LOCs to Africa cross $1 billion
Exim Bank's Life Line for Exports
By P.R. Dalal, General Manager, Export-Import Bank of India

Line of Credit (LOC) is one of the financing mechanisms through which Export-Import Bank of India (Exim Bank) extends finance to support export of goods and services from India under deferred payment terms. Exim Bank extends Lines of Credit (LOCs) to overseas financial institutions, regional development banks, sovereign governments and other entities. The Indian exporters can obtain payment for eligible value from Exim Bank, without recourse to them, against negotiation of shipping documents.
Exim Bank has recently extended the following LOCs to enhance bilateral trade relations with the African region:

•	LOC of US$ 5 million to Eastern and Southern African Trade and Development Bank (PTA Bank);
•	LOC of US$ 27 million to the Government of Senegal; and
•	LOC of US$ 17 million to the Government of Niger.

The LOC to PTA Bank is the sixth of its kind extended by Exim Bank to PTA Bank. The member countries of the PTA Bank region are important trading partners for India in the African region, accounting for around 37 percent of India's total exports to Africa during 2004-05, and 11 percent of total imports from Africa. Under the earlier LOCs aggregating US$ 45 million, exports of items like sugar plant, cement plant, sanitary machinery, tissue paper plant, medical equipment and pharmaceutical products, were catalyzed. Under the LOC, importers based in PTA Bank's member countries will make advance payment of 10 percent of contract value and credit will be provided by Exim Bank for 90 percent of contract value to PTA Bank. Exim Bank will reimburse Indian exporters on shipment of goods. The credit period will be up to five years. PTA Bank is a Regional Development Bank, established on November 6, 1985, pursuant to the Treaty for the Common Market for Eastern and Southern African States (COMESA). PTA Bank's regional member countries are Burundi, Comoros, Djibouti, Egypt, Eritrea, Ethiopia, Kenya, Malawi, Mauritius, Rwanda, Somalia, Sudan, Tanzania, Uganda, Zambia and Zimbabwe. China became the only non-regional member of PTA Bank. Seychelles became the second non-borrowing member in February 2005, after China. Besides these member countries, African Development Bank is also a member of PTA Bank. PTA Bank provides financial and technical assistance to promote economic and social development in member countries. The LOC of US$ 27 million to the Government of Senegal has been extended under the Team-9 initiative, while the LOC of US$ 17 million to the Government of Niger has been extended under NEPAD (New Partnership for Africa's Development) initiative, at the behest of the Government of India. The LOC to Senegal is earmarked for export of equipment for irrigation projects in Senegal, while the LOC to Niger is meant for financing export of transport equipment, motor pumps, etc. to Niger. Team-9 envisages a special cooperation model between India and eight countries of West Africa, viz. Burkina Faso, Chad, Cote d'Ivoire, Equatorial Guinea, Ghana, Guinea Bissau, Mali and Senegal. Under the Team-9 initiative, GOI provides LOCs through Exim Bank to the member countries to finance setting up of various projects by Indian companies in those countries. As part of this initiative, Exim Bank has extended the above-mentioned LOC to the Government of Senegal. The second LOC to Niger is covered under the NEPAD initiative. Under both the LOCs, Exim Bank will reimburse 100 percent of contract value to the Indian exporters, upfront upon the shipment of goods. Both Senegal and Niger are French-speaking countries located in West Africa. Senegal exports fish and fish products, phosphates, phosphoric acid and fertilizers, groundnuts and products. India's exports to Senegal comprise non-basmati rice, transport equipment, cotton yarn fabrics, iron and steel, pharmaceuticals, fine chemicals and manufactures of metals.
Niger's major export item is uranium. Gold exports, which began in 2005, are expected to boost the country's export earnings. India's exports to Niger comprise cotton yarn fabrics, drugs, pharmaceuticals, fine chemicals and non-electrical machinery. The above LOCs are expected to boost India's exports and create awareness about India's capability and technology in agriculture, industry and transport sectors. Exim Bank has in place a number of Lines of Credit for promoting India's exports to countries in Africa, Asia, Latin America, East Europe and Russia. Exim Bank's LOCs afford a risk-free, non-recourse export financing option to Indian exporters. In the African region, Exim Bank currently has 31 operative LOCs amounting to US$ 1051mn, including those extended with the support of Government of India. The operative LOCs, as on March 20, 2006, extended to the African region include:
• Three LOCs (US$ 10 million, US$ 10 million & US$ 5 million) Eastern and Southern African Trade and Development Bank (PTA Bank) (covering 16 countries in the eastern and southern African region),
• US$ 10 million to Central Bank of Djibouti,
• Three LOCs (US$ 15 million, US$ 27 million & US$ 60 million) to the Government of Ghana,
• US$ 10 million to West African Development Bank (BOAD) covering eight countries in the West African Region,
• US$ 10 million to the Government of Zambia,
• Three LOCs (US$ 50 million, US$ 41.90 million & US$ 27million) to the Government of Sudan,
• Two LOCs (US$ 5 million and US$ 40 million) to the Government of Angola,
• US$ 20million to the Government of Mozambique,
• US$ 5 million to the Government of Lesotho,
• Three LOCs (US$ 15 million, US$ 17.87 million & US$ 27 million) to the Government of Senegal.
• US$ 10 million to the Government of Mauritius,
• US$ 10 million to BMCE Bank, Morocco,
• US$ 26.8 million to the government of Côte d'Ivoire,
• US$ 27 million to the Government of Mali,
• US$ 33.5 million the Government of Congo,
• US$ 50 million to the Government of Chad,
• US$ 15 million to the Government of Equatorial Guinea,
• US$ 27.7 million to the Government of Senegal and Mali (combined),
• US$ 30.97 million to the Government of Burkina Faso,
• US$ 6.7 million to the Government of Gambia,
• US$ 5 million to the East African Development Bank, Uganda,
• US$ 17 million to the Government of Niger.