Category: News

Ethiopia stock exchange launch target slips from mid-year on delayed capital raise

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Ethiopian Securities Exchange CEO Tilahun E. Kassahun details short and long-term goals for the country’s planned stock exchange.

The planned timing for the launch of Ethiopia’s first stock exchange since the 1970s has slipped from the middle of this year to the third or fourth quarter, Tilahun E. Kassahun, CEO of the Ethiopian Securities Exchange, tells The Africa Report.

The exchange is seeking to raise S16m, a quarter of which is being provided by the government. About half of the remainder has been secured from the private sector, and the aim now is to close the capital raise by the end of March. The capital raising was opened in November 2023, and the aim had been to close in early January. The Christmas break contributed to the delay in fundraising, Tilahun says. “Foreign investors were out on holiday.”

Privately held Ethiopian bank Zemen has said it will buy a 5% stake in the exchange. FSD Africa, which is funded by the United Kingdom government, will also have a stake. “We want most of Ethiopia’s commercial banks to invest,” says Tilahun, adding that foreign investors including other stock exchanges are being targeted.

“There’s [a] very strong private-sector appetite.” The capital raising is also open to individual investors, and has a minimum ticket size of $180,000.

The exchange is working on a pipeline of about six unnamed state-owned enterprises, which will be listed. The pace of initial public offerings (IPOs) may be gradual. “You can’t have two IPOs in six months in Ethiopia,” Tilahun says. More investor education is needed before there can be a stream of IPOs. “Our retail investors are not educated yet.”

Repatriating funds

Preparations for the exchange have been ongoing for the last 18 months, and have included visits to stock exchanges in Nigeria, Kenya, Ghana, Morocco, Euronext, Malaysia and all three exchanges in China. Cooperation with the Nigeria Exchange Group (NGX) has been ongoing and the NGX has helped prepare the rulebook which will be used in Ethiopia.

As a latecomer to stock exchanges, Ethiopia can learn from previous successes and failures, Tilahun says. The Nigerian exchange “is one of the strongest in terms of management in

The first year is likely to see a focus on listings by introduction of private companies, rather than IPOs, Tilahun says. About eight private companies may be listed in this way in the first year, and some private banks are now taking steps on hiring advisers with a view to listing, he adds.

The long-term goal of the exchange is to have about 90 companies listed within 10 years, with a balance between state-owned and private businesses. Tilahun is confident that foreign investors can be attracted and that they will be able to move their money out of the country. There won’t be any restrictions on investors repatriating principal and dividends, subject to the availability of foreign exchange, Tilahun says.

The government and the central bank are planning new reforms to improve foreign currency availability, Tilahun says. Problems getting money out of the country “are not the result of prohibition”, he says. “When the environment improves, investors get to repatriate their funds.”

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Finance Minister launches SEC’s 5-year strategic plan for market regulation

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The Minister for Finance, Mr Ken Ofori-Atta, has unveiled a comprehensive five-year strategic plan for the Securities and Exchange Commission (), signalling a dynamic approach to market regulation and positioning the Commission as a top-tier securities market regulator in Africa.

Commencing in 2023, the strategic plan outlines five overarching goals and encompasses 60 initiatives designed to fortify the SEC’s role in the financial landscape.

The goals include deepening and expanding markets, enhancing market awareness and education, building the capacity and capability of the SEC, strengthening market infrastructure, and developing a robust legal and regulatory framework.

The official launch took place during the SEC’s Ghana Capital Market Conference, a significant event marking the Commission’s 25th anniversary. The conference focused on the theme “Deepening and Diversifying Ghana’s Capital Market Towards a more Resilient Financial System.”

In his address, Minister Ofori-Atta emphasized the pivotal role of the capital market, contributing approximately 14% to the Gross Domestic Product (GDP) and impacting around 10 million people in the country.

He underscored the government’s commitment to implementing targeted policy initiatives aimed at diversifying the investor base, reducing external dependency, and fostering broader market participation.

The Finance Minister highlighted initiatives, such as the development of a framework for domestic credit rating agencies, aiming to provide impartial assessments of companies and securities. These measures align with the broader objective of ensuring a more positive impact on the economy.

Reverend Ogbarmey Tetteh, the Director-General of SEC, acknowledged the evolving financial landscape and the unique challenges it poses to capital market stakeholders.

He stressed the need for financial markets to evolve, innovate, and develop versatile investment products to navigate the changing environment successfully.

Over the past five years, the SEC has introduced 22 guidelines, enhancing the resilience and robustness of the capital market. Tetteh outlined upcoming guidelines on crowdfunding, green bonds, financial resources, market making, margin trading, securities lending, borrowing, and asset-backed securities, all contributing to market resilience.

The Commission has already initiated the implementation of a Risk-Based Supervision framework, marking a strategic shift from the compliance-based supervision mode of operators.

Established in September 1998, the SEC underwent a name change from the Securities Regulatory Commission to the Securities and Exchange Commission in 2000 (Act 590).

The Securities Industry Act, 2016 (Act 929), further expanded the SEC’s powers, replacing the previous Securities Industry Law, 1993 (PNDCL 333).

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FSDAi Nyala Facility Extends $1mn to WIC Capital to Boost Gender Lens Investing

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FSDAi Nyala Facility BV has extended a USD 1 million loan to WIC Capital, a local capital provider investing in Senegal and Côte D’Ivoire that focuses on financing women-owned and managed Small and Growing Businesses (SGBs).

WIC Capital is led by Ms. Evelyne Dioh Simpa, a Fund Manager with a wealth of finance experience and supported by a robust team and board.

WIC Capital has a strong alignment with FSDAi Nyala Facility due to its unwavering commitment to promoting access to finance for female owned SGBs needed to expand their businesses.

For example, in Senegal, a mere 3.5% of women entrepreneurs access credit from financial institutions.

WIC Capital focuses exclusively on investing in businesses owned and/ or led by women, demonstrating that the financing gap for female-owned enterprises in West Africa can be addressed.

Furthermore, WIC Capital stands out for its innovative product structures tailored to local SGBs.

Notably, its origins in an exclusive women’s angel network, adds to its uniqueness within the FSDAi Nyala Facility portfolio, making it an invaluable learning opportunity for all investors in the small and growing businesses investing ecosystem.

Women entrepreneurs in Africa not only encounter challenges when it comes to access to finance but also grapple with the scarcity of platforms offering the essential knowledge and assistance required for the expansion of their businesses.

WIC Capital works with early-stage, women-owned/ led enterprises to provide first-time external capital as well as business training and mentorship.

Also, WIC Capital leverages a large network of successful women entrepreneurs and civic leaders to co-fund and support these emerging businesses.

The business training and mentorship is provided by the WIC Académie through a technical assistance program.

Alongside the women’s angel network, other funders of WIC Capital include foundations, multilateral donor agencies, and development financial institutions.

“Through its investment in WIC, FSDAi is backing an African women-led capital allocator with deep local angel networks, a creative funding structure and financing solution for small and growing businesses in West Africa. With our investment, WIC can position itself to attract bigger pools of capital to expand its strategy in Senegal and Cote d’Ivoire,” noted Anne-Marie Chidzero, Chief Investment Officer at FSD Africa Investments.

“I am proud that the UK is investing US$1 million in WIC Capital through Financial Sector Deepening Africa Investments. I have seen first-hand WIC Capital’s inspiring work and know that they are a deeply impact-focused organisation. They support young female entrepreneurs in a market where access to funding is a huge barrier for their growth. At the heart of building sustainable and inclusive businesses lies the need to advance gender equality through women’s economic empowerment. I look forward to continuing our collaboration to create jobs and empower Senegal’s talented women,” noted Juliette John, UK Ambassador to Senegal. 

“FSDAi is playing a critical role in the development of an emerging asset class of small business growth funds Africa, particularly women-led funds. The funding of WIC Capital represents an important confirmation of WIC’s innovative approach to financing early-stage women businesses in West Africa.  By melding their business development services, women investment club mentoring with investment capital, WIC provides a comprehensive approach to the challenges that to date have constrained Africa’s women-led businesses to growth and thrive.  We believe this commitment will be the foundation upon which other DFIs and local institutional capital holders can also provide funding to WIC Capital and other innovative local capital managers seeking to invest in Africa’s women businesses,” noted Drew von Glahn, Executive Director of the Collaborative for Frontier Finance.

“WIC Capital’s mission aligns with FSDAi’s desire to address the disfunctions of African capital markets, which include the structural barriers that small businesses face in accessing financing, specifically when they are women led. This partnership will be catalytic in the development of a local capital provider that has the potential to profoundly change the local ecosystem, by providing risk capital and business support to women led small and growing businesses (SGBs), with the ultimate goal of increasing women’s agency and economic benefit. With this investment, we are closing our first fund, and we believe this partnership will help accelerate the mobilization of our second fund to serve SMEs generating a strong impact in Senegal and Côte d’Ivoire,” concluded Evelyne Dioh, Managing Director of WIC Capital.

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TDB Group and FSD Africa Collaborate on Project Preparation Facility for Climate Action Projects in Africa

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The Eastern and Southern African Trade and Development Bank Group (TDB Group) and Financial Sector Deepening Africa (FSD Africa), are pleased to announce a new partnership on the sidelines of COP28 to accelerate the implementation of climate action projects across the continent.

In 2022, TDB launched Class C Green + shares, an innovative equity instrument that provides a pathway for institutional investors to contribute to climate action and SDGs with risk capital, leveraging each dollar invested four times into qualifying projects and transactions.

However, the challenge of lack of bankable green projects persists. To address the latter, TDB Group has set-up a project preparation facility for climate action projects which FSD Africa will strengthen through technical assistance support under this agreement. More specifically, FSD Africa will support the Group through expert services to expand its lending pipeline in line with its Climate Finance Strategy and Green Taxonomy, enable aligned projects to reach financial closure, as well as to continue mobilizing new climate-themed capital to deploy.

Expanding the pipeline of green projects is indeed a priority for TDB Group to meet its commitments in supporting its member states to address climate mitigation and adaptation needs, as well as to create additional opportunities for further investments in Class C Green + shares and deploy available climate-themed funding.

Mary Kamari, TDB Group Corporate Affairs and Investor Relations Executive said, “TDB Group has been positioning itself to accelerate the financing of climate action through its Trade and Development Fund (TDF), where a project preparation facility was set-up. We are pleased to enter into this agreement with a likeminded partner like FSD Africa which will extend valuable capacity support towards our vision to advance climate action in the region.”

Mark Napier, the CEO of FSD Africa said, “Multilateral Development Banks are an important part of the financing ecosystem in Africa. Our partnership with TDB Group will increase project pipeline opportunities, and avail innovative financing instruments and structures to attract institutional capital for Africa’s sustainable development priorities. We are pleased that two African institutions are collaborating on solutions for Africa’s climate financing gap.”

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TDB Group and FSD Africa Collaborate on Project Preparation Facility for Climate Action Projects in Africa

Posted on by TIMOTHYRADIER

The Eastern and Southern African Trade and Development Bank Group (TDB Group) and Financial Sector Deepening Africa (FSD Africa), are pleased to announce a new partnership on the sidelines of COP28 to accelerate the implementation of climate action projects across the continent.

In 2022, TDB launched Class C Green + shares, an innovative equity instrument that provides a pathway for institutional investors to contribute to climate action and SDGs with risk capital, leveraging each dollar invested four times into qualifying projects and transactions.

However, the challenge of lack of bankable green projects persists. To address the latter, TDB Group has set-up a project preparation facility for climate action projects which FSD Africa will strengthen through technical assistance support under this agreement. More specifically, FSD Africa will support the Group through expert services to expand its lending pipeline in line with its Climate Finance Strategy and Green Taxonomy, enable aligned projects to reach financial closure, as well as to continue mobilizing new climate-themed capital to deploy.

Expanding the pipeline of green projects is indeed a priority for TDB Group to meet its commitments in supporting its member states to address climate mitigation and adaptation needs, as well as to create additional opportunities for further investments in Class C Green + shares and deploy available climate-themed funding.

Mary Kamari, TDB Group Corporate Affairs and Investor Relations Executive said, “TDB Group has been positioning itself to accelerate the financing of climate action through its Trade and Development Fund (TDF), where a project preparation facility was set-up. We are pleased to enter into this agreement with a likeminded partner like FSD Africa which will extend valuable capacity support towards our vision to advance climate action in the region.”

Mark Napier, the CEO of FSD Africa said, “Multilateral Development Banks are an important part of the financing ecosystem in Africa. Our partnership with TDB Group will increase project pipeline opportunities, and avail innovative financing instruments and structures to attract institutional capital for Africa’s sustainable development priorities. We are pleased that two African institutions are collaborating on solutions for Africa’s climate financing gap.”

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Report reveals 62% of African GDP reliant on nature services

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A recent report by The African Natural Capital Alliance (ANCA) during their co-session with FSD Africa at COP28 reveals critical insights into the exposure of African countries to nature-related risks.

  • 62% of African GDP is dependent on nature services, with 70% of sub-Saharan African communities relying on forests and woodlands for their livelihoods.
  • The reliance on nature services poses significant risks for many African countries due to climate change, deforestation, and degradation of ecosystems.
  • The report urges the African financial sector to foster sustainable financial practices and take proactive measures to address these risks.

According to the report “Nature Stress Testing: Exposure to Nature-Related Risks Across Africa”, 62% of African GDP is dependent on nature services, and 70% of communities in Sub-Saharan Africa rely on forests and woodlands for their livelihoods.

The report stated that the reliance on nature services poses significant risks for many African countries due to climate change, deforestation, and degradation of ecosystems. In addition, the report’s findings hold significant implications for financial regulators and private financial institutions across the continent, as their financial systems and portfolios are likely exposed to similar levels of risk.

With the African financial sector gaining momentum, the report emphasised a growing need for proactive measures to address nature-related risks and opportunities. The stress test explores different nature transition pathways and their potential impact on the profits of businesses across these economies. It identifies how these pathways could create knock-on risks for the financial sector, emphasising the need for proactive measures.

The report specifically assesses the exposure of the African banking sector to nature-related risks, offering consolidated findings from a nature stress testing exercise conducted in five African countries [Ghana, Mauritius, Morocco, Rwanda and Zambia]. These findings hold significant implications for financial regulators and private financial institutions across the continent, as their financial systems and portfolios are likely exposed to similar levels of risk.

According to the report, If current policies and business practices persist, some countries may face substantial nature-related physical risks, especially in sectors like agriculture. The World Economic Forum also estimates that $44 trillion of global economic value creation intrinsically relies upon while also degrading natural capital, with $195 billion being the estimated yearly loss of natural capital in Africa.

To address these risks, the report urges the African financial sector to take steps to foster sustainable financial practices. So far, 16 private financial institutions across seven countries are currently piloting or in the process of piloting the Taskforce for Nature-related Financial Disclosures (TNFD) framework.

The ANCA report provides valuable insights into the challenges and opportunities faced by African economies as they grapple with the impact of nature-related risks. By working together, financial regulators, private financial institutions, and other stakeholders can take proactive measures to address these risks and foster nature-positive African economies.

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Mauritius Commercial Bank (MCB) Capital Markets advises EnVolt on its inaugural Green Project Bond issue

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MCB Capital Markets, the Investment Banking, Asset Management and Principal Investments arm of MCB Group (www.MCBGroup.com), has advised EnVolt on its inaugural issue of MUR 510m (USD 11 million) Green Project Bonds under its MUR 2 billion (USD 45 million) Multicurrency Green Bond programme.

EnVolt, the renewable energy development arm of ENL Group (“ENL”), a diversified investment holding company in Mauritius, is engaged in the construction of 13 solar roof and ground mounted facilities across the island with an aggregate capacity of 14 MWh and an estimated project cost of MUR 680 million (USD 15 million).

The issuance represents a major milestone for the Mauritian debt capital markets. It is the first time that a renewable energy project is financed by a bond issue. It is also the first Green Project Bond issued under the Green Bond Principles 2021 of the International Capital Market Association (ICMA). In line with the FSC Guidelines and international best practices, ENL’s Green Bond Framework was independently reviewed by Morningstar Sustainalytics. FSD Africa, the UK’s financial sector development organisation, provided technical support on the bond programme, as part of its wider Green Bonds programme.

The bond, which was rated by CARE Ratings Africa, raised fixed rate financing in Mauritian Rupees with a tenor of up to 17 years and attracted a broad investor base comprising banks, asset managers and pension funds. MCB Ltd was the largest investor in the bonds.

The project aligns seamlessly with and contributes to the Mauritian government’s ambition to achieve 60% renewable energy production by 2030. As the foremost banking group in Mauritius, MCB fully endorses this initiative, which endeavours to accelerate the country’s transition towards renewable energy. MCB is committed to supporting the transition to a circular and greener economy in line with Mauritius’ Nationally Determined Contribution (NDC), and to fostering local production.

Gilbert Espitalier-Noel, CEO ENL Group, said: “Our group positions itself as a major player in the renewable energy sector. Our initiatives align with the national strategy to produce up to 60% of Mauritius’ energy needs from renewable sources by 2030. Our green bond program will finance the expansion of our production capacity and enable us to contribute significantly to improve the country’s energy mix and energy security.”

Rony Lam, CEO MCB Capital Markets, said: “We are proud to have advised EnVolt on this landmark transaction, which sets international standards for the issuance of Green Project Bonds in Mauritius. This transaction reflects the rapid development of the local currency bond market over the past eight years. The deployment of local resources to finance the domestic economy and infrastructure projects is vital to the development of the African continent.”

Mark Napier, CEO FSD Africa, said: “FSD Africa is pleased to have supported everyone involved in this historic green bond issuance by EnVolt, which we hope sets a precedent for further such transactions not only in Mauritius but across the wider SADC region, building the strength of domestic African capital markets and, crucially, delivering financing routes for vital energy transition projects, which can accelerate Africa’s energy and climate security.”

Charlotte Pierre, UK High Commissioner to Mauritius, said: “International bond markets remain among the most effective and good value options for financing energy transition and major infrastructure investment programmes. We hope that many more African countries will follow the Mauritius example.”

Distributed by APO Group on behalf of The Mauritius Commercial Bank Ltd (MCB) Group.

About EnVolt:
EnVolt Limited is a subsidiary of ENL Group (“ENL”), a diversified investment holding company based in Mauritius. With over 100 subsidiaries and total assets totalling in excess of USD 2bn, the company has been a major player in the Mauritian economy since 1821. EnVolt Limited has a broad objective of developing and implementing ENL’s renewable energy initiatives. The Company, which has been operating since 2018, owns and operates 10 solar farms with a capacity of 4.1 MW under the Medium-Scale Distributed Generation 1 scheme of The Central Electricity Board of Mauritius.

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African Development Bank approves $10 million investment in Dhamana Guarantee Company Limited, East Africa

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ABIDJAN, Côte d’ivoire, 21 November 2023 -/African Media Agency(AMA)/-The Board of Directors of the African Development Bank Group has approved a $10 million equity investment in Dhamana Guarantee Company Limited to support the use of capital markets as an alternative source of long-term funding for infrastructure and the real sector in East Africa.

Dhamana will be domiciled in Kenya as a limited liability company with a regional mandate to provide credit guarantees on debt capital market instruments. The Bank Group’s financing will enable Dhamana to issue guarantees for debt instruments. These local currency bonds are intended to boost the credit rating of the instruments to crowd in investment from pension funds, insurance companies and sovereign wealth funds to finance infrastructure and the real sector in East Africa.

The Bank, together with InfraCo Africa (part of the Private Infrastructure Development Group), Financial Sector Deepening Africa, and local institutional investors and other partners, will be supporting the operationalization of Dhamana.

Dhamana  will support access to financing for key sectors including transport, water, renewable energy, and waste management, among others. Dhamana is committed to catalyze financing to assist the scale-up of green and sustainable financing into East Africa. Its credit guarantee activities should provide investors with the necessary comfort to support the allocation and intermediation of pools of private institutional investors’ funding into infrastructure.”

Nnenna Nwabufo, African Development Bank Director General for the East Africa region, said, “The African Development Bank is pleased to continue to support the operationalization of innovative solutions such as those provided by Dhamana to unlock and channel long-term local currency funding towards the real sector.

PIDG’s CEO, Philippe Valahu, said, “African Development Bank joining PIDG marks a significant milestone for the Dhamana Guarantee Company. This additional equity will allow Dhamana to further mobilise significant untapped pools of domestic institutional capital into East Africa’s real economy, such as new green infrastructure, and providers of credit to individuals and businesses. We are committed to catalysing the development of domestic capital markets in Africa, as we seek to unlock investment for bankable, climate-resilient projects to be delivered with the scale and urgency required to meet the challenges of climate change and welcome the support of African Development Bank in Africa to help achieve this goal.

Ahmed Attout, African Development Bank Acting Director for Financial Sector Development, said: “The Bank’s support for Dhamana shows the catalytic role and potential of guarantee companies in leveraging opportunities for real sector and infrastructure financing in local currency and local corporate debt capital markets deepening in the East Africa region. The investment in Dhamana follows the Bank’s priority to mobilize institutional financing for infrastructure investment in East Africa.”

The Bank’s partnership with Dhamana advances several strategic objectives including to help stimulate local currency debt market financing across diverse infrastructure sectors and enhancing economic diversification and competitiveness in the region. The intervention also aligns with the Bank’s priorities to promote regional integration including through improved infrastructure development, promotion of inclusive and sustainable industrialization, and fostering innovation.

The investment aligns with African Development Bank strategic efforts, in collaboration with development partners, including PIDG, to operationalize credit enhancement companies in selected Regional Member Countries.

Distributed by African Media Agency (AMA) on behalf of African Development Bank.

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