Press Release

OFID supports development bank in COMESA Region
US$20 million financing agreement signed

04/2010 March 3, 2010 Vienna, Austria
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An agreement for a US$ 20 million one-year renewable line of credit was signed today between OFID and the Eastern and Southern African Trade and Development Bank (PTA Bank), a sub-regional development finance institution. The agreement was signed on behalf of OFID by Mr. Suleiman J. Al-Herbish, Director-General, while Dr. Michael Gondwe, President of the PTA Bank, signed on behalf of his institution.

The main mission of the PTA Bank is to act as a vehicle for contributing towards the socio-economic development of its member states through promoting intra-COMESA (Common Market for Eastern and Southern African States) trade and the economic integration of the sub-region.

The loan will allow PTA Bank to extend its trade finance to meet the requirements of eligible Sub Saharan African markets. Indirectly, it will also help build up a network of strategic partners, such as commercial banks and other development finance institutions in the sub-region.

Referring to the line of credit, Mr. Al-Herbish noted that the agreement would help strengthen relations between the two institutions. He expressed his pleasure that OFID was in a position to “rely on PTA’s considerable know-how.” In his response, Mr. Gondwe of the PTA Bank thanked the Director-General and conveyed his appreciation for the solid cooperation between OFID and his bank, which led to the formulation of the present agreement. He said he also looked forward to strengthening the relationship through future initiatives.

In 2006, OFID established a Trade Finance Facility (TFF) as an additional mechanism for supporting socio-economic development in partner countries. The Facility aims to provide trade finance to a wide range of institutions including governments, parastatals, banks and private enterprises. Trade is supported through different instruments such as loans, lines of credit and guarantees. For example, loans are given directly to clients in beneficiary countries, for the financing of imports and exports of various commodities. Lines of credit are extended to financial intermediaries for on-lending to small and medium-sized enterprises in respect of imports, or pre/post export shipment. Guarantees are issued by OFID to other development finance institutions for risk sharing and/or commercial banks to increase trade finance beyond their own exposure limits.

The PTA Bank was established during 1985 following the provisions of the Treaty of 1981 establishing the Preferential Trade Area (PTA), which has since been transformed into COMESA, as a financial arm of the integration arrangement.

  Arabic version