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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