5 December 2017

East Africa: Americans to Dole Out U.S. $57.7m in EA Projects

EAST African countries are enjoying $57.7 million in project investments, thanks to the US Agency for International Development (USAID) work within the region.

The US agency has supported investments across East Africa, including $40.3 million in the agriculture sector and $17.4 million in non-agriculture initiatives.

In an exclusive interview with The Daily News, a senior US government official at the region's Usaid trade and investment hub, or simply The Hub, has $166 million of potential investments under review for the region, including $48 million in Tanzania alone.

He unveiled that by August 2019, the Hub expects to reach its projected $100 million in new investments across the East African region, noting that access to finance through private capital investment enables firms of all sizes to innovate, grow and ultimately sell their products locally, regionally and internationally.

"These investments are propelling inclusive economic growth and increasing supply chain efficiencies for improved food security in the region. In addition, these investments encourage the adoption of new technologies in the agriculture sector for increased productivity, reduced post harvest losses and increased trade in staple foods," he said.

The Hub attracts, mobilizes and sustains new private-sector investment within the larger EAC region by working as a neutral intermediary, meaning at no cost to the investor or investee, to help overcome barriers to high-impact investments in the financial services, agri-business, Information and Communications Technology (ICT), health innovation, and cotton, textile and apparel sectors.

"By using innovative financial instruments such as convertible debt, venture debt and equity in addition to capital from mainstream sources such as banks, the project increases access to finance for companies that would otherwise be unable to obtain debt financing through East African Community (EAC) banking systems.

"The East Africa Trade and Investment Hub provides services that reduce the risk, costs and time required for transactions in the region. Such support includes transaction advisory support - the project accelerates deal closure by providing eligible investors with due diligence, business case and risks analysis, new markets strategies, financial modelling and forecasting, feasibility and valuation services," he said.

The American official cited other undertakings as capital raising and capital introductions. In this, The Hub works with East African firms to source equity and/or debt capital from regional and international investors, including loan guarantees, political risk insurance or grants on a neutral basis.

In the agribusiness sector, for example, The Hub has engaged with institutions to develop innovative financial products that increase access to capital.

"Since the start of the project in August 2014, the East Africa Trade and Investment Hub has supported the closure of more than $40 million investments in the agricultural sector, including two dairy deals, one in Kenya, one in Ethiopia, a poultry deal in Ethiopia and several agribusiness and logistics deals in Kenya and Uganda," he unveiled.

To grow the number of investment deals, The Hub recently signed a grant with Gro- Fin, a regional fund manager that specialises in providing finance (pre-finance and postfinance support) for small and growing businesses.

He said that a key aspect of Gro-Fin's business support was to identify, manage, and mitigate risk through due diligence and transaction deal structure advice, thereby reducing failure rates.

Gro-Fin is currently screening 200 agribusinesses and offering tailor-made technical assistance such as business planning and growth forecasting support to what the official said are the most promising enterprises that have the greatest potential for growth and job creation.

By the end of the 19-month partnership with GroFin, USAID expects to facilitate $10 million in new investment in the agricultural sector.


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