The National Microfinance Bank of Tanzania has joined a syndicate of local banks and pension funds to lend USD 238million to Tanesco, the parastatal electricity company, wholly owned by the Tanzanian government, money which will be used to pay off debts to suppliers and invest in new equipment. The National Microfinance Bank was founded in 1997, and is the third most profitable bank in Tanzania, holding USD 430million in deposits and assets. The loan to Tanesco supports NMB’s business interests, as well as those of its customers, as it organises collection services for the electricity firm via its network. Currently the Tanzanian government owns 51% of the bank, having sold off the remainder of its stake in 2005. The loan syndicate involved in the bail out includes five banks and four pension funds all from Tanzania. According to Mr. Bashir Awale, Managing Director of Stanbic Bank that led the syndicate, the banks will supply two thirds of the funds, with Stanbic Bank giving USD 32million, National Microfinance Bank USD 56million, CRDB Bank USD52 million, with the rest coming from Exim Bank and the Tanzania Investment Bank. The other USD 80million will come from pension funds, the Parastatal Pension Fund (PPF), the National Social Security Fund (NSSF), the Government Employees Provident Fund (GEPF) and the Public Service Pension Fund (PSPF).
Mr Awale said the loan would be repaid by instalments in six years with an 18 month grace period at interest pegged on 182 day treasury bills (TBs) rates.
Tanesco, which was established in 1964, generates and transmits electricity, organising the distribution and sale of electricity to the Tanzanian mainland and bulk power supply to the island of Zanzibar. The majority of its generation comes from hydropower.
The company’s financial decline was blamed on poor management and the high costs of generating power. According to Tanesco, about only 11 percent of the country’s estimated population of 34 million have access to reliable electricity.
Dr. Idris Rashidi, the Managing Director of Tanesco, said the six year credit facility would reinvigorate the firm’s operations and boost existing services. However, he explained that this loan would not replace the USD 1.2 billion needed for a capital investment programme, to which the World Bank, an international quasi-public bank, has already pledged USD 85million.
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David Satterthwaite
(Visit David's Website)
David brings 10 years of experience in
microfinance management, social
entrepreneurship, non-profit
management/fund-raising and microfinance
investment research.
David is the Chairman and President of
Prisma Microfinance, Inc., a retail
“microbank” operating in Central America.
He is also Chief Editor of
MicroCapital.org, a news and information
service for the microfinance community and
its investors. Each month,
MicroCapital.org publishes the
MicroCapital Monitor, the leading industry
newspaper.
David writes and speaks frequently on
microfinance. He has been a quest speaker
at many events, including: Microcredit
Summit 5+: Panel on Private Investment,
Milken Institute Global Conference, United
Nations Year of Microcredit Symposium for
Wall Street, Chicago Conference on
Microfinance, Harvard Social Enterprise
Conference, Dartmouth’s Business
Sustainability Conference, Wharton’s
Conference on Social Entrepreneurship,
Stanford’s Social Enterprise Club,
Columbia’s Social Enterprise Program and
the Net Impact Annual Conference. Through
his work with Prisma and MicroCapital, he
has been featured or quoted in The Wall
Street Journal, the Boston Globe, “All
Things Considered,” Reuters and
SocialFunds.com. David has been
recognized with the Compaq Computer
Corporation Leadership Award, the City
Year Inspiring Leader Award and the
National Social Venture Business Plan
Competition award for Best Social Impact
Analysis.
David has supported many non-profit and
for-profit social enterprises in different
capacities, including Access Technology
Learning Center, Agora Partnerships,
Bridges to Business, City Year, Fonkoze,
Kiva and National Social Venture
Competition.
David holds a B.A. with Honors in
Political Science from Haverford College.
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