According to the memorandum which was signed on Tuesday by the Chief Executive of Jamii Bora Bank, Sam Kimani, and the Chief Operations Officer of EACL, John Mugo, East African Cables will deliver the finished products to the cable customers on condition that JBBL issues a letter of undertaking to pay for the cost of the cables directly to the manufacturer.
Kimani says the bank will issue the letter of undertaking upon delivery of products and on confirmation and acceptance of the goods by the buying entity.
Kimani says this is part of the bank’s trade finance offering whose key objective is to ensure availability of working capital to businesses in order to ease the financial burden on small and medium enterprises.
Further, the MoU requires East African Cables to open an account at JBBL into which proceeds of the transactions shall be deposited.
“This will make it easier for us to pay EACL monies accruing from the sale of cables to distributors and suppliers under this arrangement,” added Kimani.
Kimani said the bank will also provide post-delivery lending covering working capital for a period of 90 days pending payment from buyers.
There will also be Local Purchase Orders (LPO)/contract financing for a maximum of 120 days.
“This credit facilities will be subject to regulatory guidelines and our own due diligence and lending policy,” said Kimani.
On his part, Mugo says the partnership will enable their customers to grow their businesses in a consistent manner even as they await payment from their end-buyers by utilising working capital financing from JBBL.
The arrangement comes into effect immediately.