Africa-Press – Tanzania. LONDON, UK: TANZANIA and the United Kingdom are exploring new avenues through the UK Export Finance (UKEF) to foster stronger relations between the two countries within a mutual partnership framework.
This was revealed on Monday during a webinar session which brought together stakeholders from Tanzania’s public and private sectors and representatives from the UKEF.
UKEF is the operating name of the Export Credits Guarantee Department which is the United Kingdom’s export credit agency and a ministerial department of His Majesty’s Government.
UK Prime Minister’s Trade Envoy, Lord Walney, stated that the aim of the virtual meeting was to explore avenues through which UKEF could foster stronger UK-Tanzania relations within a mutual partnership framework.
Mr Walney revealed that the idea to convene such an event came following discussions with UKEF’s Chief Executive Officer (CEO), Mr Tim Reid, on January 16th in London.
Tanzania’s Minister of State, President’s Office (Planning and Investment) Prof Kitila Mkumbo, urged local investors to seize the opportunities provided by the UKEF.
He noted that the UKEF presents a significant opportunity for Tanzania as it offers favourable loan guarantee opportunities.
“The government is committed to this engagement. I believe from this session we are going to learn the actual fund support UKEF is going to offer Tanzania,” Prof Mkumbo said.
The Co-head of Global Origination Africa and America at UKEF, Ms Emma Thomas presented on the UKEF opportunities, stating that the UK has an “appetite to support up to £2.5 billion (about 8tri/-) to Tanzania.”
Ms Thomas emphasised UKEF’s commitment to ensuring that no viable UK export fails due to lack of finance or insurance from the private sector, all while operating at no net cost to taxpayers.
She informed the participants that currently, UKEF supports projects in Zanzibar worth £373 million (about 1.2tri/-).
This project involves financing upgrades to 103km of Zanzibar’s road network and Pemba Airport.
“All economic sectors are supported for capital goods or services as well as intangibles. The UK can support both private and public transactions,” explained Ms Thomas.
Over the last 10 years, UKEF has supported 358 facilities in 27 countries across the continent. Some countries benefiting from their facilities include Algeria, Uganda, Ghana, Angola and Zambia
UK Country Head of East Africa, Isaac Kahara stated, “It depends on the nature of the projects. For complex infrastructure projects, it takes more time, a year or so, to conduct due diligence.”
He added that for complex projects, it can take up to 15 years or more for the company to start repaying the loan. Additionally, Mr Kahara clarified that UKEF does not offer financial support for project preparation.
In general, the representatives of UKEF outlined three major key considerations for a company to access their financial support: market risk appetite, sector prioritisation and pricing set by banks that will give credit to UKEF’s guarantee.
UKEF charges a support fee to cover the risks it takes on based on benchmark rates set by the Organisation for Economic Co-operation and Development (OECD).
Additionally, companies eligible to access UKEF’s support include those with an export contract which must have a minimum threshold of 20 percent UK content and must undergo environmental, social, and human rights due diligence processes, and the bank must be acceptable to UKEF.
Further eligibility requirements include adherence to sustainable lending rules for sovereign borrowers, a criterion applicable to Tanzania.
Private sector borrowers undergo evaluation based on their creditworthiness, typically assessed using the last three years of audited accounts.
Ambassador Mbelwa Kairuki, at the outset of the webinar, highlighted the immense potential for partnership between Tanzania and the UK. He emphasised the numerous connections, friendships and shared priorities between the two countries, foreseeing substantial benefits from a collaborative relationship.
“With so many connections, friendships and shared priorities, Tanzania and the UK have enormous potential to build a partnership that will benefit our two countries for many years. I have witnessed this only within four months of my stay in the UK,” stated Amb Kairuki.
However, the Tanzanian embassy intends to increase the sale of Tanzanian products in the UK and Ireland, with a target of 700 million US dollars in sales by 2027.
The virtual meeting included representatives from the Tanzanian financial and banking sectors, the Confederation of Tanzania Industries (CTI), Tanzania Petroleum Development and Corporation (TPDC) and the mining sector.
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