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XSML invests in Congo river, road transportation business

2 Oct 2012

Amsterdam-based emerging markets investor XSML has sealed its fifth deal in Congo DRC after investing in SOGETRA SPRL, a company involved in river and road transport in the country.

The deal, which was completed through the firm’s Central Africa SME Fund, will help finance the construction of new tug boats and barges for transport on the river Congo.

This funding also enables SOGETRA to meet increasing demand for the transportation of cement into the interior of DR Congo and to ship agricultural produce and other products back to Kinshasa, the country’s capital city.

Given that transport infrastructure in DRC is highly underdeveloped, there is a significant demand for capable transportation companies, XSML said.The country’s rail infrastructure is dilapidated and rarely operates, which puts additional pressure on road and river transportation companies.

While the road infrastructure is good in areas such as those between Matadi and Kinshasa, it is extremely poor in others. As a result, contracts for trucking can be very lucrative in margin terms as companies understand there is a premium that needs to be paid to offset the risk associated with operating in areas with poor infrastructure.

River transporters largely run between Kinshasa and Brazzaville and between Kinshasa and the interior of the country as they carry goods to Illevo, Lubumbashi and Mbuji-Mayi. The river Congo plays a vital role in Congo’s life as it is often the only connection from the vast interior of Congo to the main capital Kinshasa, the firm added.

The funding from the Central Africa SME Fund will be used to rehabilitate tug boats and barges to augment SOGETRA’s river transportation capacity.

This increased capacity will be used to assist SOGETRA’s partner CILU (Cimenterie de Lukala), Congo’s primary domestic cement producer, as the latter seeks to reach customers in Brazzaville and the interior of Congo where access to essential construction material inputs are more scarce.

“This investment gives the remote and rural areas of the Democratic Republic of Congo and Republic of Congo access to cement and other products,” said XSML managing partner Marcel Posthuma.

“Moreover, it also helps the people in rural areas to create a market for their agricultural products as they are able to transport their products back to Kinshasa, which generates income to many rural households.”

The deal follows one earlier this year, in which XSML invested in First & Future, the Democratic Republic of Congo’s first independent call centre.

The call centre market is a nascent industry in the DRC. F&F manages both on-site as well as their own off-site call centre to service the growing need for customer service in the country.

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