Posts tagged as: debt

Brazil Finally Writes Off Tanzania Debt

By John Namkwahe

Dar es Salaam — There is a reason to smile for Tanzania after the Brazilian government wrote off a $203 million (Sh445 billion) debt.

The debt was due to a loan granted in 1979 for the construction of the Morogoro-Dodoma road, a statement issued by the Embassy of Tanzania to Brazil stated yesterday.

Tanzania’s Ambassador to Brazil Dr Emmanuel Nchimbi and an official from the Brazilian National Treasury, Dr Sonia Portella Nunes signed the agreement on behalf of their respective governments.

Dr Nchimbi thanked the Brazilian Government for writing off the long-standing debt, saying the move would be helpful as the fifth phase government under President John Magufuli strives to revamp the economy.

The ambassador also assured Brazil of Tanzania’s readiness to strengthen trade and economic cooperation.

For his part, Mr Guilheme Laux, Undersecretary of Credit and Guarantee from Brazil’s Ministry of Finance noted that the decision would now enable Brazilian companies to borrow money from Brazilian Banks for implementing development projects in Tanzania.

He also pointed out that the government of Tanzania is now allowed to initiate discussion with its Brazilian counterpart over establishment of new development projects.

Tanzania

Diaspora Raises U.S.$10,000 for Shot MP’s Medical Treatment

A total of $9,968, which is equivalent to Sh22.3 million, has been raised in four days by Chadema supporters in the… Read more »

Facebook-Linked Mobile Lender Raises Sh200 Milion for M-Pesa Loans

By David Herbling

Branch, a Facebook-linked mobile phone lending app, has raised Sh200 million by issuing a commercial paper.

The Silicon Valley start-up will use the funds to grow its loan book.

Branch says it has disbursed Sh4 billion via mobile money platform M-Pesa since its Kenya launch in April 2015.

Centum-owned Nabo Capital was the arranger of the debt facility – using Branch’s loan book as collateral.

The commercial paper was snapped up by high net-worth individuals and fund managers, the tech firm said.

“Demand for mobile loans is likely to increase as the caps are shrinking the supply of credit in many traditional avenues,” said Daniel Szlapak, director of Africa at Branch.

“Growth is powered by simplicity of the mobile app, coupled with the fact that collateral is not required. A loan can be applied for in seconds, whereas traditional processes take days,” Szlapak told the Business Daily.

Regional hub

The choice of Nairobi to raise capital for California-based fintech underlines Kenya’s position as a regional tech and innovation hub.

Branch declined to reveal the pricing of the paper, saying it was “issued at a modest premium to listed corporate paper.”

UKAid-backed consultancy FSD said the deal was a new frontier for Kenya’s mobile money markets.

“Ground-breaking deals like this can chart a path for other domestic capital providers and entrepreneurs to follow”, said Tamara Cook, head of digital innovations at FSD Kenya.

“If banks aren’t willing to intermediate funds, this deal shows how fintechs and start-ups can go directly to the domestic capital markets to access the capital they need.”

To date, Branch has raised $15 million in equity and debt funding, mostly from global funds including Formation 8, Khosla Impact, and Andreessen Horowitz, an investor in Facebook and Airbnb.

Mr Szlapak disclosed plans to raise another $50 million in both debt and equity to expand Branch to other markets. Branch opened shop in Tanzania last year.

It started lending in Nigeria this year.

Default rates

The firm says its NPL ratio has dropped to five per cent from a high of over 20 per cent during launch.

When we started the business in early 2015, default rates were over 20 per cent.

With the introduction of cutting edge machine learning technology, default rates have reduced significantly approaching 5 per cent.

Branch said it lends out Sh400 million every month to its 350,000 customers, with loans capped at Sh50,000, and repayable in between one to 12 months.

The interest rates range from 13.6 per cent per month and can drop to 1.2 per cent as a borrower builds a credit history.

Kenya: Facebook-Linked Mobile Lender Raises Sh200 Milion for M-Pesa Loans

By David Herbling

Branch, a Facebook-linked mobile phone lending app, has raised Sh200 million by issuing a commercial paper.

The Silicon Valley start-up will use the funds to grow its loan book.

Branch says it has disbursed Sh4 billion via mobile money platform M-Pesa since its Kenya launch in April 2015.

Centum-owned Nabo Capital was the arranger of the debt facility – using Branch’s loan book as collateral.

The commercial paper was snapped up by high net-worth individuals and fund managers, the tech firm said.

“Demand for mobile loans is likely to increase as the caps are shrinking the supply of credit in many traditional avenues,” said Daniel Szlapak, director of Africa at Branch.

“Growth is powered by simplicity of the mobile app, coupled with the fact that collateral is not required. A loan can be applied for in seconds, whereas traditional processes take days,” Szlapak told the Business Daily.

Regional hub

The choice of Nairobi to raise capital for California-based fintech underlines Kenya’s position as a regional tech and innovation hub.

Branch declined to reveal the pricing of the paper, saying it was “issued at a modest premium to listed corporate paper.”

UKAid-backed consultancy FSD said the deal was a new frontier for Kenya’s mobile money markets.

“Ground-breaking deals like this can chart a path for other domestic capital providers and entrepreneurs to follow”, said Tamara Cook, head of digital innovations at FSD Kenya.

“If banks aren’t willing to intermediate funds, this deal shows how fintechs and start-ups can go directly to the domestic capital markets to access the capital they need.”

To date, Branch has raised $15 million in equity and debt funding, mostly from global funds including Formation 8, Khosla Impact, and Andreessen Horowitz, an investor in Facebook and Airbnb.

Mr Szlapak disclosed plans to raise another $50 million in both debt and equity to expand Branch to other markets. Branch opened shop in Tanzania last year.

It started lending in Nigeria this year.

Default rates

The firm says its NPL ratio has dropped to five per cent from a high of over 20 per cent during launch.

When we started the business in early 2015, default rates were over 20 per cent.

With the introduction of cutting edge machine learning technology, default rates have reduced significantly approaching 5 per cent.

Branch said it lends out Sh400 million every month to its 350,000 customers, with loans capped at Sh50,000, and repayable in between one to 12 months.

The interest rates range from 13.6 per cent per month and can drop to 1.2 per cent as a borrower builds a credit history.

South Africa: Talks Underway to Address Debt of National Carrier

Deputy President Cyril Ramaphosa says any funds that are being considered to help address South African Airways (SAA) maturing debt will have to be appropriated through a special appropriations bill that will be introduced to Parliament.

He also said that SAA was in talks with its lenders in a bid to find ways to get an extension.

The Deputy President was responding to questions at the National Council of Provinces on Wednesday.

“[The] SAA debt of approximately R6.8 billion which matures on 30th September 2017 will be resolved through a two-pronged approach.

“Firstly, any funds being considered will have to be appropriated through the special appropriation Bill which will in part assist the airline’s working capital and repay some of the maturing debt.

“SAA is also negotiating with its lenders to extend maturing debt beyond September 2017.

“The precise make-up of the quantum of extension of debt and repayment of part of SAA’s maturing debt will be announced by the Minister of Finance and the SAA Board at an appropriate time,” he said.

Meanwhile, the Deputy President said at this stage, there was no need to invoke Section 16 of the Public Finance Management Act to support SAA on the matter of monies owed to it by the Angolan government.

“The position is that the new government in Angola has indicated that it will settle this debt,” he said.

IMC on SEOs looking into SAA challenges

Meanwhile, the Deputy President said an Inter-Ministerial Committee on SOEs was looking into strengthening SOEs that need support, including SAA, in order to return to their profitability.

He said the challenges faced by SAA were quite complex.

“SAA is a 100% owned state company and it is operating in a very difficult market. Airlines around the world are not your most profitable entities.

“The sector is a very competitive one and many have faced headwinds and difficulties in terms of becoming profitable and getting out of the difficult situations that they are in.

“Right now, SAA is right there facing headwinds and difficulties from an operational and profitability point of view. In the past, it operated well and made profits and right now, it is facing great difficulties and needs the bail outs that only the government can give it.

“From the IMC point of view, we have been looking at processes and policies that can enable our state owned enterprises to operate better.

“First thing that we looked at, which is covered by another question which I can address now, is how best the boards can operate and how best management can operate and how the financial stability of these entities can be upheld,” he said.

The Deputy President said it was government’s belief that once the boards of SOEs can be repositioned and empowered with good management, they can be run in a manner that they can be in a much better position.

“… this is precisely what we are doing right across the various state owned enterprises. Having set out the policy, we are also looking at how the balance sheets of these companies can be better managed and how the financing can be better structured so that they are not driven into bankruptcy,” he said.

Uganda Clays Profit Shoots to Shs2.1b

By Christine Kasemiire

Kampala — In its half year results, Uganda Clays Limited (UCL) has posted a profit after tax of Shs2.1b up from the Shs1.2b in June last year.

The manufacturer, whose luck changed for the better in 2016 after National Social Security Fund (NSSF) transferred its Shs20b debt to shares, has recovered with a 70 per cent upsurge in profit, incurring no finance cost during the period.

The clay products manufacturer attributed the profit to proper management, appraisals, distribution and aggression in the market which lowered costs of sales that dropped from Shs7.9b last year to Shs6.5b.

A restructuring exercise that started in 2014 and ended in 2016 to cut operating costs, saw 80 employees lose their jobs, and contributed to the large profit.

The managing director, Mr George Inholo, said laying off the workers had a minor positive effect.

But it was majorly distribution and aggression of the company in the industry that increased the profit.

“Laying off the workers did help a little but it is mainly proper management, energy saving management, appraisals, aggression in market and distribution of products that led to a big profit. Wherever you want to receive products be it Kampala, Jinja or Mbale, we shall distribute them to you because it is what we do,” he said.

In addition, a cheaper alternative of substituting expensive furnace oil for coffee husks was introduced at the end of 2015, to curtail the expense incurred to cut the operating costs.

Mr Inholo said the coffee husks are a cheaper, available and convenient option for UCL.

Controlling costs of production remains a key aspect for the company to ensure constant growth in the gross margin which was boosted to 49 per cent from 36 per cent last year.

The company’s revenue performance improved by 4 per cent from Shs12.3b last year to Shs12.8b.

The slow growth was blamed on the low liquidity, heightened food inflation due to long drought period and continued civil conflict in South Sudan.

Intensified marketing

Despite these shortcomings, management of UCL said it has intensified marketing activities in the second half of the year in order to improve revenue performance.

Share value of the company has also seen a boost to Shs2.4m per share, up from Shs1.4m previously.

But shareholders will have to wait on the next general meeting where they will decide if dividends will be awarded.

Ms Salima Nakiboneka, an investment analyst at Stanlib Uganda Limited, said since the shift of NSSF debt to shares, UCL now has breathing space for making profits since it incurs no finance costs.

“The company is now profitable because of the transfer of debt into shares which has given UCL a chance to concentrate on making a profit since it no longer incurs finance costs,” she said

Zimbabwe: Can U.S.$400 Million Fresh Capital Revive National Railways?

interview

The National Railways of Zimbabwe (NRZ) has been operating below capacity for years largely because of an obsolete railway system, lack of capitalisation and skills flight among many other reasons. The parastatal has now partnered Transnet and Diaspora Infrastructure Development Group (DIDG) which will invest US$400 million after winning the NRZ recapitalisation tender. Zimbabwe Independent reporter Hazel Ndebele (HN) caught up with NRZ board chair Larry Mavima (LM) to speak about the deal and the parastatal’s turnaround strategy. Find excerpts of the interview below.

NRZ has not been operating at full capacity for years. Can you summarise the challenges facing the parastatal?

The reasons why NRZ has not been operating in full capacity for years are composed of different things. The first being lack of capital by the shareholder over a very long period of time. We have outdated equipment. For instance, wagons are supposed to last an average of about 40 years but all of our wagons except for the new ones that we acquired last year are way over 50 years. When you go to your locomotive or what we call tractive power, we haven’t had any new locomotives in the last 15 years and they are well over 25 years which they are designed to last. What we do is refurbish and overhaul these locomotives and wagons as and when we get funding from our own resources or from shareholders. The other challenge that the parastatal is facing is dwindling business, as you know that primarily NRZ was dependent on ZiscoSteel, Hwange Colliery and companies like Zimasco and ZimAlloys to transport their raw materials as well as their output/production.

ZiscoSteel alone used to give NRZ in excess of 1 million tonnes per annum, which was bringing in coal from Hwange and taking out the finished product to their export markets. I am glad to see the revived efforts of Hwange Colliery that indicate that in the next year they will probably be pushing around 3 million tonnes of coal. As you know, the colliery has gone through some difficult times that at one point they almost shut down, that had a significant impact on the business relating to NRZ and same as Zimasco. However, I am happy that all these companies that I mentioned are showing an upward swing which will translate to an upward swing for NRZ business. The other challenge is the general low activity in the economy. Due to the decline in economic activity we do not have much to move locally. Last year our business was based on imports and that is grain, wheat and fuel, we also had a few exports here and there. We are bulk movers of commodities and if you do not have such to move within your country you have to base on imports.

What vision do your board and management have for the NRZ?

The vision since I got in as board chair is basically to transform NRZ into a modern, efficient and profitable railway system that competes well with not only other contiguous railway lines in other countries but also competes with the road network. It is very possible and feasible to compete with road network not only for transporting goods but also looking at the passenger side. In June this year we actually reintroduced passenger trains to different areas such as the Harare-Bulawayo route and the Harare-Mutare route. Once we become efficient and reliable then naturally we become competitive. There are other areas that may have to come into play; for instance, in terms of border clearance, railways is always faster than road because mostly goods are precleared from their country of origin, except once in a while when the train will be inspected by the Zimbabwe Revenue Authority but generally time spent at the border is less. It is also cheaper to transport bulk goods by train as it carries a huge load.

What are the stages of the NRZ turn-around plan and how long will it take now that an investor has been found?

The stages are varied; right now we have completed what I would consider the second most important stage. The first stage was being able to get the cabinet and government approval to go to tender under a new dispensation which is that the mode of financing could be either debt or debt equity. NRZ is a wholly owned government parastatal and this is the first time that government has allowed equity participation in a parastatal. We thank government for its wisdom to allow us to approach this tender in this manner which is a business approach really as opposed to the old approach that would just go for debt only. The second stage we managed to achieve was to float that tender to allow us to come up with a potential successful bidder which in this case is Diaspora Infrastructure Development Group (DIDG) which partnered South Africa’s Transnet. We are now moving to the third stage now which is the actual contract negotiation and clarification as well as signing of agreements. We are hoping that this process should take us about two to three weeks. After the contract is signed we will then go into the rollout phase which should give the investors the go-ahead to perform.

How will the NRZ benefit from working with DIDG and Transnet which was recently awarded the US$400 million recapitalisation tender?

NRZ does not have enough wagons and locomotives and therefore results in low volumes. Therefore, this partnership will result in an immediate increase of up to 2 million tonnes per year for NRZ and this is based on the business that Transnet already has and will now be carried by NRZ. We will request that our partners bring on board the necessary wagons and locomotives as well as attend to the permanent way or the main track where we have speed restrictions as they affect our efficiency to run a train within a specified period. There is the rollout plan which is very critical in the recapitalisation programme and naturally requires a joint effort of DIDG, Transnet and NRZ. NRZ knows the signalling and where exactly the problems which need to be fixed are while DIDG and Transnet has the expertise.

How is the US$400 million going to be released and how will it be used?

The US$400 million is not going to come as one big chunk. We actually have a three-year period where (in) the first year there will be US$159 million that will be spent on procurement of locomotives and rolling stock. We are talking of purchasing 24 mainline locomotives and13 shunt locomotives which are the small ones. We are also looking at about 1000 brand new wagons that will come in in the first year. There is also an amount of US$40 million that will be allocated towards fixing the permanent way by the removal of speed restriction areas. Whilst we are working on that we will be working on improving our signalling system so that we are able to control and monitor as they traverse. The second year will see another US$100 million going into fixing our infrastructure, information communication technology and further refurbishment of wagons and locomotives. To give you an idea, the railway business is very different from road business. If we place an order for a locomotive today, it will take 18 months before it gets here as they are manufactured as per order. Therefore, while we wait for our new ones to come we will refurbish the already existing ones which will take between three to six months or we will hire or lease. The rest of the money will go toward refurbishing our other infrastructure such as our buildings, workshops and so forth.

Is this money enough to turn-around the NRZ or more funds will be needed? If more funds are needed, how does the NRZ board and management plan to raise the money?

Definitely the US$400 million is not adequate to modernise the railway system. What this amount of money does is that is fixes the system to make it efficient and competitive but it does not necessarily modernise the railway system and it does not allow us to open new corridors. It is enough for the first phase of recapitalisation stage. The next phase will include opening up new corridors, for instance to create a new line that starts from Chinhoyi, going through to Kafue in Zambia. The total amount that is required to modernise NRZ is actually US$1,2 billion according to our estimates. On how we plan to raise the money is that we believe the investors have the capacity to raise that money at that particular point of time.

How many new wagons and new locomotives has NRZ acquired so far and how many more are needed?

We have managed to get 31 new wagons that came in last year. However, we have been refurbishing wagons at a rate of 50 wagons per month. We have not had any new locomotives and that is where our weakest link is at the moment to the extent that we are actually leasing some locomotives.

NRZ used to carry an estimate of 18 million tonnes of goods per year, what tonnage does it carry now? How long do you think it will take for the company to ferry such volumes?

Well, the system was designed to carry 18 million tonnes but there was never a time as far as my research is concerned that the NRZ carried that they reached that amount. The highest that was reached was 14 million tonnes. If the network is fixed we will reach up to 18 million tonnes per year. Unfortunately last year we carried 2,7 million tonnes but we are looking at improving our performance up to maybe 3,5 million tonnes. I am glad to point out actually that in the second quarter, NRZ actually posted a gross profit of US$246 000 since 2009. For the first time we turned around so we hope to improve on that. It does not mean that we are now profitable because we still have a whole lot more accumulated losses and even if we have a gross profit of US$246 000 the bottom line is that the net profit will be a loss. However, the fact that we have managed to turnaround helps to increase volumes and cost control. According to the projections that we had done when we did our feasibility studies from now to year six we are projecting that we should be between 6 and 8 million tonnes. From year seven up to year 10 we should be around 11 million tonnes.

The NRZ has been struggling to pay its workers and owes them more than US$68 million in outstanding salaries. When does the parastatal expect this to improve?

We expect this to improve in the short term. Warehousing of our debt by government has given us some breathing space. We are working on logistics and mechanisms of being able to clear or at least expunge a significant portion of what we owe. The warehousing of the debt by government has assumed it for a while but it does not mean that it has taken over the debt. Government has removed that liability from NRZ’s balance sheet to be able to lend us money which will be repaid in a period of 10 to 15 years. We urge our employees to remain patient and very soon we will be able to take care of what we owe them.

When is the parastatal going to carry out the retrenchment exercise the board has been talking about and how many people are you looking at laying off?

We are indeed actually overstaffed and are working aggressively to reduce the surplus staff but we are not going to rush the process .The staff-to-employee ratio is out of balance because we have low revenues what we call net tonne per kilometre compared to the number that is in our books.

However, at the same time we also have shortage of skills in high-technical areas that we need to run the NRZ efficiently. We have a very abnormal situation where in one area we are overstaffed and in the other area we need to hire, it is a very delicate balance that we have to achieve. If we spend US$6 million to computerise the entire NRZ system it means we will not need 500 people.

Transnet moves around 33 million tonnes per year and it has 30 000 people and we also need to have that sort of benchmark. Last year we moved 2,7 tonnes and yet we have 4 700 employees. If, for instance, we were aiming to move 3, 2 million tonnes per year then the number we would need to employ would be just above a thousand.

At the end of the day we need to run an efficient and profitable railway system that takes care of the needs of the economy, government and its citizens. We are very excited that things at NRZ are beginning to take shape now and therefore I want to thank my board for working tirelessly to get us where we are today.

Bavicha – Arrest Tegeta Escrow Beneficiaries

By Louis Kolumbia

Dar es Salaam — Chadema’s Youth wing, Bavicha, yesterday urged the government to arrest beneficiaries of the Tegeta escrow saga and Lugumi Enterprises Limited owner.

Bavicha, which has been vocal on several issues, suggested that the aforementioned should be forced to return the billions of shilling, which have cost the nation dearly.

Addressing a press conference yesterday, Bavicha national chairman Patrobas Katambi said money collected from the two sources should be used to service the Sh87 billion debt that has prompted to seizure of government’s commercial aircraft, Bombardier Q400 by a Canadian firm.

“While the government will collect Sh307 billion from the Tegeta escrow, Sh38 billion will be raised from refunds of Lugumi Enterprises. The amount can clear the debt and yet the government will have a balance to fund its development projects,” he said.

He said Bavicha will assist the government by launching countrywide crackdown to arrest all beneficiaries something the said section 16 of the Penal Code RE allowed arrest by a person before handing over the suspect to the police.

He said the party’s youth wing has written a letter expressing those issues to the Inspector General of Police (IGP) Simon Sirro and Director of Criminal Investigations (DCI) Robert Boaz.

Mr Katambi said Bavicha will declare August 31, this year the “Black Thursday” whereby they will organise countrywide demonstrations if IGP and DCI will not respond to concerns raised in their letter.

Tanzania

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Buy-Out Plans Boost Uchumi Shares Despite Drop in Sales

By James Kariuki

Shares of Uchumi supermarket continued an upward rally at the bourse this week following revelations of possible cash injection by a strategic investor.

While other counters suffered a lull or no-show performance, the retailer shrugged off post-poll jitters to post an impressive Sh4 per share sale for 937,700 shares, up from last Monday’s 3.70 price when it moved 514,100 shares.

On Friday, the government-owned listed firm issued a statement exuding confidence of a impending deal between it and a strategic investor who had pledged to pump in Sh3.5 billion to acquire a stake.

This, they said, would help them settle debts owed to suppliers and property owners in Kenya, Uganda and Tanzania, with part of the proceeds to be used in replenishing stocks.

The announcement on August 5 elicited positive interest in Uchumi shares that witnessed a sharp rise in trading from the 35,300 shares sold on August 3 to August 5’s close of day price of Sh3.45, where 828,400 shares were dealt.

Uchumi’s chief executive Julius Kipng’etich said the cash-strapped chain was seeking between Sh3.5 billion to Sh5 billion of debt capital through issue of convertible debt instrument or outright purchase of equity or a combination of both.

On Friday, Uchumi said the process of bringing on board a new investor would take four months or less, adding that the funds realised would help revamp its operations, stock up shelves, pay suppliers and rebuild customer confidence.

“The transaction process will come to a conclusion within the stipulated time or less, marking the last mile of Uchumi’s recovery,” said the CEO.

While auditors blamed Uchumi’s woes on mismanagement and abuse of office, the retail sector’s market leader Nakumatt has been suffering financial woes that saw it announce plans to bring in an investor to inject an undisclosed sum of money for a 25 per cent equity.

The firm has sought court intervention to avert seizure of its assets to repay rent arrears for two of its stores while workers have been going without salaries, raising fears on its preparedness to handle expansion into East Africa.

The regional operator with 65 stores across Kenya, Tanzania, Uganda and Rwanda has expressed optimism of returning to profitability, but emerging details show all is not well with suppliers, workers and property owners who remain unpaid.

Suppliers Association chairman Kimani Rugendo said talks were ongoing over unpaid deliveries.

In its rescue plan, Uchumi saw Dr Kipng’etich move in, closed its Uganda and Tanzania subsidiaries, as well as several branches in Kenya, and got a not from shareholders to seek injection of fresh capital.

It also sold its Ngong Hyper and Lang’ata Hyper properties on a buy-lease back arrangement.

Nigeria: Huge Debt Burden Stalls Gencos’ Expansion Projects

By Chineme Okafor

Abuja — The 26 power generation companies in Nigeria’s electricity market have linked the slow pace of investments in the expansion of their generation capacities to the huge debt figures in their respective financial books.

The Gencos said the development was scaring away potential investors, and also keeping others who had committed to invest in them, from going ahead with the conclusion of negotiations on the expansion plans.

According to the Executive Secretary of the Association of Power Generation Companies (APGC), Dr. Joy Ogaji, this has been aggravated by the poor financial positions of the Gencos as contributed by the huge debts owed them by the market for electricity supplied.

Ogaji stated this at a press briefing in Abuja where the Gencos also called out the 11 electricity distribution companies for opposing a fresh move by the Nigerian Electricity Regulatory Commission (NERC), to introduce a model central revenue management system, which would enable all players, transparent access to the revenue position of the sector.

She noted that the huge debts in the books of the Gencos have become major setbacks to their capacity expansion plans, adding that while their lenders frequently write to them on this, investors have also stayed away from advancing negotiations on financing future capacity expansions.

“Lenders have written to our members on debts owed them, in fact, our auditors find it quite difficult to deal with the debt figures in our books, they are caught between writing them off as bad debts on carrying them over to new accounting years,” said Ogaji.

Speaking other challenges of the Gencos, Ogaji explained that they were not consulted by the government in drawing up its recent N701 billion intervention fund for them.

According to her, the fund would not meet up the payment obligations to the Gencos within the periods it was planned to cover.

She also noted that past debts to the Gencos was about N500 billion, while requests for foreign exchange from the Central Bank of Nigeria (CBN) to enable Gencos buy spare parts for repairs have not been met by the apex bank.

Also, on the Genco’s call on the government to quickly declare the eligible customers’ clause in the market, Ogaji said: “The move by the regulator to bring about transparency in the market and also the plans to declare eligible customers would bring about better performance in the electricity value chain which in turn would raise sustainable cash flow for all market participants and reduced tariffs due to competitiveness.”

According to her: “Eligibility would introduce competition on the demand side and complete the liberalisation of NESI and improve efficiency, promote national economic development through supplying electricity to the productive sector of the economy, support economies of scale through bulk purchase of electricity, and reduce technical and non-technical losses for bulk high voltage supply.”

She equally added that eligibility would: “Stimulate investment in the sector as generators can sign long term contracts, send a powerful signal that the electricity sector is evolving towards full retail competition, and allow greater variety of suppliers to find innovative ways of discovering and providing what different groups of consumers want in economical ways.”

Zimbabwe: Troubled Bank Seeks to Revive Operations

TROUBLED Tetrad Investment Bank is seeking to revive operations and is looking for investors to capitalise the financial institution.

This follows an implementation of a scheme of arrangement which was recently voted by its creditors, which involved partial payment and conversion of debt to equity.

Tetrad owed its depositors and creditors in excess of $67 million as at January 2015 when the financial institution was placed under provisional judicial management.

The proposed scheme also came after failed attempts to recapitalise the bank with proposals to liquidate it brought forward, but rejected as both creditors and depositors would not recover money.

According to the bank’s judicial manager, the Deposit Protection Corporation, the debt to equity swap results in a clean balance sheet with the bank’s equity approximating the minimum capital threshold of $25 million.

“The Provisional Judicial Manager is therefore calling on interested potential investors to submit their expression of interest in Tetrad.

“Interested parties are required to register their interest with Tetrad Transaction Advisors, BDO Tax and Advisory Services Private Limited.

“This invitation is not a prospectus and does not constitute or form part of any solicitation or invitation or any offer to the public to purchase any shares in Tetrad,” said DPC.

DPC was appointed Tetrad’s provisional judicial manager in July 2015.

By end of 2016, it had recovered $16 million from debtors according to the Reserve Bank of Zimbabwe’s update in January.

It second creditors’ meeting held in Harare and Bulawayo in September 2015, creditors voted for a resolution allowing the provisional judicial manager to implement a scheme of arrangement in terms of the Companies Act.

Meanwhile, the DPC is however still in the process of liquidating a number of failed banks including AfrAsia Kingdom Bank, Royal Bank, Interfin Bank and Allied Bank.

Zimbabwe

MP Mliswa Attacks Mugabe for Protecting ‘Corrupt’ Minister Chombo

NORTON member of parliament Temba Mliswa has accused President Robert Mugabe of protecting the “corrupt” Home Affairs… Read more »

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