Dr. Kimei proposes syndication in financing major projects

The Government and other players in the financial sector should opt for syndication as a major way of locally financing the execution of major projects.

This was said here yesterday by the CRDB Bank managing director, Dr Charles Kimei, in a paper he presented during the on going 19th PPF annual members� meeting.

He said although individual financial institutions in the country have a lot of money, there was no single institution which was financially capable of financing major projects alone.

''Therefore, if we pool together these financial resources, we will have enough financial muscle to undertake big projects which need a lot of money to implement, like the Kigamboni Bridge project,'' Dr Kimei said.

He proposed such syndication to involve banks and social security institutions. He noted that while banks have a higher appetite in credit risk, social security institutions have funds which can be extended to banks that could in turn extend funding to investments and loans.

�Limitations of long term funding sources and capital force banks to involve social security institutions in loans syndication for big projects requiring huge sums of money,'' Dr Kimei pointed out.

He said such an initiative was not new in the country as there were several projects implemented through syndication of financial institutions. He named some of them as loans extended to Kagera Sugar, Tanzania Electricity Supply Company (Tanesco), 21st Century and several others.

He said the country has reached a point where there was no need for banks and social security institutions to 'compete' as happened in 2007 and 2008 due to liquidity scarcity in the market.

However, Dr Kimei noted that low liquidity was still prevalent until the beginning of this year as there were banks ''desperately looking for local currency deposits despite a high liquidity in the market.''

''Banks, being key players in the financial intermediation, have a role to play in economic development. This requires support from other financial intermediaries such as social security institutions through provision of funds and equity,'' he said.