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On the hunt
01 May 2006
With commodity prices still high, sub-Saharan Africa is witnessing a boom in exploration and development in the metals, minerals and oil and gas sectors, though structured trade remains a challenge with banks having to search out deals and be especially innovative. Oliver O'Connell looks at how banks are securing and implementing transactions in this challenging region.
For structured trade financiers sub-Saharan Africa is a tough market to crack. Prices for oil and gas, metals and minerals, and some softs are at record levels and have been for some time now. One commodities banker recalls: "Four years ago we were struggling along with something like $500 for robusta coffee and now it's over $1,000. This makes our job very difficult."
High commodity prices have seen the number of lending opportunities for banks decline significantly as commodity producers enjoy enviable cash flow. Most are now in the position to repay existing debt, especially in the oil and gas industry.
The overall effect of such high prices on the region in the long run is expected to be beneficial as producers are able to finally undertake expansion or upgrade projects that have been in the pipeline for a number of years. This means that they can achieve production...
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