UK credit agency’s financing solutions for Tanzanian businesses

Dar es Salaam. The UK’s export credit agency has expressed its readiness to support eco-friendly projects in Tanzania with a credit guarantee of nearly 2 billion pounds (about Sh6.4 trillion).

The support from the UK Export Finance (UKEF) could come in the form of guarantees or direct lending in some circumstances, a senior official said on Monday.

Speaking during a webinar session for Tanzania’s public and private sectors on opportunities in the UK, UKEF co-head of global origination Emma Thomas said the agency was ready to provide financing solutions to cater for the diverse needs of Tanzanian businesses and support their growth and development initiatives.

Ms Thomas said the entity offers a unique value proposition at a 100 percent guarantee of the loans it underwrites (on up to 85 percent of the export contract).

This is a key point of differentiation from many other credit agency as it is a full guarantee rather than an insurance.

“A minimum of 20 percent of the value we support must be spent on UK content. UK content is the cost of purchasing goods, services and intangible assets from UK exporters and UK sub-contractors,” she said.

Ms Thomas added that UKEF could also offer up to 15 years’ repayment in most sectors and up to 22 years on renewable energy and clean growth projects, including water and electric railways.

She said UKEF also offers financing in over 60 local currencies, including the Tanzanian shilling.

Other supported currencies in Africa are those of Senegal, Ivory Coast, Benin, South Africa, Egypt and Morocco.

In 2022-2023, the credit agency provided 6.5 billion pounds in support of export contracts worldwide, with 532 companies directly supported.

UKEF East Africa head Isaac Kahara said key considerations for UKEF financing in checking market risk appetite are based on specific projects which driver UK content, an essential requirement.

“UKEF can look at a wide range of projects of different sizes across sectors. All sectors can be financed except for the fossil fuel energy sector. We examine associated environmental, social and human rights risks and impacts of projects in line with local and international standards, including the Equator Principles and International Finance Corporation (IFC) Performance Standards. This should be factored in at an early stage in project development,” he said.

Mr Kahara added that a borrower will need to appoint a bank to structure the facility and to provide the liquidity.

Speaking during the session, Tanzania’s High Commissioner to the UK, Mr Mbelwa Kairuki, said the country and the UK have much more potential to build a partnership that will benefit both nations for many years.

“I sincerely believe that UK-Tanzania trade and investment volumes will increase significantly if our business community becomes aware of the opportunities that are available under UKEF and utilise them.

“With Tanzania and the UK marking six decades of diplomatic relations, the relationship has developed and grown over a broad range of areas, including our UK-Tanzania prosperity partnership, which has benefited both countries greatly,” Mr Kairuki said.