STATEMENT OF JEAN-LOUIS EKRA, PRESIDENT AFREXIMBANK ON THE OCCASION OF THE SIGNING CEREMONY OF A USD 50 MILLION SYNDICATED FACILITY IN FAVOUR OF ZAMBIAN MINING SERVICES COMPANIES AND A USD 80 MILLION SYNDICATED FACILITY IN FAVOUR OF EXPORT FUND OF ZAMBIA
LUSAKA, 9TH JUNE 2008
Governor of the Bank of Zambia
President ofPTA Bank
Representative of the African Trade Insurance Agency (A TI)
Distinguished Executives of companies
Distinguished Banker colleagues
Ladies and Gentlemen of the press
Distinguished Ladies and Gentlemen
I feel very much fulfilled today; I feel like I have arrived at the bank of a smooth running river after a long tortuous journey through patchy fields; I feel proud today, distinguished Ladies and Gentlemen to be in Zambia to participate in this signing ceremony. My feelings may sound very emotional to those who are new to Africa – who only got to know Africa in this period of its resurgence; a resurgence fuelled by determined effort by our new leaders
to correct the morass of the past and turn Africa from being a basket case to being the bread basket of the world. But those who knew our past will agree with me that the road we travelled in the 1980s and 1990s was quite challenging. Although we have not quite reached our destination, we can certainly see the Promised Land. The success that we have achieved so far also owes a lot to a fortuitous turn of events that has rejuvenated Asia
as a global growth pole which in turn has fuelled an unprecedented rally in commodity prices. Africa no doubt, is one of the winners of God’s lottery regarding the distribution of mineral wealth in the world. So, it was only natural that it became a beneficiary of that fortuitous turn of events. The difference today is that we have been able to seize the moment and have, as in the past, not sat on our arms as opportunities passed us by.
Mr. Governor,
Distinguished ladies and Gentlemen,
The confluence of Africa’s determination to do away with the paralysis of the will that has been the bane of its economic development efforts, and the strength of commodity prices is in the final analysis the reason for the new Africa that appears to be emerging. In the past, despite opportunities presented by episodic rallies in commodity prices, Africa proved unable to latch onto those opportunities because of poor macro-economic policies, political
squabbles, civil strife, and the all too willingness of the leadership to place personal interests above collective interests.
Mr. Governor,
Distinguished ladies and Gentlemen,
It is against this background that I feel highly elated about the event we are all gathered here to witness; namely the signature of two facilities that are novel in conception, timely in delivery and consistent with the current mood of the Continent. The conceptual bases of Afreximbank’s mining services facility and the Export Fund is our belief that Africans must seize the moment presented by the tremendous opportunities in the commodities markets by ensuring that the key export sectors do not remain enclaves with limited linkages to the overall economy of the host communities. Historically, commodity booms had come and passed in Africa with nothing to show for it except
environmental and cultural degradation. It is easy and simple to blame it all on the foreign mining and large exporting companies but we must realise that these companies are businesses which strive to return the highest profits to their shareholders by reducing cost and pursuing profit maximization. They would not and should not be expected to source inputs and services from the host economy if the quality of those inputs and services are not up to standards and if their indirect and direct costs are at variance with their objectiveof profit maximization. It is up to the businesses in the host economies and the governments to create incentives and disincentives that will alter the relations of production that face these companies and encourage them to source inputs and services from their
host economies.
We in Afreximbank analysed and understood theses facts and came to the conclusion that the best way to break the export enclaves is to remove the biggest constraint that makes African companies unable to offer competitive services to mining and export companies. That constraint is capital and to some extent lack of technical and managerial competences. Our response to these challenges is twofold; first, to begin to implement a specialised mining services facility, and second, to introduce commodity funds.
Mr. Governor,
Distinguished ladies and Gentlemen,
I am proud today that Zambia is one of the early beneficiaries of these two initiatives. Under the USD 50 million facility that has been made available to Zambian mining services companies, Afreximbank teamed up with like-minded institutions, such as PTA Bank and African Trade Insurance Agency to arrange funding in support of participants in the Zambian mining services sector. A very important aspect of this facility is the coming together of three multilateral financial institutions, focused on Africa, to deliver an innovative product in pursuance of their common goals and mandates. We believe that it is this kind of partnership that leverages the individual strengths of different African institutions that can justify the support they receive from different African countries who fostered their creation. I would also like to use this opportunity to thank Zambia National commercial Bank for joining us in this noble effort and for contributing ideas that helped us to refine the product offering. I must quickly add, Distinguished Ladies and Gentlemen, that the facilities we are about to sign today also owe a lot to two financial advisory services firms that have through Afreximbank’s effort of promoting cross-country fertilization of ideas been able to originate the facility that we are signing today. Permit me, distinguished Ladies and Gentlemen to congratulate ALS Capital, Zambia and Calag Capital Nigeria for a unique partnership that we hope can extend to other parts of the Continent. I am pleased to report in this regard, that Calag Capital was an active participant in a USD 75 million oil services facility which we arranged in Nigeria in partnership with Bank of Tokyo Mitsubishi UFJ and Standard Chartered Bank, London. It is the experience they gained under that Facility that enabled them to partner with ALS Capital to originate the Zambian mining services facility we will be signing shortly.
With regard to the Facility to the Export Funds of Zambia, I must put on record the great work done by Loita Capital Partners over so many months to structure and originate the transaction which we are also signing today. While the Mining Services Companies’ facility is specific to the mining sector, the Export Funds facility extends beyond that sector, targeting participants in Zambia’s non-traditional export sector. The deal structure is again innovative and deals with an issue that touches on the fundamental basis of establishing Afreximbank, that is, the diversification of Africa’s exports away from commodities through increased value-addition to those commodities.
Mr. Governor,
Distinguished ladies and Gentlemen,
You will agree with me from the foregoing that we are marking a very important milestone in the annals of Zambia and Africa today. It is said that great events normally start with simple ceremonies. Today’s event is a vindication of that saying. Permit me now, distinguished Ladies and Gentlemen, to thank all those who worked very hard to ensure the success of this event. I would like in particular to thank our partner institutions, PTA Bank, African Trade Insurance Agency, Zambia National Commercial Bank, ALS Capital, and Calag Capital. The Law firms of Lovelis, London, Corpus Globus, Zambia and Denton Wilde Sapte, London which documented the deals also deserve our
thanks for the tremendous effort and diligence they exhibited in their work. It is no doubt that without their commitment, today’s event would have been impossible. There is a saying in some parts of Africa that the attractiveness of a meal is determined by the number of people who come to the table for it. I must therefore thank the participating companies and in particular Consolidated Earth Moving and Parts Limited and Keren Motors Limited for considering our offering worthy of their consideration. We hope that this will be the beginning of a mutually rewarding relationship between us and them. I must also thank the people and Government of Zambia for receiving us. In particular, I would like to thank Governor Fundanga and his staff who made all the arrangements for
today’s event. Despite his busy schedule, the Governor found time to be here personally. Thank you, Caleb. Our appreciations also go to the Ladies and Gentlemen and representatives of Zambian mining companies here with us despite their many commitments. Their presence strengthens our belief that we are doing the right thing for Zambia and we are therefore encouraged to look at ways of expanding the levels of the facilities we are about to sign.
I will also like to thank the Ladies and Gentlemen of the press gathered here with us for finding time to cover this event. We hope they will give it the wide and positive coverage it deserves.
Thank you once again for listening and may we have a fruitful Ceremony.
Jean Louis-EKRA
President, Afreximbank
Lusaka
9 June, 2008