Exim Bank to issue $5-bn fresh line of credit to Africa

Export-Import (Exim) Bank of India, the apex financial institution fully owned by the government of India, will be releasing a fresh line of credit to Africa in the next three years, according to bank’s managing director T C A Ranganathan.

Speaking on the sidelines of the inaugural day of the India-Africa Business Partnership Summit here on on Wednesday, Ranganathan said: “At present, our exposure to Africa, in terms of sanctioned credit line, is more than $3.5 billion (which has not yet been fully disbursed), with the outstanding being around $2.75 billion. With the additional line to be issued in three years, we expect the total book size of Exim Bank on Africa to double in the next five years.”

Stating that the Exim Bank of India’s intent was to promote and provide entry to various Indian entrepreneurs to Africa, besides encouraging them to bid for projects in that continent, he said Indian entrepreneurs need to do projects on their own in Africa, as that was how their counterparts in Europe, the US, China and other parts of Asia were doing there.

“There is a vast growth that is taking place there. The continent is growing rapidly and holds huge potential. Therefore, Indian entrepreneurs should explore that continent,” he said, adding bilateral trade between India and Africa had more than doubled from $25 billion in 2006-07 to $53.3 billion in 2010-11 due to the rise in both exports to and imports from the African region.

Indian exports to Africa had risen from $10.3 billion in 2006-07 to $21.1 billion in 2010-11, primarily due to an increase in exports of transport equipment and petroleum products, Ranganathan said.

Besides providing line of credit to the continent, he said, Exim Bank of India was also financing Indian companies investing in Africa or those Indian companies selling in Africa through buyers’ credit or through investment finance.

“For instance, we had assisted Tata South Africa for their vehicles to export to various members countries in Africa by giving a buyers’ credit to the governments there. In April this year, we have launched a new scheme where we will take insurance protection from a national insurance export account and give non-recourse long-term buyers’ credit on behalf of the Indian project exporters if the counter party is a sovereign of good standing,” Ranganathan said.

Stating that the Exim Bank of India had been giving credit lines to various banks in Africa, with the latest being $100 million to the Nigerian Export-Import Bank, he said the bank was trying to promote all forms of business in that continent, based on the request of the host country and the projects that they submitted to the Indian government.