Category Archives: ADB

Deal making to finance the future at the African Investment Forum 2021

Next week at Abidjan, Cote d’Ivoire sees the return of the African Investment Forum (AIF) that is supported by the African Development Bank Group (AfDB).

This years’ summit, from December 1 to 3, will be a hybrid mix of physical and virtual sessions and is expected to feature the Presidents of Rwanda, Benin, Mozambique and Togo alongside other continental and international business leaders.

The 2020 annual meetings of the AfDB set out a focus for mobilizing financing towards infrastructure, regional trade and health care and those have carried on into the 2021 AIF whose theme is “Accelerating Transformative Investments in Africa.” It targets five priority investment sectors of agriculture & agro-processing, energy & climate change, health, ICT & Telecoms and industrialization & trade.

At the inaugural AIF in 2018 in South Africa, deals in demand were energy investments for Southern Africa, while East, Central, North and West Africa all had infrastructure top their deal discussions. Eventually, the forum secured $38 billion of investments for 49 projects across the continent.

At the next AIF in 2019, 2,200 participants from 101 countries discussed 57 deals worth $67 billion and eventually, investments were secured for 52 deals worth $40 billion. The 2019 forum also saw 16 SME’s and startups get to pitch in different boardrooms, now a staple of the AIF, alongside industry giants raising millions of dollars for larger projects.

There was no AIF last year, because of Covid-19, and the spotlight that should have been on deals to accelerate African Continental Free Trade Agreement (AfCFTA), has now taken on an added element of helping country economies rebound from Covid-19. The African Development Bank has provided support to different countries through a COVID-19 Rapid Response Facility. Also at the 2021 bank annual meetings, AfDB President Akinwumi Adesina announced that the G7 heads of state had heeded a call that $100 billion of the special drawing rights (SDRs) being issued by the IMF, be provided to support African countries as they tackle debt challenges while responding to Covid-19.

This year priority deals are being discussed that revolve around recovering from Covid-19 and include hospital projects in Angola, Cameroon and Nigeria. Another is to secure $45 million for a vaccine production facility in Eastern Africa that will manufacture three vaccines for the WHO, including one for Covid-19. There are also cotton industry projects for Burkina Faso and Mozambique as Covid-19 showed the need for self-sufficiency and a need to promote local manufacturing capabilities.

Highlights of the 2018 AIF: Afreximbank bank launched a project preparation facility, Mara launched an Android phone, there was an African creative industry showcase and social boardroom sessions for deals in Ghana and Zambia.

Highlights of the 2019 AIF: There were 6 concurrent boardroom sessions, a $600 million investment for the Ghana Cocoa Board, a financing deal for a road-rail bridge over the Congo River to link Kinshasa and Brazzaville, a forum on unclogging digital investments, and the launch of the (4th) Visa Openness Index report. It also featured sessions on opening the bank vault for women entrepreneurs, agro-processing industrial zones, climate change, an infrastructure financing trends report was launched, and a Lusophone compact for Portuguese-speaking African countries that reviewed six investment deals worth $702 million.

2021 AIF Format: Because of Covid-19 restrictions, the AIF will have 250 physical participants in Abidjan while over 2,000 others will connect virtually to participate in the boardrooms, virtual marketplaces, and virtual B2B meetings with investors and sponsors. In addition to the plenary sessions, there will be other parallel invite-only sessions that will feature heads of state, policymakers and industry leaders, some of which will be aligned for American and Asian timezones.

Anyone interested can register here for this year’s event, while companies and individuals are encouraged to join the AIF platform. There they will access financial and investment opportunities as they network with communities of other professionals. 

EDIT: November 29. The Africa Investment Forum event was postponed at the last minute after a new Covid-19 variant made it difficult for delegations to travel to Abidjan and the organizers made a decision to put prioritize the health of participants. AIF teams will continue to have discussions with partners towards investment decisions until they can reconvene at a later date.

 

AfDB 2021 annual meetings

The African Development Bank Group (AfDB) has announced its series of annual meetings for 2021.

The theme of the annual meetings which will take place from June 23-25 is “building resilient economies in post-covid Africa” and will include the 56th annual meeting of the governors of the African Development Bank and the 47th one of the African Development Fund. The 81 governors of the bank will review the annual report and operations of the group and adopt key resolutions with a focus on inclusive growth, debt and governance.

Just like in 2020, the meetings will be held virtually due to the ongoing Covid-19 situation in which the prescribed mitigation measures are restricted gatherings and travels.

Most dialogue sessions will be restricted to only the governors and bank officials, but there will be some” knowledge events” that are open to the public such as on climate change and building Africa’s health defences.

EDIT: Also during the annual meetings will be the 2021 African Banker Awards with the two main ones being the African Bank of the Year Award (contested by Afreximbank, Attijariwafa, Banque Centrale Populaire, Commercial International Bank, Equity Group Holdings, Standard Bank Group, Trade and Development Bank and Zenith Bank) and the African Banker of the Year between Ade Ayeyemi of Ecobank Transnational Admassu Tadesse (TDB), Brehima Amadou Haidara (Banque de Développement du Mali), Herbert Wigwe (Access Bank), James Mwangi of Equity Group, João Figueiredo – (MozaBanco), and Kennedy Uzoka of United Bank for Africa.

Also Innovation in Financial Services Award, Financial Inclusion Award, Sustainable Bank, SME Bank, Investment Bank (with nominees Absa EFG Hermes, FBNQuest, Misr Capital, and  Standard Bank of South Africa. There is also the Energy Deal of the Year Award, Debt Deal of the Year (which includes Dangote Cement PLC $208 million bond by FBNQuest), and Agriculture Deal of the Year which has nominees from Banque Misr, Standard Bank Group, Nedbank, Stanbic IBTC Capital and, Afreximbank.

Some of the other nominees of include the Equity Deal of the Year Award, which has the Acorn Holdings student accommodation bond/REIT by Renaissance Capital, Infrastructure Deal of the Year in which TDB is nominated for both Kigali’s King Faisal Hospital and Tanzania’s Standard Gauge Railway.

Equity Bank’s War Chest

Equity Bank has been on a tear, signing deals with other banks for affordable lines of credit for on-lending. The latest ones are with the African Development Bank and FMO.

The recent financing agreements include:

In 2020:

  • September 2020: $50 million (Kshs 5.5 Billion) loan facility with the IFC.
  • October 2020: $100 Million from Proparco (Agence Française de Développement Group) to enable Kenya MSMEs, women entrepreneurs who had been particularly affected by the economic shock of the COVID-19 crisis to create jobs. It is expected to impact 240 MSMEs firms which will create over 5,000 direct and indirect jobs.

In 2021:

  • March 4: EUR 125 million (Kshs 16.5 Billion) loan facility signed with the European Investment Bank. The long-term loan will support Equity customer to sustain and scale their operations, with Kshs 6.5 billion to agriculture and Kshs 10 billion to MSMEs.
  • March 10: $100 Million (Kshs 11 Billion) facility with DEG of Germany, CDC Group of the United Kingdom, and FMO of the Netherlands to support MSMEs cope with COVID-19 over three years.
  • March 15: USD 75 Million (Kshs 8.25 Billion) loan facility with the African Guaranty Fund to lend to women-owned and managed micro, small and medium-sized enterprises in Kenya, Uganda, Rwanda and DRC.
  • March 23: $10 billion (Kshs 11 billion) from the African Development Bank to support its expansion into Central Africa. The  tier-two facility with a 7-year maturity is also to support lending to women and youth entrepreneurs access capital to recover and thrive in a post-COVID environment.
  • March 25: $50 million (KShs 5.5 billion) NASIRA loan portfolio guarantee from Netherlands FMO, covering loans provided to MSMEs affected by the COVID-19 crisis, including women and young entrepreneurs and companies in the agri-value chain.

AFMI 2020 shows African financial markets resilience

The findings of the 2020 African Financial Markets Index (AFMI) report were highlighted in Nairobi today for a year in which countries face economic and medical challenges from COVID-19.

The fourth edition of the AFMI report by the Absa Group and the Official Monetary and Financial Institutions Forum (OMFIF) now measures 23 countries that encompass two-thirds of the continent’s population and 80% of its GDP. The countries are ranked by six assessments of investment attractiveness and this year, Eswatini, Lesotho and Malawi were added to the Index. 

South Africa remained on top, followed by Mauritius, and surprisingly Nigeria, which, along with Morocco, Ghana and Seychelles, made great strides to improve. Kenya, which was number three in 2019, dropped to number seven this year. Overall, 14 of the 23 countries scored above the median mark, a great improvement from the first index when only 6 of the 17 countries achieved this.

COVID-19 has had different impacts on African countries, but as Jeremy Awori Absa Kenya CEO said, even with the slowed-growth in the first half of the year, much was still expected from the continent that has a rising middle-class, and rising urban population. He added that growth would come from developing open, transparent and well-regulated financial markets.

Absa Economist, Jeff Gable said Africa cited some developments on the continent towards financial inclusion and making exchanges accessible to retail investors. These included Eswaitni’s automated trading platform and the Nairobi Securities Exchange’s revamped mobile app for retail investors with Dar es Salaam also working on a similar one. He spoke of moves to encouraging more funds to invest within the continent that saw Lesotho require its pension fund managers to invest locally (currently just 3% of assets are in the country), the launch of a derivatives market in Nigeria, and Ethiopia drafting legislation for a stock exchange.

In terms of sustainable finance, Kenya had its first green bond, Egypt had the first one in the MENA region, and Nigeria is working on its third green bond. Also, the African Development Bank was one of the first institutions to issue a financial instrument to fight the COVID-19 pandemic as it issued a $3 billion social-bond tranche. 

Danae Kyriakopoulou of OMFIF spoke of Kenya’s drop which was mainly in the “access to foreign exchange” measure where which it was ranked tenth after having topped the pillar just two years ago. This was partly due to the perception of the currency exchange rate. And on market transparency, she said that Kenya has few firms that have global credit ratings, compared to Nigeria, South Africa, and Mauritius.

She added that a strong local investor base was a source of long-term capital and a financial markets shock absorber of volatility, and that Namibia has the highest pension assets under management per capita on the index.  In terms of protection of minority shareholders, Kenya does well on that but it also needs to adopt enforcement of international financial master agreements (ISDA) as a key area of improvement. Kenya is also part of a pilot Africa Exchange Linkages Project to promote intra-African investment flows between the stock exchanges of Nairobi, Johannesburg, Casablanca, Egypt, Nigeria, Mauritius and the BRVM in West Africa.

George Asante, Head of Global Markets at Absa, said that the impact of COVID-19 was not as drastic on African financial markets as they had developed more resilience through having regulators work in uniform. This was in comparison to the 2008 global financial crisis which had a big disruption on African markets resulting in bond yields shooting up 30%. But he cautioned that African governments should work hard to remove the uncertainties that are still in the prices of their bonds, to attain lower borrowing costs in future.

The 2020 AFMI report by Absa Group and OMFIF can be downloaded here.

AfDB 2020 annual meetings

The abbreviated annual meetings of the African Development Bank (AfDB) Group ended this week after just three days, a slimmed-down virtual event, compared to the meetings last year in Malabo.

The Governors of the bank, representing 54 African and 27 non-regional member countries, dealt with statutory matters and approved the accounts of the bank for 2019, and reviewed its performance and the auditor reports. The Governors also commended the bank for its measures to work through COVID and while also providing flexible support to countries through the COVID-19 Rapid Response Facility of up to $10 billion.

During the year there will be a focus on infrastructure finance and quality health care and collaboration with the African Union and regional economic blocs to fast-track the African Continental Free Trade Area which was postponed from July this year, and will now kick off on January 1, 2021. Another initiative that will be supported will be the G-20 debt relief effort, recognizing that many African countries will go in to recession for the first time in twenty-five years as they tackle lockdowns, weaker tax revenue, and increased emergency health expenses.

2020 Annual Meetings Day 2 – Best of

The main highlight of the AfDB meetings was the election of the President, which saw Dr. Akinwumi Adesina re-elected for a second term with 100% of the delegate votes. The USA appears to have been the main opponent of his re-election, and their comments calling for the bank to ensure cost-effective management, review its use of resources and strengthen oversight & governance were contained in the final communiqué released by the Bank at the end of the meetings.

The next AfDB Annual Meetings are planned to take place in May 2021 in Accra Ghana. They will be hosted by the new Chairperson of the Bank, Mr Ken Ofori-Atta, Ghana’s Minister for Finance who took over from Ms Niale Kaba, the Côte d’Ivoire Minister of Planning & Development after she stepped down at the end of her term this week.

https://www.flickr.com/photos/afdbgroup/50294214242/

EDIT September 1: Dr. Akinwumi Adesina was sworn in to start his second term as President of the African Development Bank Group.