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Monday, 29 September 2014

EAST AFRICAN DEVELOPMENT BANK PREPARES TO ADMIT BURUNDI


The East African Development Bank (EADB) is to undertake its valuation that will inform how much Burundi would pay to become a member of the regional financial institution.
Last year, Bujumbura applied to join the bank, six years after Rwanda was admitted as a member of the regional institution.
In May, the board of directors of the EADB reviewed Burundi’s request and authorised management to engage a professional firm to undertake the bank’s valuation with the view to admitting Burundi.
“The process of recruiting the firm is at an advanced stage,” reads the EAC Council of Ministers report.
The board also recommended that the Governing Council increase the authorised Class ‘A’ — paid in shares — by 8,000 shares in order to accommodate the subscription of Burundi. The Governing Council will deliberate on the matter at its next meeting.
Rwanda and Burundi were admitted to the EAC on November 30, 2006. In 2007, Kigali requested to join the EADB and was granted its wish in 2008. Uganda, Kenya and Tanzania are principal shareholders of the bank, with equal shares.
The EAC deputy Secretary General, Planning and Infrastructure, Enos Bukuku told The EastAfrican that one of the reasons Burundi has taken long to join the bank was that the country still belonged to the Francophonie — French-speaking countries.
It is understood that in 2012, Burundi began the process of joining the rival Anglophone — English-speaking organisation — the Commonwealth.
“Contrary to Rwanda which had become an Anglophone country, Burundi’s membership to francophonie impeded the country from joining the EADB,” said Dr Bukuku.
Other sources say that a $137 million compensation case filed by the Tanzanian transport firm Blueline Enterprises against EADB was a factor behind Bujumbura being cautious about joining the regional institution because the country did not want to inherit liability.
“Should the court have ruled in favour of Blueline, shareholders would have been liable to bail out the bank and Bujumbura did not want to bear the burden,” the EAC source told The EastAfrican.
Court ruling
On December 28, 2012, the Court of Appeal in Tanzania ruled in favour of EADB, quashing a High Court order that had directed it to pay the $137 million to Blueline Enterprises.
The appeals court declared as null and void the entire proceedings of the High Court and faulted the lower court for wrongly entertaining the execution proceedings after the EADB had pleaded immunity.
For EADB, the battle with Blueline has been a gruelling two-decade-long affair that has shackled the ability of the bank to operate and participate in big syndication club deals with the likes of PTA Bank and the African Development Bank.
The Kampala-based EADB was created in 1967. It provides mainly project loans, finance leases and equity participations aimed at leveraging private funds in the region. 
In January 2013, African Development Bank injected $24 million into EADB in new equity, bringing its shareholding to 15 per cent. The new ownership table in EADB equity is not yet publicly available.
The East African

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