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With “Room2Run,” AfDB Launches Securitisation Market For Multilateral Development Bank Sector

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➢ 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.”

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Sanlam & NASASA Launch NASASA Financial Services For Stokvels

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Sanlam and the National Stokvel Association of South Africa (NASASA) have launched NASASA Financial Services (Pty) Ltd; a brokerage catering to the financial services needs of the South African stokvel market. NASASA is a self-regulatory organisation with a database of 125 000 stokvel groups, reaching about 2.5 million individuals. The new entity will foster greater financial inclusion for all members.


Jacqui Rickson, Chief Executive: Group Benefits at Sanlam Developing Markets Limited and Board member of NASASA Financial Services says, “For South African stokvels this is an opportunity to formalise their existence without having to forego their traditions. The peace-of-mind that each member of a stokvel will be protected in their time of need is invaluable.”

“Stokvels are powerful financial services providers in their own right,” says NASASA Financial Services CEO, Mizi Mtshali “and have the potential to help grow South Africa’s economy once they enter the more formalised sector through appropriate product offerings”. Currently, there are over 800 000 stokvels in the country, aggregating an estimated R50-billion pa. They are, however, quite exposed, especially to liquidity issues that may render them unable to discharge benefits to their members, as well as scams that promise to resolve such issues. This results from a lack of accessible, relevant products that meet the needs of a more informal savings sector. 

As a result, some burial stokvels may not pay enough to cover funeral expenses in their entirety. By offering broad-based financial services to members, NASASA Financial Services will empower stokvels through greater socio-economic inclusion and security.

Jacqui Rickson says, “This venture supports our client-centric focus by allowing financial inclusion to be extended to South Africans who are on the edge of the formalised insurance structures.  Through this, we can help families recover financially following difficult, unexpected events.”

NASASA Financial Services is currently licensed as a Juristic Representative of Sanlam Developing Markets, with a long-term plan to become a Financial Services Provider (FSP).  NASASA Financial Services will distribute tailor-made products nationally via its distribution force. Sanlam as underwriter, through NASASA Financial Services, will initially offer group-based funeral benefits, tailored to each individual type of stokvel.

Products are competitively priced and start at R15 per person. Once the stokvel has selected its option, the stokvel will pay one premium for the whole group. For burial stokvels, Sanlam has designed a full product, covering up to nine family members and all products have been created in partnership with NASASA.

Currently, the product offering includes:

  • A Principal Member Only Funeral Benefit
  • An Immediate Family Funeral Benefit
  • A Principal Member Plus Up To 9 Dependents Funeral Benefit
  • Grocery and Airtime Cash Benefits

NASASA is about educating their members about wealth and more appropriately, financial health, which includes saving on the expense of premiums through aggregation and paying group rates rather than more expensive individualised rates. We’ve designed products as an extension of this; as a tangible, affordable, non-intrusive offering that seamlessly blends the required formal structures with community-based traditional structures.

Mizi Mtshali, NASASA CEO, adds, “The research conducted during the build-up of our product launch saw the solution being entirely built by participating stovels. As a result, we deliver unmatched value by buiding a solution briefed in by our constituency. Amongst the majority of South Africans, funeral insurance fulfils an unmistakable need. While many are excluded from the formal financial system, those who do interface with the sector largely feel inadequately serviced. Burial Societies are formed as providers of such services and have developed systems around the real needs of their members. There are roughly 200 000 active Burial Societies in South Africa, with the majority being self-underwritten.

Because such groups rely on their collective savings to discharge their benefit to members, they often face liquidity problems that may lead to their disbandment. This brings about the need for an underwriter who will take on the risk on behalf of the group, as well as offer a set of products and services built around the group’s needs. NASASA is tasked by its members to solve this problem, and we have identified Sanlam as the most suitable partner in this regard.”

Mtshali says this venture will also facilitate job creation, which is key to socioeconomic inclusion, “For South Africans, this opportunity provides meaningful employment particularly in the township economy. Not only is this a step towards financial inclusion, but a giant leap towards societal transformation”

Down the line, NASASA Financial Services is aiming to extend its offering to include life cover as well as short-term products like household insurance and is investigating the potential of integrating other banking products.

Content provided by Sanlam

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RISING WOMAN: A Celebration Of Women

Advertorial BY STRATEGY BUSINESS GROUP

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A celebration of women, thought leaders, innovators, thinkers, problem solvers, and drivers of growth and development who are contributing to the Rising Africa Story.


ABENA BRIGIDI

CEO Nimed Capital, Ghana

Nimed Capital’s Managing Director and CEO demonstrated a flair for finance early in her professional career. She quickly rose through the ranks at Zenith Bank from a customer service advisor to a relationship manager and head of customer service. Her expertise in corporate finance, funds and investment management, as well as investment research, has effectively paired with her entrepreneurial drive to create one of Ghana’s leading investment banks. Today, the investment analyst, author, and speaker is a passionate advocate for empowering women through recognition and promotion of the efforts and successes of women in various industries.

Brigidi herself was recognized as one of the Woman Rising’s 100 Most Outstanding Women Entrepreneurs in Ghana in 2017 and adjudged the Emerging Woman Entrepreneur of the Year.


YOADAN TILAHUN

CEO Flawless Events, Ethiopia

Running seamless, perfect – flawless – events was a vision of Ethiopian-born Yoadan Tilahun.

Initially launched in Washington, DC and transplanted to Addis Ababa, Ethiopia, Flawless Events has worked tirelessly to earn its well-deserved reputation for innovation and creativity. As a result, it has achieved substantial growth in its 15 years of operation.

Tilahun is known for instituting exceptionally high work standards and always doing business with integrity and honesty.

Tilahun is also an enthusiastic advocate for professionalizing the MICE industry in East Africa and is an active member of the International Congress & Convention Association (ICCA). In 2018, she was named Seasoned Entrepreneur of the Year by Global Entrepreneurship Week (GEW).


MICHELLE TAKON

Founder Narnia Events, Nigeria

What advice would you give young women entrepreneurs?

Firstly, young women entrepreneurs need to understand the business they’d like to go into; the business environment, target market, and then ensure that their business ideas will solve a problem before they embark on their entrepreneurial journey.

I would also tell them to make sure that whatever they choose to do, should be borne out of passion and not based on what other people are doing or how much money others are making.


DR. IBILOLA AMAO

STEM Specialist & CEO Lonadek, Nigeria

Dr. Amao established Lonadek with a greater purpose than just providing technical consultancy to ensure that local and indigenous companies utilized established systems, processes and procedures to deliver quality goods and services. She envisioned a company that could continually develop the capacity of young Africans in the science, technology, engineering and mathematics (STEM) fields.

Dr. Amao also mentors young professionals and engages with Junior Engineers, Technicians, and Scientists (JETS) clubs. Over the last 25 years, Lonadek has successfully trained over 5,000 certified engineers, designers, and cost consultants in the utilization of engineering software and information technology.


QUEEN OHAMARA

Founder, Qmara Vie Planners, Nigeria

Qmara Vie Planners is a boutique events management company based in Abuja, Nigeria and founded by Queen Ohamara. The company emphasizes adding luxury and sophistication to their client’s event while maintaining a sense of modernity.

Qmara Vie Planner is comprised of a young, vibrant team that is constantly innovating and pushing themselves to creatively turning dreams into reality. The company prides itself on curating unique once in a lifetime experiences. That is why her company bears all the stress of planning an event so clients can enjoy their special day.


ADAMA AMANDA NDIAYE

Adama Paris, Senegal

Adama Amanda Ndiay is a Senegalese fashion designer born in Kinshasa, Zaire. She epitomizes the multicultural fashion designer of the new millennium.

Adama is also the founder and producer of many fashion events such as Dakar Fashion Week, the Afrika Fashion Awards, also known as the Trophies of African Fashion (TMA), and the Black Fashion Week in Prague, Paris, Bahia, and Montreal since 2010. Adama and her team also launched the first Fashion Africa Channel in 2014. She is a passionate advocate for the promotion of women entrepreneurship throughout Africa.


TANG SAU MUOI

CEO of ILCI Business School & IESIG Management School, France

As I ran from war and emigrated to France, I never had the chance to finish my education. I was certain that the only way to succeed was to be well-educated. The benefit of a good education was exemplified by my children; all five attained Master’s degrees and have good jobs.

I wanted to give the same chance to children from abroad, to benefit from a good education. I established the IESIG School and ILCI Business School with the main focus of offering programs that align with future employment needs.

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FOCUS ON KENYA: A Chain Reaction Of Investment And Economic Growth

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“Kenya has the largest, most diverse economy in East and Central Africa, serving as the regional hub for logistics and air transportation, financial services, ICT innovations, and international media coverage. We have a clear vision for economic development. Our focus is on implementing more business-friendly policies and reforms to reduce investment costs and enhance the sector’s global competitiveness.” – President Kenyatta

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Kenya is known as one of the most innovative countries in Africa with the strongest and most reliable internet connectivity in the continent thanks to the undersea cables that connect Kenyans to the world wide web. The country has shown exceptional economic progress in recent years, even jumping ahead an incredible 56 positions on the ease of doing business index in 2018, placing them at number 61. The Kenyan people are strong, dedicated, and eager to use their talents and assets to create a new future as a middle-income country. This goal has been spearheaded by the plans established by President Uhuru Kenyatta’s administration. The Vision 2030 Plan and Big Four Agenda are the keys to propelling Kenya forward for years to come. The Big Four Agenda, which is focused on four major pillars of economic development: Food Security, Affordable Housing, Manufacturing and Universal Healthcare, is the secret weapon to developing key sectors and causing a ripple effect through the entire economy. Through the implementation of this plan, Kenya will soon be a world leader in numerous sectors, as evident from their current success in utilising their ICT advantage in developing existing industries to create a better life for all.

            The administration is dedicated to capitalising on Kenya’s diverse economy in order to develop the economy. President Kenyatta says, “Kenya has the largest, most diverse economy in East and Central Africa, serving as the regional hub for logistics and air transportation, financial services, ICT innovations, and international media coverage. We have a clear vision for economic development. Our focus is on implementing more business-friendly policies and reforms to reduce investment costs and enhance the sector’s global competitiveness.” Paving the way for foreign direct investment is another key factor to facilitate the country’s growth. FDI in the past has been positive, especially with the amount of inclusivity and the influx of Internet start-ups that Kenya has seen in recent years.

            SEACOM has established an economically viable and reliable fibre broadband access, which has given life to many sectors so that they may grow, expand and modernise. Access to stable Internet has been a crucial addition for Kenya and many East African businesses. Tonny Tugee, Managing Director of SEACOM, says, “Our ambition was always to better equip African companies with high-performance Internet so that they can harness its potential for growth, with positive effects for local economies.”

The greatest asset of strong and reliable Internet access is the connectivity and inclusivity it brings to users across the country. This tool has already been embraced by companies such as Absa Group member Barclays Bank of Kenya. Jeremy Awori, Managing Director and CEO of Barclay’s Bank, states, “Technology allows you to meet customer needs and improve customer experience more efficiently and cost-effectively. It enhances your control and provides you with data that enables you to take more efficient decisions.” These decisions have been made to ensure financial inclusion for all Kenyan citizens as the country goes fiercely in the direction of its inevitable bright future.

            The growth of the economy opens the door for other sectors to enjoy Kenya’s achievements as well, just as public-private partnerships in the country are helping to develop sectors such as energy, education, healthcare, transport and infrastructure. Judith Nyakawa, Director of Public-Private Partnerships Unit, says, “We are enablers in the President’s Big Four Agenda. We contribute to improvements in the road, health, and infrastructure sectors. As a unit, we are continuously looking for alternative ways to raise funds so that government development budget can be used to meet other needs.” These initiatives are creating a closer and more inclusive sense of community among Kenyas, connecting them and providing better access to roads, transportation, healthcare and insurance, among other needs.

            The fulfilment of these needs will lead to a successful and driven population, but also to more opportunities in other sectors such as agri-business; manufacturing; financial services; ICT; tourism; and transport and logistics. To foster the rapid and favourable growth of these sectors, Afreximbank has invested in Kenya and developed plans to support its companies. Afreximbank is the most prominent pan-African multinational financial institution committed to financing and advancing intra- and extra-African trade. The heart of their plan lies in the Fund for Export Development in Africa (FEDA) which will provide seed capital to African companies to help them expand and grow in the thriving economy. In a briefing, Afreximbank said, “The bank’s location in Nairobi will create more job opportunities for the youth and generate business opportunities for entrepreneurs to venture into. Afreximbank has already become a significant player in Kenya’s economy, having financed deals close to 300 million U.S. dollars.”

            The progress that Kenya is continuing to enjoy is a chain reaction of dedication from its people, administration and sectors who see a bright future in store for the country. The Vision 2030 has brought successful results since its implementation in 2008 and the momentum is not stopping anytime soon. The country’s sectors are energised and ready to expand through the improvement of public infrastructure, even stronger ICT, and financial inclusion for all. The Big Four Agenda will use the country’s strengths and tools to ensure Food Security, create more Affordable Housing, enhance Manufacturing and provide Universal Healthcare for all, skyrocketing Kenya into a middle-income country.

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