By KENNEDY MUPESENI and JUDITH NAMUTOWE –
ULENDO, a special purpose vehicle sponsored by the Focus Ironclad Group has established a K6.5 billion collateral free Road Infrastructure Note Programme(RINP) for local contractors.
The first sum of K500 million has since been released and funds will seek to address the financing gap and cash flow challenges faced by  local road contractors.
The money will be accessed by contractors executing  contracts awarded by the Road Development Agency (RDA).
According to the statement released by the organisation, the programme would result in the speedy development and growth of the Zambian contractor base in order to empower Zambian road contractors to increase the uptake of road contracts issued by RDA.
“This will enable Zambian road contractors access collateral free financing given the challenges they currently face in borrowing from traditional sources of financing,” the statement said.
It would also build capacity for the local Zambian contractors by improving access to capital and equipment.
The performance of road development in quality and completion timelines was expected to be enhanced.
The move would increase liquidity in the market by reducing capital flight in the  road construction sector and in return contributing to the country’s economy.
The deputy Group chief executive George Mubipe said the programme would benefit both investors and the Government alike due to its unique responsive nature to challenges faced in the market.
“Ulendo RINP is exclusively structured to address the challenges faced by local road contractors in financing contracts and completing them within the stipulated time.
Ulendo RINP will make it possible for contractors to increase their liquidity thereby, giving them a better chance to compete for road contracts with larger and international contractors,” Mr Mubipe said.
The expectation is that individual investors will also be able to invest in the Road Infrastructure Note Programme with a minimum requirement of K1,000 giving a return of up to 24 per cent  per annum on Kwacha investments and up to seven per cent  per annum for dollar investments to be paid back in semi-annual payments.
Ulendo has secured investment grade credit enhancements in the form of default risk cover or sub- sovereign risk cover from the Africa Trade Insurance Agency (ATI), rated A stable by S and P, and Liquidity Guarantee from Guarantco rated AA- by Fitch.
These credit enhancements make the issuer enjoy the combined credit rating of the guarantors which significantly exceeds the credit quality of most of the issuers in the market and yet offers very competitive yields.
The Issuer has also secured firm commitment from Norsad Finance Limited as an anchor investor who will invest up to 30 per cent of the tranche 1 amount.