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The National Microfinance Bank of Tanzania helps Bail out the Tanzania Electric Supply Company (Tanesco) with a USD 56million Loan
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| Guest post by: David Satterthwaite |
Article Overview: 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.
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The National Microfinance Bank of Tanzania helps Bail out the Tanzania Electric Supply Company (Tanesco) with a USD 56million Loan
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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About the Author: David Satterthwaite RSS for David's articles - 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. Click here to visit David's website Federal Executive Council FEC of Nigeria Approves $272m Loan from the International Fund for Agricultural Development IFAD for Rural Microfinance Kinnevik Invests $14m in African Microfinance Institution Bayport Financial Services Five Talents Joins a Consortium of Fellow Christian NGOs to Support Microfinance Program in Sudan Compassion International Invests USD 5 Million in Opportunity International to Develop Microfinance in Africa Police in Uganda Investigate Front Page Micro Finance and Three Other Microfinance Firms |
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