate and objectives were to foster industrial development and “to promote industrial complementarity and redress industrial imbalance” among the then partner states. The bank was re-established under a new charter in 1980.

Today, the EADB is owned by Kenya, Uganda, Tanzania and Rwanda. Its membership also includes other international development institutions and commercial financial enterprises.

According to the EADB’s economic and market analysis for the third quarter of 2014, growth for East African Community partner states for the full year is estimated to be 5.9%, compared with 5.1% for sub-Saharan Africa.

The analysis said, at the country level, “Kenya’s economy is expected to grow at an annual rate of 6.3% due to higher consumption, infrastructure investments and the knock-on effects of better global conditions”.

A report published earlier this year by the International Monetary Fund said Kenya’s medium-term growth prospects are favourable, supported by rising infrastructure investment in energy and transportation and the expansion of the East African Community market.