In a recent interview with Investor’s Magazine, Admassu Tadesse, the President Emeritus and Group MD of Trade and Development Bank Group, passionately advocates for African production as a means to reduce the import-export gap on the continent. He emphasises the critical role of the SME sector in driving Africa’s economic growth and development. In this article, we delve into Tadesse’s insights and perspectives on these topics.
Can you give us a short brief about ESATAL?
Eastern and Southern African Trade Advisers Ltd (ESATAL) is a TDB subsidiary fund manager in Mauritius that has been established to champion the asset management activities of TDB Group by providing a platform that mobilises African and global capital to finance trade and development across our region, through market-oriented investment funds.
ESATAL has been in operation for three years and has successfully navigated the Covid 19 pandemic and other storms the global economy has experienced in recent years.
During this period, ESATAL’s first investment fund under management – the Eastern and Southern African Trade Fund (ESATF) – has grown from an initial fund size of about US$50m to a current fund size of over US$120m and is set for continued growth.
How has your portfolio evolved?
ESATAL has managed the ESATF portfolio to evolve towards increased diversification in terms of product, geography and sector. The fund portfolio now includes various types of debt finance instruments, including trade finance facilities, letters of credit and short-term loans. These instruments are issued by borrowers that are spread out within the African continent from various countries, including Kenya, Nigeria, Mauritius, Democratic Republic of Congo and Angola. These borrowers also operate across various sectors such as financial services, logistics, telecommunications and commodity trading.
Can you tell us about a flagship project in which ESATAL has been participating?
As an example, the fund portfolio includes an investment in a financial services business in the Democratic Republic of Congo that is a leader in providing working capital to small and medium-sized enterprises (SME’s). The SME sector is key to the development of our continent and the realisation of the Africa Continental Free Trade Area (AfCFTA) vision, which envisages domestic production and inter-African trade. SMEs would play a critical role in creating jobs for our growing youthful population, strengthening regional integration and improving our resilience against global shocks, including international conflicts and climate change.
From basic items like processed food and shoes to high-tech products like cell phones. All of these can be manufactured in Africa…
Admassu Tadesse | Group President Emeritus and Group MD | Trade and Development Bank
What are the most promising sectors in Africa?
The most promising sectors in Africa include agriculture and value-addition through manufacturing. By 2035, the number of sub-Saharan Africans reaching working ages of between 15-64 years will exceed that of the rest of the world combined, and by 2040, half of the world’s youth will be African.
All these Africans will consume food and other basic items. According to the African Development Bank, we currently import over US$35 Billion worth of food each year as a continent, despite having the arable land, fresh water and labour to produce our own food and even export food globally. This is clearly not the best situation but the huge market gap presents a great opportunity for our people to collaborate, innovate and build sustainable food value chains.
Similarly, this same growing population consumes everything from basic items like processed food and shoes to high-tech products like cell phones. All of these can be manufactured in Africa and traded across our borders, and this presents a great business opportunity for African entrepreneurs to create jobs, grow our domestic tax bases and develop our regional economies.
What role does ESATAL want to play in the implementation of the AfCFTA?
The TDB Group strategy envisions supporting investments across our region that develop and promote technology and skills, create jobs, use local inputs, benefit trade and exports and are environmentally sustainable all of which is aligned with the AfCFTA.
As part of TDB Group, ESATAL is well positioned to build on the experience already gained by launching and growing its first fund – ESATF – to promote new market-oriented funds that scale up the mobilisation of our own capital as Africans, as well as global capital, to finance enterprises that are aligned to these areas of focus, while providing a healthy return to investors.
In this way, ESATAL would be advancing the TDB Group mission of extending development capital to advance sustainable regional growth, integration and prosperity.