This Week in Africa Finance- 071123

Key Takeaways • Africa commodities platform gets $26.5 million investment and chemical sectors. • Nigerian Banks Take on Fintechs • Notable deals of the week.

African Commodities platform gets $26.5 million investment from British International Investment.

The UK’s development finance institutional (DFI) and impact investor British International Investment (BII) has announced a US $26.5 million investment in Africa’s leading commodities platform AFEX.

• This reflects the intersection between finance, agriculture and technology all very important elements of the African food value chain.
• AFEX operates over 200 warehouses in Nigeria, Kenya, and Uganda giving the footprint to serve over 450,000 farmers
• Digital solutions like AFEX will lead to increased agriculture productivity, efficiency and transparency across the various input channels.

Technology will continue to disrupt traditional models across key industries like agriculture in Africa. The role of forward-thinking and long-term investors like the BII would become more prominent in helping to achieve sustainable food and agricultural value chains that would lead to increased trade from within the country to across the continent.

Nigerian Banks Take on Fintechs

Generates $157 Billion through Digital Banking Transaction

Nigerian banks are longer just maintaining the status quo of traditional banking, they are seeing fast-emerging opportunities across the digital banking value chain, and positioning for a share of the growing market.

Three of Nigeria's Tier-1 banks namely Access Holdings. Guaranty Trust Holdings and Zenith Bank, the most technology-driven players in the industry have generated NGN 123.94 trillion (approx. USD 157 billion) across various digital banking channels namely Mobile Banking, Automated Teller Machines (ATMs) and Unstructured Supplementary Service Data in the half year ended June 30, 2023.

This represents an increase of 28.3 per cent over N96.58 trillion reported in the corresponding half-year ended June 30, 2022.

• Market leader Zenith Bank generated N54.03 trillion in H1 2023, an increase of 9.1 per cent from N49.5 trillion reported in H1 2022.
• Access Holdings, generated N49.69 trillion in H1 2023 from N28.85 trillion in H1 2022, while GTCO declared N20.22 trillion in revenue in H1 2023, an increase of about 11 per cent from N18.22 trillion reported in H1 2022.
• Charges on USSD transactions and the drop by 15% reflect customer sensitivity and the preference for other channels.

While Fintechs across Nigeria continue to evolve with new products and infrastructure. The Nigerian banks known for their country and regional-wide banking infrastructure are investing significantly in digital banking capabilities making them a dominant force in the fintech space.

Africa Credit Markets Snapshot

A roundup of the trends and activities in the African credit markets covering commercial papers, corporate bonds government securities, development loans, treasury bills, and commercial & foreign currency convertible borrowings.

Sovereign Debt:

• Somalia is to receive an additional $100 million in financing under a three-year Extended Credit Facility (ECF) arrangement from the International Monetary Fund (IMF). subject to the fund’s executive board approval. The country has made significant progress in rebuilding its economy under the current ECF-supported program.
• Nigeria’s foreign debt is expected to rise from $43.2 billion as of June 2023 to approximately $51 billion, this follows an additional request in line with the 2022-2024 borrowing plan of $7.8 billion and €100million.

Private Debt

• Egypt’s leading provider of investment banking, leasing, and microfinance products CI Capital has concluded a securitised bond issuance of EGP 3.035bn for Capital Securitisation, on behalf of Tasaheel Finance, who acted as the originator of the portfolio. The issuance of four tranches includes a first tranche, valued at EGP 952mn, with a tenor of six months and a Prime 1 rating from Middle East Ratings and Investor Services (MERIS). The second tranche of EGP 506mn with a tenor of nine months and a Prime 1 rating. The third tranche, valued at EGP 541mn, with a tenor of 13 months and an A+ rating, while the fourth tranche, valued at EGP 1.036bn, has a tenor of 34 months and an A rating.
• Nigerian-based solar-internet service provider Tizeti has secured a long-term debt financing Fund from Chapel Hill Denham's $120 million Nigeria Infrastructure Debt Fund to achieve the roll of its broadband network across 15 states in the West African country.
• XSML a Frontier Markets investor has provided a US $2.5 million loan to Advancetire Comercio as working capital to increase its product and services range.

Commercial Papers

• Leading Telco MTN Nigeria Plc has proposed the issuance of up to N52.896 billion series 8 &9 Commercial paper under its N250 billion issuance programme. This comes after the company completed its Series 6 & 7 Commercial Paper (CP) Issuance under its upsized N250 billion CP Issuance Programme with 146 per cent oversubscription by investors.

Bonds

• CRDB’s Kijani Bond raises TZS 172 billion for green sustainability financing
  CRDB Bank has announced that its “Kijani Bond’ was subscribed by 429.55 per cent, bolstering the funding for the advancement of green, social, and sustainability initiatives in Tanzania.  

Infrastructure Debt

• The African Development Bank Group has approved a loan of $196.43 million for Namibia to implement the second phase of its Transport Infrastructure Improvement Project (TIIP). The loan, approved on 31 October 2023, represents 51.8 per cent of the project’s total cost. The Namibian government will provide the remaining 48.2 per cent.

Deal Roundup

Fundraising

• Pearl Capital Partners (PCP) has launched a $6 million fund with support from The Embassy of the Kingdom of the Netherlands (EKN). The Dairy-Horticulture Credit Limited (‘DHCL Fund’), managed by PCP Uganda Ltd, is a UGX23.9 billion credit facility for wholesale lending to SACCOs, other Cooperatives and SMEs working with and supporting smallholder farmers in the dairy and horticulture value chain.
• Pan-African venture capital firm Norrsken 22, has successfully achieved the final close of $205 million for its debut fund, surpassing its initial target.

Sustainable Finance

• Carbon Value Exchange ( Cavex) a digital carbon financing platform has secured a seed fund of Sh905.15 million ($6 million) from E3 Capital, a Nairobi-based investor in early-stage businesses and FSD Africa Investment. The platform will connect buyers of carbon credits with projects from the Global South by leveraging digital tech to enable validation of the integrity of project data, introduce visibility and traceability in project activities, and increase pricing transparency.

Infrastructure Finance

• The Emerging Africa Infrastructure Fund (EAIF), a Private Infrastructure Development Group (PIDG) company, has committed up to USD 48 million) to launch West Africa’s first-ever social asset-backed security. EAIF will act as a co-investor, deploying capital in two tranches alongside the International Finance Corporation (IFC). The combined commitments of up to XOF 60 billion will encourage participation by local investors. Africa Link Capital is serving as the mandated lead arranger with distribution being managed by local brokers BoA Capital Securities and NSIA Finance.

Private Equity

• Alternative asset manager BluePeak Private Capital firm has successfully reached a final close of US$156 million for its inaugural private capital fund,  BluePeak Private Capital Fund SCSp. The fund attracted commitments from investors and development finance institutions (DFIs) such as the African Development Bank (AfDB), British International Investment (BII), the European Investment Bank (EIB), the US Development Finance Corporation (DFC), FMO, SwedFund, and CDC Tunisia.
• Pan-African Multilateral Development Financial Institution Africa Finance Corporation (AFC) has exited its $138m in equity and debt investment in Ghana’s Takoradi Port to Amsterdam and Istanbul-based Yildrim Group’s subsidiary Yilport Holdings.
• South African Private Equity Investor EXEO Capital through its Agri-Vie Fund II is a USD 150 million food and agri-business investment fund Agri-Vie Fund II has invested USD 10 million in Amos Dairies towards its next strategic growth step of being the only processor of casein in sub-Saharan Africa.

Rating Update

• Moody’s affirms the Republic of the Congo’s Caa2 rating and maintains a stable outlook. The Government of Morocco Ba1 stable and the Government of Niger with a Caa2 negative outlook.