Africa needs $25 bn investment, 25 pc
cancome from India

Dr. Michael Gondwe, President of PTA Bank, was in Mumbai in February to sign a Line of Credit with Export-Import Bank of India. The sixth LOC for $5 million raises the total amount granted by Exim Bank to PTA Bank over the years to $50 million. In an interview with Veerendra Bhargava, Dr. Gondwe talks about PTA Bank's efforts at funding various projects and its endeavour to promote the private sector. While the latest LOC for $5 million has already been used up, Dr. Gondwe hints at coming back to Exim Bank for yet another LOC. Dr. Gondwe has estimated Africa's funding requirements for the five-year period up to 2010 at $25 billion. He expects at least 25 percent of this amount to come from India. Excerpts.

Could you tell us about the latest Line of Credit?
This Line of Credit for $5 million has already been taken up. The project is ready, the sponsor is ready and so are the supplier and the machinery. It has gone to our 45 million market. What does it mean? It means that we have to come back, to talk to our friend (Exim Bank) to give us another Line of Credit.

When is the next LOC going to be discussed?
It is in the process. We have a long line of projects in the pipeline, which are looking towards procuring from India. Some of them involve manufacture of ethanol and other sugar-related products, Others are in the area of infrastructure. We are going to discuss these projects with Exim Bank. They are already financing a Railway Line in Angola. There is also a railway line project for a port in Zambia from the new area of copper mining. It can be constructed with the assistance of Exim Bank.

India is very competent in the construction of railway lines
… Yes, we have suggested this to the promoters of the project. They have begun to identify their needs. We have told them that no one can beat India in the railway line construction, infrastructure and so on, In fact that is what I have indicated to Exim Ban. We are going to discuss it together. This is a new proposal that has reached us. Perhaps India might be asked to help in the Angola railway line project. If you look at that railway line, it used to come all the way from Zambia, taking the export route, straight to London. There is another project - the inland waterways project - In the landlocked country of Malawi. The authorities in Malawi are very keen on this project. We might want to see If Exim Bank can assist in financing this project so that it can be put in place. The vision of the PTA Bank is to help in the construction and development of the part of Africa where it operates, so that it becomes a reference point, where all the parameters are met and all the players, who would like to contribute to the development, will come and see how best they can provide assistance and how best they can invest. You can see that we have already demonstrated to our friends by using $45 million of Exim money, which has been properly invested in strong projects that are producing and helping with the employment and economic development. They have all been doing very well and some of them are the pride of Africa. You look at the sugar project in Zambia. It has got so famous. There is another project in Kenya.


You have 17 members. What is the total requirement of PTA to meet their diverse requirements? What is the larger picture for the period till 2010?
The larger picture is very encouraging. So encouraging that sometimes we feel overwhelmed. The resources that are required are immense. Because this is the part of the world that is looking for a lot of resources to develop itself but is lagging behind. Indeed, Africa is grateful that it has friends like India, like Exim Bank. Some the projects, which require a lot of financing, are infrastructure projects. Such as the railways, the road network, or the airports. Angola alone wants to put up 16 airports. So in terms of actual requirement, let us say, in the next four five years, up to 2010, we are looking for not less than 25 billion dollars. That is why when we look at our requirements we are overwhelmed.

How much of this $25 billion do you expect to raise from India?
We expect at least 25 percent of the $25 billion required to come from India. So, there we are. What is our niche? It is the Indian example of medium scale projects that are in the range of $5 to $10 million. For us that is our niche. And then there are the bigger ones. These are the ones that we can only syndicate. Get ourselves involved individually and ask friends like Exim Bank to join us. Because these syndications will need more than one financial institution to be able to put them in place. So our role is to help promote entrepreneurship in the private sector, from actual project formulation to implementation. Some of them are startups, some rehabilitation and expansion. This is where, we think, we should concentrate. At the same time, as a bank not to lose sight of big infrastructure projects like the one I have mentioned about Malawi - the inland waterway or the railway line for Zambia. And there are various others, involving NEPAD (New Partnership for Africa's Development). And we keep on drumming to ensure that India is at the centre of NEPAD projects. India is one of those countries as you saw at the last Africa conclave held in New Delhi. Some of them are huge infrastructural projects. We would like to see they are implemented. All of them are beyond our capacity. But we can still play our part in terms of mobilizing resources through syndications. We also want to bring about a change in the mentality so that some of these projects can be run by the private sector, so that the governments are relieved of the burden of looking after these infrastructure projects. Again we are making our policy makers aware that 'you don't have to have a road only financed by the government to run.' It can also be run by the private sector. A good example in Africa is a road put up between Johannesburg and Maputo. It is private sector-run. Through the collection of toll, it is able to maintain itself and be able to pay back the investors who financed it. The role we are trying play is that of a catalyst to investment. We are also reminding our principals and governments of the fact that the private sector is the engine of development and growth.

Next India-Africa Partnership Conclave in Kenya or Zambia?

The Export-Import Bank of India is looking at the prospects of organizing the next India-Africa Partnership Conclave in Africa, either in Kenya or in Zambia, the details of which are still being worked out, according to PTA Bank President, Dr. Michael Gondwe.. "The captains of Indian industry and commerce can see for themselves what they can do. We would like to invite investors from India. Africa is crying for Investors. Some of the best investors would be investors from India, Dr. Gondwe said. He said Chinese were coming to Africa but India could do better, adding that India and Exim Bank would be able to play a very major role in Africa.

Healthcare is another area in which India could help Africa in a big way.
Certainly. One of projects is the financing of a company in Uganda, which is procuring pharmaceutical products from India. We have realized after attending all the conclaves that India is a giant in pharmaceuticals production. Not only that, India can manufacture products at prices that Africa can afford. In fact, one of the projects in the pipeline is a pharmaceutical project for which the promoter is going to procure from India. And this is what might be financed by the next Line of Credit, which we are going to put together with our friend Exim Bank. The need for resources is actually overwhelming and we are playing our role. As you have rightly pointed out that in the healthcare sector, it is important that we do our best and also governments should seek the assistance of the private sector. In that regard, we have already got one project in Uganda, which is approved. Another is in Kenya, a huge modern hospital, financed by some of our friends.

On the prospects of steel and cent industries..
Steel and cement industries are the backbones of the economy. In fact, we are looking at a steel project, together with the African Development bank. In cement, we have financed two projects with the help of Exim Bank Again these are the areas in which India can play a major role. Indian investors can come and set up industries. We have the raw materials for steel and they can exploit them. . Infrastructure requires so much construction and so much steel. Africa would be using steel from its own soil and then some of it could also be exported.