An inclusive money market ecosystem is a pre-condition to stable capital markets and real economy development. Without it, financial intermediaries and financial markets struggle to perform their core role of converting household savings into loans to companies. This is especially the case in emerging and frontier markets where the financial sector is bank-centric and bond markets are under-developed. Frontclear’s investments are designed to address this, enhancing the domestic banking sector and making it cheaper and easier for African consumers to transact.
GBP 1.5m
The interbank market is important because, alongside deposits and the wholesale market (e.g. bonds), it can be a highly attractive source of capital for banks. If interbank markets function well, banks can get access to capital instantaneously and on more flexible terms than in the wholesale markets. This drives better access to finance for the private sector as well as affordability.
For example, Tradeclear Uganda, launched by Frontclear in June 2022 with US$ 30m in gross notional guarantees, provides a multi-bank plug-in interbank guarantee structure which increases efficiency in inter-bank lending.
Greater capacity and enabling frameworks are needed to build money markets. The Frontclear Academy has supported Money Market Diagnostic Frameworks (MMDF) in Ethiopia and Rwanda, offering a full review of the legal and regulatory framework and identifying initial reforms. The Academy has executed knowledge development through classroom-based delivery.
“FSD Africa Investment’s support for Frontclear has been instrumental in encouraging the other investors to commit to Frontclear in the first close. We see huge potential for Frontclear in Africa and FSD Africa’s footprint and networks across the continent make them the ideal partner for us.” Philip Buyskes CEO of Frontclear
25 Countries in which Frontclear extended activities during 2021, thereby strengthening emerging market economies responding to Covid-19.
$3,486 M Cumulative 6-year mobilised funding on the back of issued guarantees.
47% Volume of guarantees issued to African banks since inception (balance to other emerging market countries).
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