Business: AfDB boasts East African Development Bank (EADB) with equity funds

The East African Development Bank (EADB) headquaters in Kampala, Uganda. PHOTO: Courtesy

The East African Development Bank (EADB) has benefited from a US$24million direct equity investment from African Development Bank (AfDB).

The amount which was approved by the AfDB Board of Directors will go a long way to strengthen its balance sheet and contribute to improve its international credit rating with US $10 million to be placed directly with the balance in the form of callable capital.

According to an online press release by AfDB the investment will help mobilize significant financial resources in the East African Community (EAC) to stimulate economic development and employment opportunities in the region.

EADB is set to benefit in its support in capital market development, government revenue generation and foreign exchange.

“This project will help EADB consolidate the gains of its successful restructuring program, assist the current business strategy of the bank by strengthening its capital base and will be crucial to mobilize financial resources from capital markets at more affordable terms and meeting the growing demand for investment in the EAC,” the statement said.

The funding is expected to contribute in driving the bank’s credit rating by improving the quality of the callable capital of the bank.

“A technical assistance package, financed by the Fund for African Private Sector Assistance (FAPA), will reinforce institutional capacity at EADB to complement the proposed equity investment,” AfDB said.

The partnering of the two banks will help to exploit synergies stemming from complementary sources of comparative advantage with EADB’s field presence and local knowledge of the EAC market will provide a logical conduit for AfDB to reach out to end-customers, including SMEs, by efficiently leveraging its scale.

The project is aligned with AfDB’s East African Integration Strategy, with its focus on sub-regional development finance institutions, as well as with the key pillars of AfDB’s forthcoming Long-Term Strategy, particularly private sector development and regional integration.

EADBwhich was established in 1967 under the terms of the Treaty for East African Cooperation is a sub-regional multilateral lender based in Kampala, Uganda offering interventions mainly in form of loans, leases and equity participations to Kenya, Rwanda, Uganda and Tanzania.

Manuel Odeny, Copyright: 2013