FOR a second consecutive year, the East African Development Bank (EADB) has recorded higher profits.
East Africa's oldest financial institution posted a profit of $2.2 million in the year ended December 31, 2010, up from $1.85 million in 2009, according to Ms Hafsa Mosi, the chairperson of the East African Community (EAC) Council of Ministers.
This is in contrast to shocking losses of $8.7 million and $8.9million in 2008 and 2007 respectively, on the back of three successive years (2004, 2005 and 2006) of profitability, other reports show.
EADB is a development finance institution with the objective of promoting development in East Africa.
The results in 2007 and 2008 were in contrast to what the EADB had previously achieved by easing its massive losses from $10 million in 2002 to $4.2 million in 2003, turning around to profitability with profits of $200,000 in 2004, $1.4 million in 2005 and $4.6 million in 2006.
In 2007, East Africa's largest regional bank and foremost development finance institution, suddenly found itself in shambles with a loss of $8.9 million.
In the 2007 financial report, the EADB made the loss due to bad debts amounting to $21 million, which were written off in the course of the year.
"The loss was occasioned by a charge on non-performing loans of $20.9 million," the report reads.
According to the accounts, EADB approved investments worth $84.6 million in 2007, down from $108.6 million in 2006, with $69.9 million going into short, medium and long-term lending, $13 million into asset leasing and less than $1 million into equity investments.
The report reveals that loans to the construction sector accounted for 28 per cent, transport, storage and communication 22 per cent, electricity, water, gas and oil 19 per cent and manufacturing 13 per cent of the total.
"I am gratified to note that the EADB has adopted a robust response to development needs of the region which is underpinned by its five year strategic plan (2011 - 2015), whose formulation is at an advanced stage," said Mr Peter Munya, Kenya's Assistant Minister for EAC Affairs, who represented Ms Mosi at the just-ended EA Assembly meeting in Arusha.
Mr Munya said that the EADB's member states have remained committed to strengthening the bank's intermediation role and capacity and in turn the bank has remained closely engaged with the EAC secretariat and other organs and institutions of the EAC.
The EADB was a key sponsor of the first Lake Victoria Investment Forum held in Mwanza, Tanzania in December 2010, which was held under the auspices of the Lake Victoria Basin Commission.
"The EADB was also a keen participant in the process of the EAC Partner States working toward the establishment and operationalization of the East African Community Development Fund," Munya said.
EADB plays a threefold role of lender, advisor and development partner. The bank provides a range of products and services which are made for the region's development requirements.
As of September 2010, the capitalization of EADB was valued at about $227 million.
It was established in 1967 under the treaty of the then East African Co-operation between Kenya, Tanzania and Uganda.
Following the breakup of the EAC in 1977, the bank was re-established under its own charter in 1980. In 2008, following the admission of Burundi and Rwanda into the EAC, Rwanda applied and was admitted into the EADB.