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Living the FATCA life in Africa: New U.S. tax regulations add to burden of compliance on financial institutions across Africa

Posted on 21 May 2013 by Eugene Skrynnyk

Eugene Skrynnyk

Eugene Skrynnyk (CIPM, MILE, BComm) is a senior manager and specialist for the asset management industry in the Africa Sub-Area at Ernst & Young in Cape Town, South Africa.

Eugene Skrynnyk is the Ernst & Young Senior Manager and specialist for the asset management industry in the Africa Sub-Area.

Eugene holds a Certificate in Investment Performance Measurement (CIPM), Master of International Law and Economics (MILE) and Bachelor of Commerce and Finance (B.Comm.).

 

When the U.S. Department of the Treasury (“Treasury”) and Internal Revenue Service (“IRS”) issued final Foreign Account Tax Compliance Act (“FATCA”) regulations in January of this year, there was a sigh of relief that the financial services industry in Africa could begin to digest FATCA’s obligations. However, achieving FATCA compliance remains a challenge for banks operating across Africa.

FATCA is already law in the U.S. but negotiations are under way to enshrine it in national law of countries around the world via intergovernmental agreements (“IGAs”) with the U.S. While a variety of African jurisdictions will each face unique obstacles with FATCA compliance, many in the industry share a general unease with FATCA’s scope, as well as scepticism that FATCA’s rewards (an estimated US$1 billion in additional tax revenue annually) justify its expenses. Generally, FATCA attempts to combat U.S. tax evasion by requiring that non-U.S. financial institutions report the identities of U.S. shareholders or customers, or otherwise face a 30% withholding tax on their U.S. source income. Overwhelmingly, FATCA compliance obligations apply even where there is very little risk of U.S. tax evasion and it impacts all payers, including foreign payers of “withholdable payments” made to any foreign entities affecting deposit accounts, custody and investments.

General issues in Africa

Concerns about privacy abound. FATCA requires financial institutions to report to the IRS certain information about U.S. persons. For this reason, IGAs are being put in place so that institutions could instead report information to their local tax authority rather than the IRS. In some jurisdictions, investment funds and insurance companies are permitted to disclose information with client consent. In other jurisdictions, such disclosure is prohibited without further changes to domestic law. The process to make necessary changes locally involves time and effort.

Cultural differences in Africa need to be considered. In certain situations FATCA requires that financial institutions ask a customer who was born in the United States to submit documents explaining why the customer abandoned U.S. citizenship or did not obtain it at birth. African financial institutions never pose such a delicate and private question to their customers. Even apparently straight-forward requirements may pose challenges; for example, FATCA requires that customers make representations about their identities “under penalty of perjury” in certain situations. Few countries have a custom of making legal oaths, so it would not be surprising if African customers will be reluctant to give them.

FATCA contains partial exemptions (i.e., “deemed compliance”) and also exceptions for certain financial institutions and products that are less likely to be used by U.S. tax evaders. It still has to be seen to what extent these exemptions have utility for financial institutions in Africa. For example, the regulations include an exemption for retirement funds and also partially exempt “restricted funds” — funds that prohibit investment by U.S. persons. Although many non-U.S. funds have long restricted investment by U.S. persons because of the U.S. federal securities laws, this exemption could be less useful than it first appears. It should be pointed out that the exemption also requires that funds be sold exclusively to limited categories of FATCA-compliant or exempt institutions and distributors. These categories are themselves difficult for African institutions to qualify for. For example, a restricted fund may sell to certain distributors who agree not to sell to U.S. persons (“restricted distributors”). But restricted distributors must operate solely in the country of their incorporation, a true obstacle in smaller markets where many distributors must operate regionally to attain scale.

Other permitted distribution channels for restricted funds are “local banks,” which are not allowed to have any operations outside of their jurisdiction of incorporation and may not advertise the availability of U.S. dollar denominated investments.

Challenges and lessons learned – the African perspective

Financial institutions will have to consider what steps to take to prepare for FATCA compliance and take into account other FATCA obligations, such as account due diligence and withholding against non-compliant U.S. accountholders and/or financial institutions.

The core of FATCA is the process of reviewing customer records to search for “U.S. indicia” — that is, evidence that a customer might be a U.S. taxpayer. Under certain circumstances, FATCA requires financial institutions to look through their customers and counterparties’ ownership to find “substantial U.S. owners” (generally, certain U.S. persons holding more than 10% of an entity). In many countries the existing anti-money laundering legislation generally requires that financial institutions look through entities only when there is a 20% or 25% owner, leaving a gap between information that may be needed for FATCA compliance and existing procedures. Even how to deal with non-FATCA compliant financial institutions and whether to completely disengage business ties with them, remains open.

The following is an outline of some of the lessons learned in approaching FATCA compliance and the considerations financial institutions should make:

Focus on reducing the problem

Reducing the problem through the analysis and filtering of legal entities, products, customer types, distribution channels and account values, which may be prudently de-scoped, can enable financial institutions to address their distinct challenges and to identify areas of significant impact across their businesses. This quickly scopes the problem areas and focuses the resource and budget effort to where it is most necessary.

Select the most optimal design solution

FATCA legislation is complex and comprehensive as it attempts to counter various potential approaches to evade taxes. Therefore, understanding the complexities of FATCA and distilling its key implications is crucial in formulating a well rounded, easily executable FATCA compliance programme in the limited time left.

Selecting an option for compliance is dependent on the nature of the business and the impact of FATCA on the financial institution. However, due to compliance time constraints and the number of changes required by financial institutions, the solution design may well require tactical solutions with minimal business impact and investment. This will allow financial institutions to achieve compliance by applying low cost ‘work arounds’ and process changes. Strategic and long-term solutions can be better planned and phased-in with less disruption to the financial institution thereafter.

Concentrate on critical activities for 2014

FATCA has phased timelines, which run from 2014 to 2017 and beyond. By focusing on the “must-do” activities, which require compliance as of 1 January 2014 – such as appointing a Responsible Officer, registering with the IRS, and addressing new client on-boarding processes and systems – financial institutions can dedicate the necessary resources more efficiently and effectively to meet immediate deadlines.

Clear ownership – both centrally and within local subsidiaries

FATCA is a strategic issue for the business, requiring significant and widespread change. Typically it starts as a ‘tax issue’ but execution has impacts across IT, AML/KYC, operations, sales, distribution and client relationship management. It is imperative to get the right stakeholders and support onboard to ensure that the operational changes are being coordinated, managed and implemented by the necessary multidisciplinary teams across the organization. These include business operations, IT, marketing, and legal and compliance, to name but a few. Early involvement and clear ownership is key from the start.

Understand your footprint in Africa

Many African financial institutions have operations in various African countries and even overseas, and have strategically chosen to make further investments throughout Africa. The degree to which these African countries have exposure to the FATCA regulations needs to be understood. It is best to quickly engage with appropriate stakeholders, understand how FATCA impacts these African countries and the financial institutions’ foreign subsidiaries, and find solutions that enable pragmatic compliance.

What next for financial institutions in Africa?

Negotiations with the U.S. are under way with over 60 countries to enshrine FATCA in national law of countries around the world via IGAs. Implementation of FATCA is approaching on 1 January 2014 and many local financial institutions have either not started or are just at the early stages of addressing the potential impact of FATCA. In South Africa, only few of the leading banks are completing impact assessments and already optimizing solutions. Other financial services groups and asset management institutions are in the process of tackling the impact assessment. Industry representative in Ghana, Kenya, Mauritius, Namibia, Nigeria and Zimbabwe have started engaging relevant government and industry stakeholders, but the awareness is seemingly oblivious to date. In the rest of Africa, FATCA is mainly unheard of.

Financial institutions choosing to comply with FATCA will first need to appoint a responsible officer for FATCA and register with the IRS, ensure proper new client on-boarding procedures are in place, then identify and categorize all customers, and eventually report U.S. persons to the IRS (or local tax authorities in IGA jurisdictions). Institutions will also need to consider implementing a host of other time-consuming operational tasks, including revamping certain electronic systems to capture applicable accountholder information and/or to accommodate the new reporting and withholding requirements, enhancing customer on-boarding processes, and educating both customers and staff on the new regulations. Where possible, institutions should seek to achieve these tasks through enhancing existing initiations so as to minimise the cost and disruption to the business.

Conclusion

Financial institutions in Africa face tight FATCA compliance timelines with limited budgets, resources, time, and expertise available. This is coupled with having to fulfil multiple other regulatory requirements. To add to the burden, FATCA has given stimulus to several countries in the European Union to start discussing a multilateral effort against tax evasion. The support of other countries in the IGA process indicates that some of these countries will follow with their own FATCA-equivalent legislation in an attempt to increase local tax revenues at a time when economies around the world are under unprecedented pressure. The best approach for African financial services industry groups is to engage their local governments in dialogue with the IRS and Treasury, while for African financial institutions to pro-actively assess their FATCA strategic and operational burdens as they inevitably prepare for compliance.

 

About Ernst & Young

Ernst & Young is a global leader in assurance, tax, transaction and advisory services. Worldwide, our 167,000 people are united by our shared values and an unwavering commitment to quality. We make a difference by helping our people, our clients and our wider communities achieve their potential.

The Ernst & Young Africa Sub-Area consists of practices in 28 countries across the African continent. We pride ourselves in our integrated operating model which enables us to serve our clients on a seamless basis across the continent, as well as across the world.

Ernst & Young South Africa has a Level two, AAA B-BBEE rating. As a recognised value adding enterprise, our clients are able to claim B-BBEE recognition of 156.25%.

Ernst & Young refers to the global organisation of member firms of Ernst & Young Global Limited, each of which is a separate legal entity. All Ernst & Young practices in the Africa Sub Area are members of Ernst & Young Africa Limited (NPC). Ernst & Young Africa Limited (NPC) in turn is a member firm of Ernst & Young Global Limited, a UK company limited by guarantee. Neither Ernst & Young Global Limited nor Ernst & Young Limited (NPC) provides services to clients.

For more information about our organisation, please visit www.ey.com/za

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Multi-faceted consumer car market bucks economic trend, says Standard Bank South Africa

Posted on 06 May 2013 by Africa Business

The South African new car market is bucking the economic trend with sales increasing by 4.1% to 163 092 units during the first three months of 2013 when compared to the same period last year. This is despite tough economic conditions, with the South African Reserve Bank expecting GDP to grow by only 2.7% during 2013.

Sydney Soundy, head of Vehicle and Asset Finance at Standard Bank South Africa, says that the prosperity within the market is notable when compared to other sectors, which were feeling the brunt of reduced consumer spending and the cost pressure caused by higher inflation and fuel prices, among other factors.

“Consumers seem to be taking advantage of the low interest rate environment and clearly still have an appetite for secured credit,” Mr Soundy says.

Vehicle sales continue to be driven by passenger vehicles and individual purchases. As at February 2013 total vehicle instalment debtors and leases were made up largely by individuals, who made up 72% of the instalment and leases book.

Looking at the South African buyer reveals several interesting facts.

“The majority of people applying for vehicle finance are between the ages of 18 and 45, constituting 62.4% of the market. These consumers display the highest level of awareness about technical changes to vehicles taking place in the industry, the brand offerings available, the legislation and the financial offerings available to buyers,” Mr Soundy says.

He notes that manufacturers have reacted to this knowledgeable sector of the market by ensuring that their offerings are competitively priced and offer the features demanded. One of the results is a diversified market in which about 70 brands of passenger vehicle are available, offering customers a choice of around 2 500 variants.

“About 65% of consumers are purchasing cars that cost less than R200 000. Toyota, Hyundai and Volkswagen are some of the manufacturers that have met the need for buying economical vehicles, capturing 50% of the new car market in this segment,” he said. Smaller engine vehicles (<1.7 litres) have seen the biggest sales growth in recent times, growing by just under 12% in 2012 from 2011, compared to growth of 9% and 1% for medium (1.8 to 3 litres) and large (>3 litres) engine vehicles respectively.

Consumers have been addressing the monthly affordability of repayments for their vehicles of choice in different ways, including through financing vehicles over a longer period, using the Residual Value option on their finance deals, and varying the extent of deposits offered.

The advent of the National Credit Act has also seen finance contracts taken over longer terms, with the average contract for new vehicles now being just over 60 months. “The average settlement period for new vehicles however, is just over 40 months,” Mr Soundy says.

Applications with a residual value request have increased, with the overall percentage of applications received with residual values at around 13% in the first quarter of 2013, from just over 11% in 2012. Consumers are seeing the benefit of this finance option, in which the monthly installments are reduced due to a residual value.

In the first quarter of this year, Standard Bank South Africa has seen an increase in the number of vehicle finance applications; however the percentage of applications with deposits have declined, with more consumers seeking to finance vehicles without a deposit.

Mr. Soundy also notes that although the traditional installment sale agreement remains very popular, consideration for alternative financing options, such as rental and leasing options, is gaining traction.

“Astute consumers are well aware that a vehicle cannot be deemed an asset. They are shifting the risk of vehicle ownership and residual values, and the responsibility of disposing the vehicle at the end of the contract, to the financier.”

Looking ahead, Mr Soundy notes that certain factors this year may work against growth in new vehicles sales. These include the Rand exchange rate which could put pressure on vehicle prices, continuing high levels of consumer household debt, and the high level of households with impaired credit records. Increases in food prices, energy prices (both fuel and electricity), and transport costs, including toll fees, will also impact on consumers’ disposable income. Inflation will be under pressure to remain below the target of 6% in 2013, impacted largely by the depreciation of the Rand and higher fuel prices.

“The Rand is likely to remain sensitive to both domestic and global developments. This could have a negative knock-on effect on vehicle prices,” he says. “However, the effect of the exchange rate has not yet reflected in car sales. Last year, vehicle prices rose by only 2.2% year-on-year.”

Mr Soundy believes that the continuing current low interest rate environment and the competitive nature of the South African motor industry will provide potential boost for growth in the market.

He says that Standard Bank South Africa’s financing activities will continue to be based on responsible lending that takes into account cash flow optimisation for both personal and commercial customers.

“Regardless of the economic situation, we will continue to assist customers by developing and providing financial services that make the acquisition of vehicles, whether for private or corporate use, as easy as possible.”

Source: StandardBank.com

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Sarama Resources Acquires 100% Interest in the Tankoro Exploration Property in Burkina Faso

Posted on 12 April 2013 by Africa Business

About Sarama Resources Ltd
Sarama Resources Ltd is a Canadian company with a focus on the exploration and development of gold deposits in West Africa.  The board of directors and management team, a majority of whom are founders of the Company, are seasoned resource industry professionals with extensive experience in the exploration and development of world-class gold projects in Africa.

The South Houndé Project in south-west Burkina Faso is the Company’s flagship property and is currently the focus of an aggressive exploration program to increase the size of its maiden discovery and to test gold-in-soil anomalies located in a 30km-long structural corridor.  Recent drilling programs at the South Houndé Project have intersected significant mineralisation in several prospect areas which the Company is actively following up.  The Company has built substantial early stage exploration landholdings in prospective and underexplored areas of Burkina Faso (~3,100 km²), Liberia (~2,400 km²) and Mali (~560 km²) and is aggressively exploring across the property portfolio.

 

VANCOUVER, April 11, 2013 /PRNewswire/ – Sarama Resources Ltd. (“Sarama” or the “Company“) is pleased to announce that it has acquired a 100% interest in the Tankoro exploration property (“Tankoro” or the “Property“) at its South Houndé Project in Burkina Faso (refer Figure 1).

The Company entered into an agreement in respect of the exploration rights to the Property in January 2011, giving it the right to acquire a 100% interest after making instalment payments to the vendor over a period of three years.

Sarama has achieved considerable exploration success on the Property, with drilling returning significant intersections at several prospects over an 11.5km-long strike length, including the discovery of the high-grade MM Prospect which has been delineated over a 1.9km strike length.  On this basis, the Company elected to make the final instalment payment early and initiated the transfer process on November 2, 2012.

Pursuant to the agreement with the vendor, the vendor retains the right to a 1.5% net smelter return royalty (“NSR“) for any future mineral production from the Property. The Company retains the right to acquire the NSR for US$1,000,000 at any time.

Sarama’s 100% interest in exploration rights has been acknowledged by Burkina Faso’s Ministry of Mines and Energy which duly issued a transferred exploration permit in the name of the Company on March 23, 2013. The exploration permit contained no additional conditions upon the Company and is valid until December 17, 2014. Pursuant to the Burkina Faso Mining Code, the Company can elect to renew the permit for a further three years from this expiry date.

Sarama’s President and CEO, Andrew Dinning , commented:

“We are pleased to have obtained 100% ownership of the Tankoro exploration property.  Exploration results to date and Sarama’s substantial investment in the area highlight the ongoing importance of this permit to the Company.  With a cash balance of around US$11M (unaudited) as at March 31, 2013, we are continuing to actively explore the South Houndé Project and look forward to completing the necessary work to support the release of a maiden mineral resource in Q3 2013.”

 

Figure 1:   Location of Tankoro Exploration Property in South-West Burkina Faso

 

SOURCE Sarama Resources Limited

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Aggreko and Shanduka Recognised for Delivering Africa’s Best Fast Track Power Project

Posted on 11 April 2013 by Africa Business

The power project has been awarded at the Africa Energy Awards

JOHANNESBURG, South-Africa, April 11, 2013/African Press Organization (APO)/ The Aggreko Shanduka cross-border power project, located at Ressano Garcia in Mozambique has been awarded Africa’s Best Fast Track Power Project in 2012 at the Africa Energy Awards. The award ceremony took place during the gala dinner of the Power and Electricity World Africa conference and exhibition being held from the 8th to 11th of April in Johannesburg.

Commissioned in July 2012, the Ressano Garcia project is recognised as the world’s first interim cross-border IPP (Independent Power Provider) project. Utilising natural gas from Mozambique’s Temane gas fields, the output of the plant is being injected directly into the national grid of Mozambique on site via a purpose built substation. The project saw the generation and supply of 110 MW of power to Electricidade de Mocambique (EDM), the national utility of Mozambique and cross-border to Eskom, the South African national utility.

While being a highly innovative project in terms of delivering much needed power to both countries, the judges were impressed by the truly fast-track nature of the project. Commissioning the project, from first breaking ground to being fully operational, took less than four months. This included a substantial civil infrastructure programme involving the building of access roads, a 1.2 km high pressure gas pipeline, gas processing and de-pressurising infrastructure, a major substation and 1.5 kilometres of 275 kV transmission line.

The project is connected to the Southern African Power Pool (SAPP) which links the power grids of nine Southern African countries. Taking advantage of this exceptional transmission infrastructure and the flexible nature of Aggreko’s power installations, on March 14th 2013 Aggreko (http://www.aggreko.com) announced that it would extend the Ressano Garcia facility to add an additional 122 MW. Coming on-line within the second quarter of 2013, this additional power will be shared between EDM and NamPower, the Namibian national utility and bring the total generating capacity of Ressano Garcia to 232 MW.

“To realise a project of this scale and complexity, the global resources of Aggreko were mobilised to project manage and engineer the installation of Ressano Garcia. This capability coupled with the expertise of our partnering contractors and customers, working together as one team resulted in the successful delivery of this remarkable project,” commented Ron Sams, Global Operations and Technology Director, Aggreko.

“We are thrilled to receive this award in conjunction with our partner Aggreko,” commented Phuti Mahanyele, CEO, Shanduka Group. “Access to sufficient and stable power supplies creates tremendous value for the development of the region. This project has also brought significant benefits to the local population, providing increased employment opportunities, stimulating wider economic activity and, through Shanduka’s Adopt-a-School Foundation, assisting in the development of a local primary school, Escola Primaria Completa De Ressano Garcia.”

Commenting on the award James Shepherd, Managing Director, Aggreko Southern and East Africa, “I’m delighted that what is indeed a unique and ground-breaking project has been recognised as such by our industry peers. Building a power plant of such size and complexity, on a completely greenfield site, in less than four months is truly remarkable. This award recognises the vision and hard work of the project team from Aggreko and Shanduka, our customers EDM and Eskom and all the partners that made this project such a resounding success.”

 

Aggreko plc

Aggreko plc (http://www.aggreko.com) is the world leader in the supply of temporary power and temperature control solutions. Aggreko employs over 5,700 people operating from 194 locations. In 2012 we served customers in about 100 countries, and had revenues of approximately GBP 1.6bn (USD 2.5bn or Euros 2.0bn). Aggreko plc is listed on the London Stock Exchange (AGK.L), is a member of the FTSE-100 index, and is headquartered in Scotland. For more information, please visit the company website at http://www.aggreko.com

Aggreko provides power and temperature control solutions to customers who need them either very quickly, or for a short or indeterminate length of time. Examples would be the supply of power to an industrial site which needs to service its permanent power supply, supplying a whole city in times of power shortage, or providing a major sporting event with power and cooling systems. We serve our customers either through our 194 service centres, which we call the Local business, or globally through our International Power Projects business.

In the Local business (http://www.aggreko.com/products-and-services), which accounts for about half of our revenues, we hire our equipment to customers, who then operate it for themselves, although we retain responsibility for servicing and maintaining it. In the International Power Projects business (http://www.aggreko.com/industries/case-study-library), which also accounts for about half of our revenues, we operate as a power producer. We install and operate power plants and we charge our customers both for providing the generating capacity, and for the electricity we produce. We design and manufacture equipment specifically for these requirements in our factory in Dumbarton, Scotland.

Recent customers include the London 2012 Olympic and Paralympic Games (http://www.aggreko.com/media-centre/press-releases/aggreko-supports-a-powerful-london-2012), the Vancouver 2010 Olympic Winter Games (http://www.aggreko.com/events/the-olympics/vancouver-2010) and the power utilities in over 50 countries including the UK (http://www.aggreko.co.uk), France (http://www.aggreko.fr), Angola, Kenya (http://africa.aggreko.com), Indonesia, Bangladesh, Venezuela, Chile (http://www.aggreko.cl), Brazil (http://www.aggreko.com.br) and the USA (http://us.aggreko.com).

In 2012 we fulfilled almost 45,000 customers’ assignments and 70% of those who responded to our research gave us a recommendation of 9 or 10 out of 10.

For more information, please visit our local website at: http://www.aggreko.co.za

Shanduka Group

Shanduka Group was founded in 2001 as a black-owned investment holding company. It is invested in a diverse portfolio of listed and unlisted companies, with key holdings in the resources and food and beverage industries. Shanduka is also invested in the financial services, energy, telecoms, property and industrial sectors. The group has investments in South Africa, Mozambique, Mauritius, Ghana and Nigeria.

The company’s investment philosophy rests on partnering with firms that have a history of delivering profitable earnings and capable management teams that embrace transformation.

Shanduka’s broad-based ownership demonstrates its commitment to empowerment and transformation. Part of its shareholding is held by trusts that invest in education and small business development. Total black ownership is 51%, of which an 18% shareholding is held by broad-based trusts.

For more information on Shanduka, please visit our website at: http://www.shanduka.co.za

SOURCE

Aggreko plc

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“Solar investors, project developers and EPCs are shifting from a short term cost per Watt focus to a more accurate measure of a system’s value based on the levelized cost of electricity, expressed as cost per kilowatt hour.”

Posted on 08 April 2013 by Africa Business

Exclusive interview with Stephan Padlewski, Market & Program Leader at DuPont Photovoltaic Solutions.  DuPont is a silver sponsor at the upcoming Clean Power Africa.  A DuPont specialist will also address the solar conference session on:  “Know What is in Your Modules – Materials Matter”.

1) What are you most excited about currently in terms of DuPont’s products and solutions?
Materials designed and proven to improve the power output and reliable lifetime of solar panels lower the levelized cost of electricity (LCOE), making solar a better investment.  There are three key materials that should be carefully considered: metallization pastes, encapsulation and backsheet materials.

    Photovoltaic metallization pastes boost the efficiency of solar cells to deliver significantly more power output from solar panels.  Every 1% improvement in sunlight conversion efficiency could result in a 6% cut in the cost of the overall solar power generation system. DuPont is the leading supplier of these high-efficiency materials – Solamet® pastes have essentially doubled cell efficiency over the past twelve years.
    Encapsulation materials surround and protect solar cells and panel circuitry.  While Ethylene vinyl-acetate (EVA) has been widely used, degradation in external environments has been increasingly observed.  Many are now considering DuPont ionomer encapsulants, which were recently shown in independent testing to be at least 25 times more effective than standard EVA encapsulants in preventing Potential Induced Degradation (PID), an increasing cause of solar panel failure.  Additionally, ionomer has almost two decades of field use as an encapsulant, and has demonstrated exceptional results in both reliability and durability, delivering excellent long term system performance.
    DuPont™ Tedlar® polyvinyl fluoride (PVF) film, used in the backsheet of solar panels, has set the standard in the industry because it provides critical, long-life protection to the panel.  Tedlar® is the only product that has been field-proven to deliver high performance in all climates for more than 30 years.  Alternatives to Tedlar® are all relatively new materials for use in SOLAR and are unproven in the field for long term (> 25 years) use.  These backsheet materials are lab-tested in a way that artificially accelerates the effects of aging vs. field-tested over significant periods of time.  Unfortunately, lab tests do not accurately predict lifetime performance.  Backsheet failure can result in safety issues, power and investment loss.

      2) What is on the calendar for DuPont in 2013?
      In 2013, DuPont Photovoltaic Solutions will continue to focus on developing advanced materials that improve the power output and lifetime of solar panels, lowering overall system costs and encouraging faster and broader adoption of solar energy.

      We are also working to address a key issue of concern.  There is a race for survival in the solar industry today, fueled by the drive to achieve grid parity, and exacerbated by industry overcapacity.  As costs are being cut, some manufacturers are substituting unproven and inferior materials that threaten system durability and lifetime.  Sacrificing quality for cost is a tradeoff that has the potential to create widespread system failures and to give the entire solar industry a black eye at a critical time in its growth.

      DuPont therefore has a heavy focus this year on helping solar investors, project developers and EPCs understand the factors most critical to quality in solar panel selection.  Materials are critical and those that are proven to deliver superior power output and extend the lifetime of panels will generate increased rates of return for solar projects.

      We are beginning to see traditional thinking evolve.  For example, solar investors, project developers and EPCs are shifting from a short term cost per watt focus to a more accurate measure of a system’s value based on the levelized cost of electricity, expressed as cost per kilowatt hour.  This is a better measure of overall cost of ownership that takes system lifetime appropriately into account.  We are also seeing increased specification for key materials such as polyvinyl fluoride films, which are the only backsheet materials field-proven to protect solar panels for more than 30 years.

      3) What opportunities do you see in Africa?
      We anticipate significant growth opportunities for solar energy in Africa.  The market could grow from the current hundreds of megawatts to hundreds of gigawatts over the next decade.

      Power supply is a major issue in most parts of sub-Saharan Africa.  The conventional electrification approach involves large and centralized power sources such as nuclear or coal combined with the deployment of power grid systems that need to stretch over large territories.  This approach implies very large up-front capital expenditures and very long lead times.  By contrast, a decentralized and scalable power source such as solar can provide electricity to a large proportion of the population including rural areas, rapidly and cost effectively.

      Diesel generators are widely used today to power mini grid systems for private and small communities.  Solar panels could be plugged into these grids.  Initially, that would lower the use of diesel generators, lower the cost of electricity and minimize environmental impacts.  The LCOE from solar power today can be as low as USD $0.10 per kilowatt hour – about half or even a third the cost of conventional generators that require complex logistics for fuel supply, maintenance and involve high fuel costs. Longer term and as energy storage technology matures, solar and other intermittent sources such as wind could become primary electrical power sources, covering electricity needs over the entire day cycle.

      Africa has the opportunity to bypass the conventional electrification infrastructure approach with its centralized, carbon-based power source combined with a complex distribution system.  Africa can directly adopt a state-of- the-art electrification model involving clean and decentralized renewable power combined with smart grid systems and storage in the future without relying upon high capital cost distribution infrastructure.

      The amount of sunlight Africa receives has the potential to meet and exceed the amount of energy that Africa will ever need.  Solar energy systems can generate cost-effective electricity, and deliver it to even the most remote locations across the continent.

      4) What do you think are the biggest challenges to the South African/African energy market?
      The biggest challenges are in building and strengthening investor confidence, which is the key to a healthy solar industry in South Africa.  And, well-defined regulatory and legislative frameworks are needed that allow for feed-in to the grid at all voltage levels.  These frameworks will further allow the market to develop at a sound pace.

      5) Why did you decide to sponsor at Clean Power Africa?
      Africa has great potential for growth in solar, it’s a key emerging market for us.  It also presents a great opportunity to connect and network with regional players, in particular downstream investors, project developers and EPCs.

      6) What surprises you about this industry?
      With the abundance of sun in Africa, and given the high cost, volatility, limitations and complexity of fossil fuels, we would expect solar energy to play a larger role in the current market.

      The African continent is well suited for solar power, since it is mostly rural and there is a need for power in many areas.  Solar energy can help address these issues in the short-term and also contribute to local economic development.

      7) What will be your main message for the event delegate and visitor?
      In the past, an investor, developer or system owner didn’t need to be an expert in materials technologies for solar panels.  High quality, proven technologies were assumed.  It’s still not necessary to be a materials expert, but now you need to be aware of what’s in your panel and what to ask for. In today’s market, industry consolidation and the efforts to maintain profitability throughout the value chain are driving short-term decisions with long-term implications.

      We believe that the industry’s short-term focus is resulting in lower quality and lower performing materials being used in solar panels, which shifts more risk to system owners who may experience premature power degradation and decreased system lifetime.  Warranties and ‘bankability’ status are no longer effective to mitigate risks.  The panel manufacturer that supplied your system may not be around long-term. Becoming aware of your system’s bill of materials, component design and manufacturing processes is the key to ensure durability, reliability and long-term performance of a solar investment.

      8 ) Anything you would like to add?
      Please visit our website to learn more about the role of materials in powering solar  http://www2.dupont.com/Photovoltaics/en_US/index.html?src=African-U-W-2-DPVSHP#.UUGHddaR_Sg

       

       

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      Sultan Al Mansouri: We will continue our efforts to make the Annual Investment Meeting a true global investment platform

      Posted on 02 April 2013 by Africa Business

      Investment Map Project by the Ministry of Economy is a leading initiative to attract foreign investments

       

      Dubai – United Arab Emirates:

       

      His Excellency Sultan bin Saeed Al Mansouri, Minister of Economy stressed that the UAE has become a strategic hub for foreign investments and leading international establishments, thanks to its solid economic fundamentals and wise economic policies that are based on openness, diversity and flexibility.  Nowadays, the UAE enjoys a leading status as pivotal destination for investments.

      Al Mansouri said the “Investment Map Project” is the latest initiative launched by the Ministry aimed at attracting foreign investment capital and promoting UAE among investors. Furthermore, it enlightens potential businessmen from around the globe about investment opportunities and better understand the realities here.

      His Excellency said the Ministry of Economy is keen to develop the economic legislative system in the country as it continues to work on putting the final touches on a number of draft laws to enhance UAE business performance, most notably the foreign investment law, corporate, industry and small and medium enterprises, competition and intellectual property rights protection. All these draft laws are in their final stages.

      The new investment law will give extra protection for foreign investors, and includes incentives to encourage foreign investment, and aims to enhance the investment climate in the UAE and to ensure economic diversification in line with UAE Vision 2021.

      His Excellency Sultan bin Saeed Al Mansouri said that the AIM which is held under the patronage of His Highness Sheikh Mohammed bin Rashid Al Maktoum, UAE Vice President has gained an ever increasing regional and international attention since its inception two years ago, especially in light of political, economic, financial and climate crises which still threaten the future of the world.

      The meeting has become a comprehensive platform in bringing the attention of government, decision makers, private sector and other related entities including the civil society as it offers exclusive discussions to exchange views between participants from around the world. This event is also important as it allows the concluding of trade deals and ratification of the agreements between the countries of the world.

      Al Mansouri hailed the efforts of Ministry of Foreign Trade headed by Sheikha Lubna bint Khalid Al Qasimi, the Minister of International Cooperation and Development and her role in making this meeting a success in its past editions. The Ministry of Foreign Trade was the host of this event, however Ministry of Economy will now host this event as MOFT tasks were shifted to MoE as per the new cabinet formation announced by His Highness Sheikh Mohammed bin Rashid Al Maktoum. The Ministry of Economy will build on efforts to make this event a destination for investors from around the world.

       

      Minister of Economy also stressed on the importance of the third edition of this meeting which be held on April 30. He said that the AIM draws a true picture of the global economic landscape in light of the crises and challenges. It also monitors the repercussions of these crises on foreign direct investment, referring to the accelerated change in the international economy in light of the multiplicity of attractive investment destinations. The new realities require concerted efforts and professional implementation of creativity and innovation in planning for future projects.

      He described the UAE as a motivating environment for investors, as it allows full ownership in free zones, and has state of the art infrastructure, availability of efficient and highly qualified manpower, the protection of intellectual property rights and laws against piracy, strategic geographical location which is a gateway to the MENA and South Asia for international companies that look for premium investments.

      Al Mansouri emphasized on promising investment opportunities in the aviation, tourism and hospitality, retail, health care, industry, oil and gas, renewable energy, financial services, logistics and education.

      The minister underlined that UAE economy has countless features and characteristics including premium investment environment supported by security, political stability and modern infrastructure. This is in addition to the strategic location as international trade hub providing access to all regional and international markets as well as advanced laws that protect capital, investment and flexible economic legislations and low custom tariffs with rates ranging from zero to 5 % and the absence of income tax.

      He stressed on the importance of the foreign direct investment to the United Arab Emirates and its impact on sustainable development, and role in strengthening the national economy, and success of UAE’s strategy to build a sustainable economy based on knowledge and innovation, and in line with UAE Vision 2021.

      Please visit aimcongress.com

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      Standard Bank South Africa’s affordable housing loan book reaches R14bn in 2012

      Posted on 23 March 2013 by Africa Business

      Standard Bank South Africa’s home loan book for the affordable housing market grew by 30% to R14-billion in 2012 as South Africa’s largest residential mortgate lender continued to attract first-time homebuyers in this segment.

      Thabani Ndwandwe, head of credit management for inclusive banking at Standard Bank South Africa, says: “More than R2bn, or close to 80% of loans granted, was disbursed to first-time homebuyers in 2012 alone. Theincome band distribution also shows that we are not just financing the upper end of affordable housing market, but continue to increase access to home ownership for customers in the low income segment.”

      The term affordable housing refers to the market with household incomes of up to R18 000.

      The milestone means that Standard Bank has now helped place more than 80 000 South Africa customers into homes since it took the decision five years ago to enter the affordable housing mortgage market.

      Nicholas Nkosi, head of affordable housing at Standard Bank South Africa, says: “One in three of all the houses sold in the affordable housing market continues to be financed by Standard Bank. Although there is still much to be done to address the extent of the country’s housing challenge, this is a significant milestone.”

      He says what is also encouraging is that more and more people in this market segment are starting to put down deposits when they purchasehouses, which dispels some of the notions about consumers not saving.

      “Our experience is also an indication that demand in this segment of the housing market has remained resilient despite weak economic conditions. There is still high demand for affordable housing. Standard Bank also expects to attract more prospective homebuyers that are seeking to move out of the rental market and become home owners.

      “Our figures confirm our commitment to getting as many people as possible into homes. Standard Bank has an appropriate and well-managed risk appetite that has enabled us to widen our product offering in the affordable housing market.”

      Mr Nkosi says although the start of the implementation of Basel III regulatory capital requirements on banks is going to put pressure on customers’ affordability, Standard Bank is developing innovative ways to ensure that users in the affordable housing market continue to enjoy lower costs and get intotheir first homes.

      For details of Standard Bank South Africa’s home loan offerings, visit www.standardbank.co.za.

      Source: StandardBank.com

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      AfDB Approves US $73 Million for Irrigation and Road Projects in Malawi

      Posted on 14 March 2013 by Africa Business

      LILONGWE, Malawi, March 14, 2013/African Press Organization (APO)/ The African Development Bank (AfDB) Group (http://www.afdb.org) approved, on March 13, 2013, grants and loans amounting to US $73 million to finance irrigation and road rehabilitation projects in Malawi.

      The grants, amounting to US $39.98 million from the Global Agriculture and Food Security Program (GAFSP) and the African Development Fund (ADF), will be used to finance the Smallholder Irrigation and Value Addition Project (SIVAP). A total of US $39.6 million will come from the GAFSP Multi-Donor Trust Fund, while the ADF will provide a grant of US $0.38 million.

      The project aims is to contribute to food security, increased income levels and poverty reduction and the specific objectives are to increase agricultural production and productivity through intensification of irrigation, crop diversification, value addition and capacity building. SIVAP will benefit 11,400 farm families of which more than 50 per cent are headed by women.

      A total of about 450,000 people will indirectly benefit from project activities through enhanced crop production, diversification and developing high value-chains.

      The project will ensure ownership by the beneficiaries through participation in supervision, monitoring, evaluation, afforestation activities, matching grant arrangement for equipment, and training. The emphasis on expanding irrigation capacity will support Government efforts in achieving the objective of enabling farmers to plant at two crops per year.

      The AfDB also provided a concessional loan of US $33.2 million to finance the rehabilitation of the road between Mzuzu and Nkhata Bay. The Mzuzu-Nkhata Bay road is one of the major trunk roads prioritized in the government’s Road Sector Programme, as it is part of the road network that links the northern region of the country to the central and southern regions.

      The road, once rehabilitated, will support economic growth sectors in the northern region and is expected to benefit an estimated 342,211 people living in the two districts, by improving access to markets, schools, and health centres and other social-economic centres.

      In addition to the above, the road is located on the Mtwara Development Corridor and therefore serves international freight traffic from Zambia and Tanzania. It is an important road link, not only for domestic connectivity, but also for regional trade and integration.

      The AfDB is committed to supporting the Malawi Government in its efforts to achieve inclusive economic growth and reducing poverty. The AfDB is confident that these resources will support Government’s efforts towards the achievement of goals and targets of the Malawi Growth and Development Strategy (MGDS II), consistent with the Bank’s Country Strategy covering 2013-2017.

       

      SOURCE

      African Development Bank (AfDB)

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      Great Western Minerals Group files mineral resource estimate on Steenkampskraal rare earth deposit, South Africa

      Posted on 10 March 2013 by Africa Business

      TSX Venture Symbol: GWG
      OTCQX: GWMGF

      CUSIP: 39141Y 10 3

      SASKATOON, March 7, 2013 /PRNewswire/ – Great Western Minerals Group Ltd. (“GWMG” or the “Company”, TSX-V: GWG)  today announced that has filed its previously announced National Instrument 43-101 resource estimate and technical report (the “NI 43-101 Report”).

      The NI 43-101 Report, which has been prepared by Snowden Mining Industry Consultants Inc. (“Snowden”) for the Company’s Steenkampskraal rare earth property located in the Western Cape of South Africa, is dated effective December 15, 2012 and is available under the Company’s SEDAR profile at www.sedar.com.

      Highlights (resource estimate unchanged from January 21, 2013 news release):

      • A mineral resource estimate of 32,000 metric tonnes of total rare earth oxides plus yttrium oxide (“TREO”) under the Indicated category and 42,100 metric tonnes of TREO under the Inferred category, each using a 1% TREO cut-off grade (the “Resource Estimate”).
      • The new results demonstrate the success of GWMG’s exploration programs at Steenkampskraal with a 114% increase in the Indicated Resource and a 219% increase in the Inferred Resource as compared to May of 2012.
      • The drilling program at Steenkampskraal supports the goals of: expanding the Resource Estimate; increasing the confidence in the geological model, upgrading the categories of reported resources; providing technical data for mine planning; and to check for mineralisation in those areas of the property where the concentrator and other infrastructure facilities will be located.
      • The core logging and assay results of 87 completed drillholes remain to be evaluated and reported in a future update.

      Resource Estimate

      The following Table 1 contains the final information relating to the NI 43-101 Report and updates and supersedes the information disclosed on January 21, 2013.

       

      Table 1: Mineral Resource Estimate for Steenkampskraal at a 1% cut-off grade (as of October 31, 2012)
      Resource Estimate1 Tonnes Grade
      TREO%
      Contained TREO
      tonnes
      LREO2
      tonnes
      HREO2
      tonnes
      Monazite Mine Area
      Indicated 71,500 23.0 16,400 15,200 1,200
      Inferred 95,800 17.1 16,400 15,100 1,300
      EXP Area
      Indicated 68,200 18.1 12,400 11,400 1,000
      Inferred 181,000 14.2 25,600 23,500 2,100
      Upper Tailings
      Indicated 8,000 9.3 750 690 60
      Inferred 1,200 7.5 90 80 10
      Lower Tailings
      Indicated 28,600 8.8 2,500 2,300 200
      Inferred 0 0 0 0 0
      Category Totals for Updated Resource
      Indicated 176,000 18.2 32,100 29,600 2,500
      Inferred 278,000 15.2 42,100 38,700 3,400
      Previous (May 2012) estimate
      Total (Monazite Mine Area,
      Upper and Lower Tailings)
      Indicated 82,090 16.8 13,800 12,700 1,100
      Inferred 87,160 16.2 14,100 13,100 1,100

       

      (1)  For the Resource Estimate, “tonnes” and “grades” were rounded to 3 significant figures. Apparent errors in the totals may occur
      due to rounding.
      (2) “LREO” means lanthanum (La2O3), cerium (CeO2), praseodymium (Pr6O11), neodymium (Nd2O3) and samarium (Sm2O3).  “HREO”
      means europium (Eu2O3), gadolinium (Gd2O3), terbium (Tb4O7), dysprosium (Dy2O3), holmium (Ho2O3), thulium (Tm2O3), ytterbium
      (Yb2O3) lutetium (Lu2O3) and yttrium (Y2O3).  “TREO” includes yttrium.

       

      Qualified Persons

      The NI 43-101 Report was prepared by Mr. Ivor Jones , (BSc. Hons), MSc, FAusIMM, CP Geo., the Group General Manager of Geosciences with Snowden.  He contributed to and supervised the Resource Estimate for the main monazite deposit as well as the tailing dams.  Mr. Jones consents to the inclusion in this news release of the matters based on his information in the form and context in which it appears. Mr. Jones has sufficient experience relevant to the type of deposit under consideration and to the activity which he is undertaking to qualify as a Qualified Person as defined under NI 43-101 – Standards of Disclosure for Mineral Projects (“NI 43-101″) and supervised the preparation of the contents of the Resource Estimate section of this news release.

      Snowden was assisted by Dr. John Hancox , Pr.Sci.Nat., of Caracle Creek International Consulting (Pty) Limited of Johannesburg. Dr. Hancox provided geological interpretations and the drillhole and underground channel sampling database for the Resource Estimate. Dr. Hancox has sufficient experience relevant to the style of mineralization and type of deposit under consideration and to the activity which he is undertaking to qualify as a Qualified Person as defined under NI 43-101 and supervised the preparation of the contents of the geology, exploration, and data assurance sections of this news release. Dr. Hancox consents to the inclusion in this news release of the matters based on his information in the form and context in which it appears.

      Brent C. Jellicoe , B.Sc. (Hon.), P.Geo., Director of International Exploration for GWMG, is the Qualified Person responsible for supervising the preparation of the technical content of this news release.

      About Great Western Minerals Group Ltd.

      Great Western Minerals Group Ltd. is engaged in becoming an integrated rare earth producer. Its specialty alloys are used in the battery, magnet and aerospace industries. Produced at the Company’s wholly owned subsidiaries Less Common Metals Limited in Ellesmere, U.K. and Great Western Technologies Inc. in Troy, Michigan, these alloys contain transition metals including nickel, cobalt, iron and rare earth elements. As part of the Company’s vertical integration strategy, GWMG also holds 100% equity ownership in Rare Earth Extraction Co. Limited, which controls the Steenkampskraal monazite mine. In addition to an exploration program at Steenkampskraal, GWMG also holds interests in four active rare earth exploration and development properties in North America.

      Neither TSX Venture Exchange nor its Regulation Services Provider (as that term is defined in the policies of the TSX Venture Exchange) accepts responsibility for the adequacy or accuracy of this release.

      Cautionary Statements

      Certain information set out in this News Release constitutes forward-looking information.  Forward-looking statements (often, but not always, identified by the use of words such as “expect”, “may”, “could”, “anticipate” or “will” and similar expressions) may describe expectations, opinions or guidance that are not statements of fact and which may be based upon information provided by third parties. Forward-looking statements are based upon the opinions, expectations and estimates of management of GWMG as at the date the statements are made and are subject to a variety of known and unknown risks and uncertainties and other factors that could cause actual events or outcomes to differ materially from those anticipated or implied by such forward-looking statements. Those factors include, but are not limited to, risks associated with the uncertainty of resource estimates, in particular those relating to Inferred resources;  risks relating to estimating grades, in particular where interpolation is used to estimate grades; the successful and timely completion of its preliminary economic assessment at Hoidas Lake; the successful and timely completion and the results of its preliminary economic assessment of the Steenkampskraal project; the construction, commissioning and operation of the proposed monazite processing facility and separation facility and mine refurbishment activities; the adequacy of the Company’s financial resources and the availability of additional cash from operations or from financing on reasonable terms or at all; reliance on third parties to meet projected timelines and commencement of production at Steenkampskraal; risks related to the receipt of all required approvals including those relating to the commencement of production at the Steenkampskraal mine, delays in obtaining permits, licenses and operating authorities in Canada, South Africa and China, environmental matters, water and land use risks; risks associated with the industry in general, commodity prices and exchange rate changes, operational risks associated with exploration, development and production operations, delays or changes in plans; health and safety risks; uncertainty of estimates and projections of production, costs and expenses; risks that future Hoidas Lake or Steenkampskraal and region exploration results may not meet exploration or corporate objectives; political risks inherent in South Africa and China; risks associated with the relationship between GWMG and/or its subsidiaries and communities and governments in Canada and South Africa, radioactivity and related issues, dependence on one mineral project; loss of, and the inability to attract, key personnel; the factors discussed in the Company’s public disclosure record; and other factors that could cause actions, events or results not to be as anticipated. In light of the risks and uncertainties associated with forward-looking statements, readers are cautioned not to place undue reliance upon forward-looking information. Although GWMG believes that the expectations reflected in the forward-looking statements set out in this press release or incorporated herein by reference are reasonable, it can give no assurance that such expectations will prove to have been correct. Except as required by law, GWMG does not assume any obligation to update forward-looking statements as set out in this news release. The forward-looking statements of GWMG contained in this News Release, or incorporated herein by reference, are expressly qualified, in their entirety, by this cautionary statement and the risk factors contained in GWMG’s Professional Securities Market listing particulars available at www.sedar.com.

      Cautionary Note For US Investors Concerning Estimates of Indicated and Inferred Resources

      This press release uses the terms “Indicated” and “Inferred” resources.  United States investors are advised that while such terms are recognized and required by Canadian regulations, the United States Securities and Exchange Commission does not recognize them. “Inferred” mineral resources have a great amount of uncertainty as to their existence, and as to their economic and legal feasibility. It cannot be assumed that all or any part of an Inferred mineral resource will ever be upgraded to a higher category. Under Canadian rules, estimates of Inferred mineral resources may not form the basis of feasibility or other economic studies except in limited circumstances and with specific notification to the reader.  United States investors are cautioned not to assume that all or any part of any mineral resources will ever be converted into mineral Reserves (as defined under NI 43-101). United States investors are also cautioned not to assume that all or any part of an Inferred mineral resource exists, or is economically or legally mineable.

      SOURCE Great Western Minerals Group Ltd.

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      African banks look to fill gap left in trade finance as Europe pulls back

      Posted on 10 March 2013 by Africa Business

      International commodity traders are turning to African banks to finance trade transactions as the global economic slowdown, Eurozone debt crisis and tougher capital requirements force international banks to pull back their lending in Africa.

      Standard Bank’s Global Head of Structured Trade and Commodity Finance, Mr Craig Polkinghorne, says the pull-back forced on global banks is happening at a time when Africa’s trade continues to grow across a broad front of geographies and sectors.

      Mr Polkinghorne says: “The scale of trade finance opportunity is substantial when considering that Africa’s exports alone grew to US $500-billion in 2012 from US $445-billion in 2011. It is something of a phenomenon that the general tightening of global credit continues to curtail availability of commodity trade finance from the traditionally dominant players, even as African countries ramp up trade relations with the fastest-growing economies.

      Many international banks have reviewed their risk appetite and have withdrawn from, or limited their exposure to trade finance in Africa. Mr Polkinghorne says that a funding gap has consequently opened up, creating an opportunity for other players to fill that vacuum.

      “This has created great opportunities for African banks to be more active in trade finance because they have strong balance sheets, the necessary capital and liquidity, and risk appetite. For domestic currency transactions they also have competitive funding costs compared to global counterparts,” he says.

      “More importantly, as European and US demand has continued to decline, the liquidity from African banks has helped to deepen intra-African trade and increase trade flows between the continent and other emerging market regions.”

      China is increasingly accounting for a significant portion of Africa’s trade compared to its trade with the rest of the world. Trade with China has grown from 10% of overall trade in 2008 to 18% in 2011. China’s dominant African trading partners are Angola, South Africa, Sudan, Nigeria, Egypt and Algeria.

      African countries are also importing goods to support infrastructure investment and consumer spending. Standard Bank Group research shows that imports of machinery, transport equipment and textiles remain buoyant

      “So, we see strong trade and constrained competitors as an ideal growth environment for banks with local presence and technical banking expertise,” says Mr Polkinghorne.

      Standard Bank Group has recently expanded its client base to incorporate new jurisdictions in Africa. Mr Polkinghorne notes that the growth Standard Bank Group has experienced in issuing letters of credit shows growing trust in its ability to take on and manage the “Africa risk” portion of these transactions.

      Standard Bank Group has used the opportunity to strengthen its position in trade finance in the energy, natural resources and agricultural sectors, says Mr Polkinghorne.

      In one such recent deal, Standard Bank Group provided Tanzania’s Export Trading Group (ETG) with US $250-million in trade finance facilities. ETG is a leading integrated agricultural supply chain manager in East and Southern Africa.

      In another transaction, Standard Bank Group assisted the Ghana Cocoa Board to secure a US$1.5-billion pre-export finance facility to purchase cocoa beans in the 2012/13 cocoa season. The facility is currently the largest non-oil deal in sub-Saharan Africa.

      Standard Bank Group also acted as mandated lead arranger on the 2012 US $1.5bn Sonangol pre-export finance deal, further cementing the banks activities in Angola. Africa of course had three important global suppliers of crude oil; Angola, Egypt and Nigeria. Significant oil product import lines were provided across sub-Saharan Africa, where the Bank provides in excess of US $1bn of import trade finance lines across West, East and Southern Africa.

      Oil and oil products remains a dominant influence in the continents GDP and is viewed as being strategically important to the success of the growth achieved by the continent as a whole, and as consumer discretionary spend increases, and car ownership rises, this will continue to be an important trade flow where the bank can provide bespoke trade finance solutions across the supply chain.

      Mr Polkinghorne says: “An important change in growing our share of the trade finance market is that liquidity pressures have made the cost of funding for Standard Bank Group and its African counterparts more competitive when compared to European banks.

      “We are seeing indications in the market that South African and other African banks are participating not only as lenders but co-arrangers on large pre-export finance deals.” he says.

      Mr Polkinghorne notes that African banks are increasingly being called upon to step up their lending for trade transactions because of their stronger balance sheets and risk appetite.

      “Natural resources, both within the oil and metals markets and the agriculture sector continue to dominate the African landscape. But it is perhaps the processes through which such resources are utilised, both in the facilitating of international and intra-regional trade and establishment of a suitable environment to conduct business that remain the key challenges. Local banks have increasingly found greater opportunities and increasing confidence to support major trade transactions, says Mr Polkinghorne.”

      Source: StandardBank.com

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