BankMuscat Signs Trade finance deal with PTA 

BankMuscat signed a Line of Credit Agreement (LOC) for USD 5 million with the Eastern and Southern African Trade and Development Bank (better known as PTA Bank). Through the LOC, BankMuscat will provide a line of credit to PTA Bank for confirmation of letters of credit for export of goods and services from Oman to Eastern Africa. The line of credit covers exports as well as re-exports from Oman to Eastern Africa. 

Recognising the close historical and cultural relationship between the Sultanate of Oman and Africa countries, BankMuscat, the largest bank in the Sultanate of Oman has taken the initiative to bring the two regions even closer in terms of trade. BankMuscat has once again provided industries in Oman an innovative trade finance mechanism to help them boost their exports to Eastern African region. 

PTA Bank was established in 1985 under a Charter as a limited liability entity pursuant to a Treaty establishing the COMESA. The Bank, promoted by African Development Bank and Member Governments of COMESA aims to support and advance East and Southern African business interests in the global marketplace by assisting in the development of trade and industry. The main objective is to provide financial and technical assistance of projects and trade activities, which would promote economic integration within the COMESA sub-region. 

COMESA was established in 1994 to replace the former Preferential Trade Area for Eastern and Southern Africa (PTA), which had existed from 1981. The current members of COMESA are: Angola, Burundi, Comoros, Democratic Republic of Congo, Djibouti, Egypt, Eritrea, Ethiopia, Kenya, Madagascar, Malawi, Mauritius, Namibia, Rwanda, Seychelles, Sudan, Swaziland, Tanzania, Uganda, Zambia and Zimbabwe. The Bank is owned by 15 Member States of COMESA. It is at the forefront of providing development capital through innovative and need oriented financing instrument. 

BankMuscat is the premier banking institution is the Sultanate of Oman offering a gamut of financial products and advisory services at both corporate and retail levels. BankMuscat has played a key role in development of the Sultanate’s infrastructure mainly, gas, power and ports. It continues to play an eminent role in the country’s economic development by offering new innovative products required by trade and industry. BankMuscat has the largest market share in Oman in trade finance products. The bank has recently installed a sophisticated Trade Finance system that has automated most of the processes and provided the bank with competitive advantage in trade finance area. The bank’s corporate customers will soon be able to connect to its Trade Finance system through the Internet. Oman’s exports (incl. Re-exports) to Tanzania, Kenya, Zambia and Zanzibar amounted to 45 million in 2000 (6% of Oman’s exports). Bulk of the exports to these countries comprise motor parts for vehicles, motor car and bus tyres and wheat flour. However, there is no effective trade finance mechanism to finance exports from Oman into these African nations. With the proposed line of credit, BankMuscat has taken the initiative to increase the possibility of enhancing trade between the Sultanate of Oman and the African countries through an effective trade finance mechanism. Exporters in Oman can utilise this trade finance mechanism to boost their exports to Eastern and Southern African nations. This mechanism, while providing assurance of payment to the Omani exporter, would allow the exporter to consider providing credit period to the importer and, therefore, lead to increasing trade volumes. 

The Omani Centre for Investment Promotion and Export Development (OCIPED) through its Representative Office in Kenya has played a significant role in bringing BankMuscat and PTA Bank together culminating in the Line of Credit agreement signed now.