Rwandan banks are raising over $100 million in a syndicated loan for the country’s sole cement company Cimerwa to construct a new plant.

The move follows withdrawal of financial pledge to a tune of $30 million by the African Development Bank (AfDB).

Cimerwa needs $130 million for the construction of the plant and purchase of equipment to manufacture cement.

The loan will be the second of its kind on the market though it will be the largest commercial transaction by Rwandan banks after MTN Rwanda’s $17.8 million syndicated loan in 2009.

Bank of Kigali, contributing $25 million to this deal, is the lead arranger while KCB Rwanda has pledged $25 million and the Development Bank of Rwanda (BRD) $3 million.

Other banks expected to be part of the deal are EcoBank and Commercial Bank of Rwanda.

“AfDB was supposed to be the lead arranger of the loan but we disagreed over a few things and we thought it would make sense if we used the local banks,” Mr Ramba said without divulging details of the disagreements with AFDB.

However, sources in the know told The EastAfrican that the management of Cimerwa reconsidered borrowing from the bank after it had set stringent conditions that would not only delay disbursement of the funds but also make it expensive to finance the loan.

When contacted, AfDB responded that it does not “comment on specifics of projects with third parties, due to confidentiality undertakings.”

The five local banks will raise the majority of the resources while the Eastern and Southern African, Trade and Development Bank will contribute $25 million.

Cimerwa’s current old plant operations have been inefficient with constant breakdown in addition to old technology affecting supply.

During the first half of 2011, production went down by 26.5 per cent from 55,188 tonnes to 40,693 tonnes.

Shareholders in Cimerwa include government, BRD, Rwanda Investment Group and two private individuals.