➢ WITH “ROOM2RUN,” AfDB LAUNCHES SECURITIZATION MARKET FOR MULTILATERAL
DEVELOPMENT BANK SECTOR
➢ TRANSACTION IS IN DIRECT RESPONSE TO G20 ACTION PLAN FOR MDB BALANCE SHEET OPTIMIZATION
➢ AfDB COMMITS TO REINVEST FREED UP CAPITAL INTO NEW AFRICAN INFRASTRUCTURE
LENDING, MAKING ROOM2RUN ONE OF THE LARGEST IMPACT INVESTMENTS EVER
➢ TRANSACTION IS SUPPORTED BY NEW EUROPEAN UNION GUARANTEE TOOL (EUROPEAN FUND FOR SUSTAINABLE DEVELOPMENT)
OTTAWA, Canada, 18 September 2018 — The African Development Bank (AfDB), the European Commission, Mariner Investment Group, LLC (Mariner), Africa50, and Mizuho International plc today announce the pricing of Room2Run, a US $1 billion synthetic securitization corresponding to a portfolio of seasoned pan-African credit risk. Room2Run is the first-ever portfolio synthetic securitization between a Multi-Lateral Development Bank (MDB) and private sector investors, pioneering the use of securitization and credit risk transfer technology to a new and previously unexplored segment of the financial markets.
Structured as a synthetic securitization by Mizuho International, Room2Run transfers the mezzanine credit risk on a portfolio of approximately 50 loans from among the African Development Bank’s nonsovereign lending book, including power, transportation, financial sector, and manufacturing assets. The portfolio spans the African continent, with exposure to borrowers in North Africa, West Africa, Central Africa, East Africa, and Southern Africa. Mariner, the global alternative asset manager and a majority owned subsidiary of ORIX USA, is the lead investor in the transaction through its International Infrastructure Finance Company II fund (“IIFC II”). Africa50, the pan-African infrastructure investment platform, is investing alongside Mariner in the private sector tranche. Additional credit protection is being provided by the European Commission’s European Fund for Sustainable Development in the form of a senior mezzanine guarantee.
“Room2Run gives us fresh resources to invest in the projects Africans need most,” said Akinwumi Adesina, President of the African Development Bank Group. “Africa has the most promise, the greatest natural resources, and the world’s youngest population. But we also have the world’s most persistent infrastructure deficits. The African Development Bank has the strategy to address these infrastructure finance gaps—and Room2Run gives us the capacity to make it happen.”
Structured as an impact investment, Room2Run is designed to enable the African Development Bank to increase lending in support of its mission to spur sustainable economic development and social progress. In connection with Room2Run, AfDB has committed to redeploy the freed-up capital into renewable energy projects in Sub-Saharan Africa, including projects in low income and fragile countries.
“On the Impact scale, Room2Run is off the charts,” said Dr. Andrew Hohns, Lead Portfolio Manager and head of the Mariner Infrastructure Investment Management team. “Room2Run answers the call of the G20 for private sector participants to step in and facilitate development finance, providing a template for attracting significant private sector capital into urgently needed projects in developing economies.”
Raza Hasnani, Head of Infrastructure Investment at Africa50 commented, “Room2Run provides an innovative and commercially viable solution to the African Development Bank’s risk management and lending objectives, while paving the way for commercial investors to support and benefit from the growth of infrastructure on the continent. Africa50 is very pleased to participate in this landmark transaction, which is in line with our mandate to drive increased investment in infrastructure in Africa, and to create pathways for long-term institutional capital to flow into this space.”
Room2Run enjoys the support and participation of the European Commission with an investment from the European Fund for Sustainable Development, in the form of a senior mezzanine guarantee. “Only a few days after announcing our renewed Alliance with Africa for sustainable investments and jobs, I am very happy to announce that we are, together with the African Development Bank, launching Room2Run,” commented Neven Mimica, the European Commissioner for International Cooperation and Development. “This initiative is a perfect example of what we are doing to support investments in African low income and fragile countries through the External Investment Plan. Through Room2Run we provide
an additional protection to investments in the field of renewable energy. Through our Guarantee, investments under Room2Run will translate into extending supply to many people currently without electricity whilst creating much-needed new jobs.”
Room2Run also directly responds to calls by the G20 that MDBs use their existing resources to full capacity, as articulated in the 2015 G20 MDB Action Plan to Optimize Balance Sheets, as well as calls for greater MDB efforts to crowd-in private investment. The G20 has called on MDBs to share risk in their non-sovereign operations with private investors, including through structured finance, mezzanine financing, credit guarantee programs, and hedging structures.
The Government of Canada has been a global leader in advocating for MDBs to use their existing resources more efficiently and to mobilize private capital for global development. The goal of the G20 MDB Action Plan to Optimize Balance Sheets is to catalyze significant new development financing from the MDBs throughout the real economy in key development regions. “Attracting more private capital into global development efforts is critical to building economies that work for more and more people around the world,” said Bill Morneau, Canada’s Minister of Finance, “that’s why Canada and our G20 partners have been calling on multilateral development banks to use their existing resources as efficiently as possible, and to look for new ways to attract more private capital. We are pleased to see the African Development Bank come forward with a transaction that directly responds to both of these objectives. Room2Run is an innovative solution to a long-standing challenge.”
Juan Carlos Martorell, Co-Head of Structured Solutions at Mizuho International, adds, “Compared to other synthetic securitizations, a major achievement of Room2Run has been to ensure that ratings agencies, and in particular S&P, reflect the merits of the risk transfer into their rating assessments for multilateral development banks. AfDB’s leadership through this transaction has now set the stage for broader adoption of the instrument throughout the MDB community.”
Driven By African Stories
What’s in a name? For the team at Africa Communications Media Group, ACG, quite a lot, actually. An African Corporate Communications and Media Agency based in South Africa with presence in Ethiopia, Zimbabwe and Rwanda, ACG also services the rest of Africa.
Having worked on numerous campaigns on the continent over the years, ACG takes pride in their reach spanning across all 54 African countries.
The journey began just under four years ago when co-founders Mimi Kalinda and Addis Alemayehou, who are both very passionate about Africa and driving her narrative, teamed up to begin what is now the first African-owned and run Pan-African Communications Agency.
The two were driven by the very pertinent need for African stories to be told by Africans in a way that is understanding of nuance and sensitive to the ways of the region.
“Doing business in Africa, while very rewarding, does not come without its challenges. It requires one to fully grasp the cultures, values and needs of the local consumer. My team and I know Africa, and sometimes that means accepting the fact that while we may not be the most conversant with the ways of a certain region, there are other people who are.
Therefore, we maintain great working relationships with our affiliate PR firms across Africa. They serve as our eyes and ears on the ground to ensure that any work we put out is relevant, culturally-attuned and timely,” says Mimi Kalinda, ACG Group Chief Executive and co-founder, on the commemoration of the company’s third anniversary.
Public relations is fast changing from practitioners being the gatekeepers and liaisons between client and media; to playing an active role in the industry and, as such, the ACG team sees innovation as the backbone behind everything they do.
”Innovation is the backbone of everything we do at ACG. This is evidenced by the services we offer such as perception audits to better understand clients’ positioning in the market and stakeholder mapping to ensure that clients are speaking to the right audiences.
We also have a deep understanding of the media landscape in the countries our clients want to reach, giving them the on-air presence to help tangible results with visible returns on investment. We play an active role in tying communication outcomes to the overall business objectives of our clients” says Nonye Mpho Omotola, ACG Managing Director
A wonderfully diverse team, the ACG staff compliment comprises of people from Nigeria, DRC, Zambia, South Africa, Zimbabwe, Rwanda and Mozambique. The agency lives up to its name by being fully immersed in Africa and having a keen interest in the affairs and happenings of the continent.
When the team at FORBES WOMAN AFRICA approached ACG to participate as activation partners in the Leading Women Summit held at the Durban ICC, it was a natural alignment of goals for both parties as the management and entire team at ACG are passionate about the development of women, particularly in Africa.
Rising Africa Series
A celebration of thought leaders, innovators, thinkers, problem solvers, and drivers of growth and development
Rising Ethiopia 2019
Dr. Mohammed Nuri Osman, Board Chair & CEO, Medtech, Ethiopia
Medtech is an Ethiopian pharmaceutical company that was created due to the shortage of pharmaceutical supplies in the country. Dr Mohammed Nuri, Chairman and CEO of Medtech Ethiopia began his long successful career as a clinic based medical doctor, and through an unstoppable passion for a more substantial quality of life in Africa, rose to become the CEO of Medtech.
He states that it is persistence which has brought Medtech great success and
will increase the company’s stability even further. Medtech is known for supplying long term solutions to create an affordable and accessible pharmaceutical market.
With this in mind, Nuri has set goals in motion to become one of the top three African pharmaceutical companies by 2020. Through his endeavors, Medtech has advanced from trading limited drugs to manufacturing a variety of advanced medicines.
Nuri states that Medtech follows an invaluable level of respect and reputation for all included parties, striving toward the motto ‘we care to cure’.
To Nuri there is nothing more important than quality at the core of everything Medtech does, bringing affordable drugs to Ethiopians throughout the country and beyond.
Benyam Bisrat, Managing Director Jupiter International Hotel, Ethiopia
“We are certainly endowed with numerous attractions, extensive historical sites, and a great climate mix, however, our competitive edge remains elusive because we are yet to properly develop and brand our product globally.
Despite this, in recent years, Ethiopia’s tourism and hospitality industry has
emerged as one of the key sectors driving the country’s economy. The tourist sector continues to flourish, owing it to a surge in both business
and leisure travel, with international and regional visitor numbers climbing.
This said, there are plenty opportunities for investors, not only in mid-scale hotels, but also in timeshare business, conference centers, water parks, golf courses, and recreation centers throughout the country.”
Banking On The Financial Freedom Of African Women
4G Capital’s Chief of Staff, Genevieve Hennessy-Barrett discusses how inclusion, female mentorship and shared knowledge can cross borders and heal Africa’s displaced and most vulnerable women.
Access to financial services and the freedom to open a bank account remains unattainable for many women around the world, and even more so in frontier markets.
Some progress has been made; the number of bank accounts owned by women now equals men in South Africa. But, elsewhere on our continent, the situation is not so encouraging. According to a 2017 Global Findex report, the gender gap remains, on average, just over 9% across Sub-Saharan Africa, unchanged since 2011.
We are all too familiar with the numerous reasons why women all over the world find it difficult to gain financial independence. In ‘emerging’ markets there exists an even greater lack of opportunity in terms of education and work, and in some cases a cultural expectation that can prevent women from investing in their own future.
But no matter the challenge, women have always adapted and overcome through the creation of their own opportunities, and have worked together to protect and support their families and communities.
Female entrepreneurs make significant contributions to local and national economies. The SME Finance Forum’s research indicates that almost one third of the world’s small businesses are owned by women and account for 32% of the micro, small and medium enterprises (MSME) finance gap, estimated to be worth be $5.2 trillion.
Lack of collateral, official identification and correct paperwork, are the primary reasons for financial exclusion. Access to credit is often extremely difficult for MSMEs, and even more so for small businesses owned by women who are often given less favourable terms than their male peers.
As a fintech credit company working with MSMEs who are typically excluded from traditional financial institutions, 4G Capital has sought to bridge not only the finance gap, but also address the gap in financial literacy. By combining these offerings we can alleviate poverty sustainably and unlock vital human potential. We are on target to positively impact more than 1 million people by 2020.
We believe it is our blend of finance and education delivered via ‘touch-tech’ that is responsible for our appeal to many female business owners. Although we did not focus our marketing strategy on gender, 81% of our customers are female.
We are able to support their development through a bespoke programme of business training to help them use our micro-loans to achieve much higher take-home earnings.
According to recent research by one of our partners, Technoserve, this combination of training combined with working capital credit resulted in an 82% increase in revenue year-on-year.
But imagine the challenges faced by women who have had to flee their own countries, seeking refuge and safety for themselves and often for their children. Determined to build a sustainable future, their plight has gained the attention of RefuSHE, a charity set to provide support to refugee women in Kenya.
4G Capital has initiated a program to deliver business training and mentorship to RefuSHE’s Girls’ Empowerment Project (GEP), designed to give access to education and livelihood opportunities, while learning about human rights and cultivating leadership skills.
We kick started this partnership by welcoming the girls at one of our 4G Capital branches. They were given training on basic business principles such as book keeping and responsible management of business credit.
Based on what they learnt, RefuSHE’s girls have now taken part in our Business Plan Competition.
Successful participants have been taken forward to internships and matched with successful female entrepreneurs who are customers of 4G Capital.
They will be supported, mentored and trained. The hope is that with this initiative, these girls who were once so vulnerable will now gain the necessary skills to run a successful business, be part of a community and build a new life.
As we celebrate International Women’s Day, we’d like to honour all the women of Africa striving to build a future for themselves and their communities by saluting their determination, knowledge, wisdom, humour and humanity in the face of the challenges which affect us all.
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