Archive for the 'Financial inclusion' Category
January 4th, 2017 by Tom Minney
Stock exchanges across Africa should be working towards regional integration, says Prime Minister of Rwanda Anastase Murekezi. He was guest speaker at the 20th African Securities Exchanges Association (ASEA) annual conference. The conference’s action agenda would see the regulated stock exchanges driving industrialization and economic transformation.
Panel discussions highlighted the opportunities for African exchanges, provided they adapt to meet the needs and demands of local investors and issuers. They must also find the balance between local context and environment, and alignment with global best practices.
Government support and engagement are keys to the success of exchanges and to providing the capital to grow economies. Governments should continue to create enabling environments that encourage investment, economic growth and development. Regulation should follow market needs and focus on supporting development as favourable regulatory frameworks are essential for sustainable economic growth.
Other challenges the exchanges should continue to work on include: financial inclusion or letting more people access the capital markets for investing and for raising long-term risk capital for their enterprises; financial literacy and investor education; product innovation including using technology and creating innovative platforms for new products; and finding ways to finance the missing middle of small and medium enterprises (SMEs) in Africa.
Exchanges should encourage greater emphasis on environmental, social and governance components to enhance corporate transparency and performance.
Celestin Rwabukumba, CEO of the Rwanda Stock Exchange, said innovation and technology would enable Africa’s capital markets to harness resources to fuel structural transformation: “Currently, less than 5% of the African populace participate in the capital markets; this means that there is a huge opportunity to widen the base of African capital markets by incorporating new models based on technology and other creative innovations that target provision of direct linkages with the ordinary citizens in order to bring them in the loop of resource mobilization and utilization”.
The 20th ASEA conference brought together 300 delegates, including securities exchange CEOs, regulators, ministers, investors and others. It was held in Kigali on 28-29 November 2016. The theme was “Road to 2030: Making the African capital markets relevant to the real economy”.
Speakers included Claver Gatete, Rwandan Minister of Finance, and Prime Minister Murekezi delivered a message from the President of Rwanda, His Excellency Paul Kagame, in which he commended ASEA for its role in deepening the capital markets as a way of addressing the challenges that hampered Africa
Other speakers included Prof. Kingsley Moghalu, (former Deputy Governor of the Central Bank of Nigeria), Tonye Cole (founder of Sahara Group), Staci Warden (Executive Director, Milken Institute), Sandy Frucher (Vice Chairman of Nasdaq), Paul Muthaura (CEO Capital Markets Authority Kenya), David Grayson (Co-founder and CEO of Auerbach Grayson & Company), as well as CEOs from ASEA member exchanges.
May 26th, 2016 by Tom Minney
Cameroon is a big winner at this year’s African Banker Awards, the 10th edition. The winners were announced yesterday (25th May) in Lusaka. Morocco’s Attijariwafa Bank, active in 20 countries, wins the prestigious Bank of the Year Award and GT Bank CEO Segun Agbaje is recognized as Africa’s Banker of the Year for his leadership of the Nigerian banking giant, one of Africa’s most profitable banks.
African Banker Awards have become the pre-eminent ceremony recognising excellence in African banking. They are held on the fringes of the annual meetings of the African Development Bank. Your editor is proud to be among the judges and can comment on the excellence of the many submissions from great banks all over Africa.
For the first time, two Cameroonians feature among the laureates: Alamine Ousmane Mey wins Minister of Finance category or his contribution to socio-economic development in his country. Leading banker and economist Paul Fokam, President of the Afriland First Group, is awarded the Lifetime Achievement Award; he is a serial entrepreneur, a renowned economist and his bank is one of the more important institutions in Central Africa. Cameroon scored a hat trick as Lazard’s credit-enhanced currency swap won the award for “Deal of the Year – Debt”.
Other winners include South Africa’s Daniel Matjila, CEO of South Africa’s Public Investment Corporation, a fund with $139bn funds under management. He was awarded the African Banker Icon, recognising the significant investments by the fund into African corporations and the lead role he has played in driving investment from South Africa into the continent.
The African Central Bank Governor of the Year accolade was given to Kenya’s Patrick Njoroge. Kenya’s central bank, largely unknown a year ago, has managed to navigate a tough economic climate and Patrick has been credited with cleaning up the banking sector in his country.
Speaking at the exclusive Gala Dinner at the Intercontinental Hotel attended by over 400 financiers, business leaders, and influential personalities and policy makers, Omar Ben Yedder, Group Publisher of African Banker magazine, which hosts the awards in partnership with BusinessInAfricaEvents said: “It has definitely been a defining decade in banking in Africa. We have recognised true leaders tonight who are playing a critical role in the socio-economic development of the continent.
“Finance remains a key component of development, be it in terms of financing massive infrastructure projects that today are being wholly financed by consortia of African banks, or SME financing. It’s happening because of strong, bold and visionary leadership. I have been privileged to honour some truly exceptional individuals who have left an indelible mark on the industry over the years.
“We are very grateful to our High Patron, the AfDB, for their unwavering support in this initiative and our thanks also go to our sponsors: MasterCard, Ecobank, Nedbank, African Guarantee Fund, PTA Bank, CRDB Bank, Arton Capital and Qatar Airways for partnering with us and enabling us to reward outstanding achievements, commend best practices and celebrate excellence in African banking”.
This year’s judging panel was made up of Koosum Kalyan, Chairman of EdgoMerap Pty Ltd; Zemedeneh Negatu,Managing Partner of Ernst & Young Ethiopia; Tom Minney, Chief Executive of African Growth Partners; Alain le Noir, CEO of Finances Sans Frontières; Christopher Hartland-Peel, Principal at Hartland-Peel Africa Equity Research and Kanika Saigal, Deputy Editor of African Banker Magazine.
THE 2016 AFRICAN BANKER AWARD WINNERS
- Bank of the Year: Attijariwafa Bank (Morocco)
- Banker of the Year: Segun Agbaje – GTBank (Nigeria)
- Minister of Finance of the Year: Alamine Ousmane Mey (Cameroon)
- Central Bank Governor of the Year: Patrick Njoroge (Kenya)
- African Banker Icon: Daniel Matjila, CEO PIC (South Africa)
- Lifetime Achievement Award: Paul Fokam, Founder Afriland First Bank (Cameroon)
- Investment Bank of the Year: Rand Merchant Bank (South Africa)
- Award for Financial Inclusion: Ecobank (Togo)
- Best Retail Bank: BCI (Mozambique)
- Socially Responsible Bank of the Year: Commercial International Bank (Egypt)
- Innovation in Banking: Guaranty Trust Bank (Nigeria)
- Deal of the Year – Equity: Naspers $2.5bn Accelerated Equity Offering (Citi)
- Deal of the Year – Debt: Cameroon’s Currency Swap (Lazard)
- Infrastructure Deal of the Year: Azura – Edo IPP (Fieldstone; Rand Merchant Bank; Standard Bank; IFC)
- Best Regional Bank in North Africa: Commercial International Bank (Egypt)
- Best Regional Bank in West Africa: Banque Atlantique (Côte d’Ivoire)
- Best Regional Bank in Central Africa: BGFI (Gabon)
- Best Regional Bank in East Africa: CRDB Bank (Tanzania)
- Best Regional Bank in Southern Africa: MCB (Mauritius)
For more on the African Banker Awards, please visit: http://ic-events.net/.
May 9th, 2016 by Tom Minney
Highlights of the African Financial Services Investment Conference AFSIC 2016, held in London 5-6 May.
Development finance institutions have made $6.5bn of investments in financial institutions. Here are examples of what they are doing:
Proparco, Sophie le Roy, Head of Banking and Capital Markets: “We are 50% invested in Africa and financial services and banking make up 50% of our portfolio. Our aim is to catalyze private investors, we show you can invest and make profit. We have a careful process, we helped create banks in Mauritania, Benin and DRC and they still exist.”
BIO (Belgium), Carole Maman, Chief Investment Officer: “We have Eur600m under management, Africa is about 40% of portfolio, most of it is invested in financial institutions. We work on smaller transactions, our sweet spot is from EUR 6m+. We work mostly with tier 2 financial institution through microfinance, equity and loans. In countries such as Ethiopia and DRC where many people are unbanked, there will be lots of opportunities.”
FMO the Dutch development bank, Bas Rekvelt, Manager Financial Institutions Africa: “We have been investing in developing countries for 45 years, we have been able to catalyze EUR 1bn into the markets last year. We try to ensure the markets where we work are attractive enough for the private sector. Our portfolio is 25% Africa, spread between financial institutions, energy and agriculture.”
SIDA, the Swedish International Development Cooperation Agency, Christopher Onajin, Loan and Guarantees Partnerships & Innovation: “Our role is to give money and guarantees, covering credit risk and market risk. Our Africa portfolio is $135m, and we encourage banks, microfinance and others to push them to lend to under-served sectors.”
DEG – German Development and investment company, Peter Onyango, Investment Manager, Financial Institutions Group, Africa: “We have about 50 years of emerging markets expertise and Africa is a particular focus. We see more countries becoming bankable. Internally our risk appetite is improving, we see opportunities in more countries. We see opportunities in growing insurance and the nascent leasing markets, which will improve. There is a lot more in fintech. A setback for Africa is an opportune time for long-term investors, including DFIs and private investors.”
January 22nd, 2016 by Tom Minney
Funding for start-up companies in the technology space was nearly $185.8 million in 2015, according to research by website portal Disrupt Africa. More growth is expected in 2016.
According to the data in Disrupt Africa African Tech Startups Funding Report 2015, the top 3 places where tech investors were backing new businesses were South Africa, Nigeria and Kenya, both in number of deals and amount. Most funding went into solar power (33%), followed by fintech (financial services firms using technology – 30%). The report monitors 10 sectors.
It says 125 tech start-ups raised funding in 2015. These were located 36% in South Africa, 24% in Nigeria and 14% in Kenya. Funding to South African start-ups totalled $54.6m, to Nigerian firms $49.4m and Kenyan firms received $47.4m. Other key places for funding included Egypt, Ghana, and Tanzania.
Gabriella Mulligan, co-founder of Disrupt Africa, commented on the website: “2015 was an exciting year for African tech startups. Our data shows the increasing vibrancy of our ecosystem, with more quality tech startups, and more investor activity than ever before. We’re very pleased to make our data available in the Disrupt Africa African Tech Startups Funding Report 2015, and trust it will contribute to understanding and growing the ecosystem.
He co-founder Tom Jackson added: “These are impressive numbers, showing real growth in the amount of funding available to African tech startups, but in reality they are merely the tip of the iceberg. There will have been many funding rounds across the continent that have taken place quietly. But in terms of demonstrating the development of the ecosystem, these figures are an excellent starting point. We expect to see further growth in 2016.”
Disrupt Africa describes itself as “Africa’s startup portal.. a one-stop-shop for all news, information and commentary pertaining to the continent’s tech startup – and investment – ecosystem”. The report provides detailed information for each country, including deals per location, average deal sizes and highlights key deals and is available here for $50.
Also check out the Fintech Africa awards event, due to be held in South Africa this October.
December 29th, 2015 by Tom Minney
The market for small and medium size businesses is picking up momentum on the Dar es
Salaam Stock Exchange. Mwalimu Commercial Bank Plc was the fourth listing on the Enterprise Growth Market segment on 27 November, and Prime Minister Majaliwa Kassim Majaliwa spoke at the listing. The share launched at TZS500 ($0.23) after its initial public offer (IPO) and then soared by 40% to TZS700 on the first day of trading before gradually falling back to TZS665.
The IPO also registered a success for the mobile phone trading platform launched by the DSE in August 2015. DSE Chief Executive Officer Mr Moremi Marwa told Daily News that at the end of September, a month after the launch, some 700 investors used mobile phone trading. The paper says that because of the mobile platform, upcountry buyers outpaced Dar es Salaam residents in buying shares in the Mwalimu Bank IPO. It is good step forward for financial inclusion in Tanzania. The IPO was oversubscribed by 24%.
DSE CEO Moremi Marwa, (photo credit 24Tanzania)
Previous EGM listings were Mkombozi Commercial Bank (December 2014), Swala Gas and Oil (August 2014, local exploration subsidiary of Australian Swala Energy), and Maendeleo Bank (November 2013). There are four registered nominated advisers to help companies apply to the EGM for listing and to sponsor their listing and compliance, employing a model based on London Stock Exchange’s Alternative Investment Market (AIM).
The EGM was launched in 2013 as part of a successful project backed by the Financial Sector Deepening Trust (FSDT).
The name of Mwalimu bank means “teacher” in Swahili and was also the affectionate honorific title for Tanzania’s founding President Julius Nyerere. The bank is supported by the Tanzania Teachers Union, which has 200,000 members according to this DSE press release.
It has not yet opened its doors as it needed a banking licence approval and to raise capital, before it can establish systems and procure core banking and other systems. CEO Ronald Manongi was reported in The Citizen newspaper saying it will start offering services in May 2016 with a branch at Samora Avenue in central Dar es Salaam and later at Mlimani City. It has a capital base of TZS31 billion.
October 13th, 2015 by Tom Minney
ECX buyers and sellers make deals. (Photo credit – John Humphrey. From www.globalisationanddevelopment.com)
The Ethiopian Commodity Exchange (ECX) has unveiled an online trading platform that has capacity for nearly 5,000 times more transactions than its current “open outcry”. Since the ECX was started in 2008 trading has been done on a trading floor in its Addis Ababa headquarters by dealers trading directly with each other, and about 200 transactions a day could be done.
Initially, dealers using the eTRADE Platform would be based at the ECX HQ’s trading centre. However, eventually market players will be able to trade electronically from anywhere. The platform will be gradually rolled out to newly built ECX trading centres in regional cities Hawassa, Humera, Nekemte and, in the near future, an additional 4 centres. The ECX has trained and certified more than 445 ECX trading members and representatives who are qualified to trade on the platform.
The trading platform has been under construction for the past 2 years and was developed in-house at the ECX. It was unveiled on 8 October and, on launch day, a record $400,000 of coffee was traded according to this news release
A test run was done on 20 July with trading in local washed and unwashed byproduct coffee. ECX says 2,390 metric tonnes of farm produce has been traded on the platform so far with a trade value of ETB 120 million (about $5.7m).
ECX chief executive officer Ermias Eshetu said: “The inauguration of this eTRADE platform sets a new course for Ethiopia and brings with it unparalleled economic and social benefits. The platform inevitably breaks the physical and time barrier of the current open-outcry trading platform and provides the ECX with vital economies-of-scale to trade a number of additional new commodities.”
Transforming life for small farmers
The Investment Climate Facility for Africa (ICF) and other partners have been supporting the programme, according to this news release. William Asiko, CEO of ICF, said the platform would bring a revolution to Ethiopia’s agriculture sector: “The modernization of ECX will help to improve the business environment for stakeholders involved in the commodities sector and give Ethiopian agricultural products a competitive advantage.
“But for farmers, this modernization will be life-changing. It will enable farmers to get better pricing for their produce, thereby creating a more equitable distribution of wealth that has far-reaching social implications.”
The ECX was founded with the aim of improving agricultural marketing – a large part of its success is due to the large network of warehouses, quality controls and logistics up and down the country, and its main aim is to empower smallholder farmers, including through better information about prices. The current Government 5-year Growth and Transformation Plan II, launched from July 2015, sees state-run ECX serving 24 “agro-centres” with increased storage and warehousing facilities and better transport links.
Ermias, who became CEO in January after coming from Zemen Bank, said in April that the Government is establishing an enterprise to oversee the upgrading of warehousing, which will rely on a mixture of public and private capital. Donors including the World Bank and Bill & Melinda Gates Foundation are considering supporting what will require “huge investment,” he said.
One key tool for ECX has been its short message service (SMS) and interactive voice response (IVR) notifications of market data to farmers and others. This was introduced in 2011 in Amharic and English and gives real-time access to commodity prices. The SMS service processes 800,000 transactions a month and the IVR handles 1m calls a month, according to the news release. An upgrade was unveiled on 8 October which expands to Oromiffa and Tigrinya languages and introduces menu-based services (USSD) and new interfaces.
ECX mulls trading securities
Earlier this year it was also considering whether it could trade securities, including stocks and bonds, as part of its 5-year expansion plan. Ermias told Bloomberg in April: “We want to be a marketplace for any kind of stock, be it derivatives, agricultural commodities, financial instruments. That’s the ultimate vision.” He added that formal discussions have not yet begun on trading securities.
“With the two components, logistics and scalability, we will be able to introduce multiple commodities to the market,” he said. “ECX must offer the truly transparent marketplace for anything that’s going on in the Ethiopian economy.”
He said the market could move from coffee and sesame seeds, which account for more than 90% of volumes and are the two biggest generators of foreign exchange in Ethiopia, to sugar and grains such as corn and then add equities, government debt, power and metals.
Bloomberg cites Yohannes Assefa, the director of Stalwart Management Consultancy, a Dubai-based group working on Kenyan and Tanzanian exchanges, saying that ECX has capacity to expand beyond agricultural commodities within 12 months: “The existing platform is robust and the regulatory system is mature and well managed.”
The main problem would be changing government regulations, and Yohannes warned this “may require serious internal consultation before a change of policy.”
Exporters want futures
Bloomberg adds that coffee exporters such as Fekade Mamo, general manager of Addis Ababa-based Mochaland Import and Export, criticize the ECX for not allowing futures trading to hedge positions in a volatile global market. Ermias said it would take more than a year to build necessary steps for this, including insurance options for farmers in case they can’t deliver, better access to credit and the strengthening of the legal system.
Donors including USAID and the United Nations have supported the ECX when it was launched in order to boost efficiency of food markets in a nation where millions regularly went hungry. It had strong support from the Government, which decreed that exporters of coffee – Ethiopia is Africa’s biggest producer – must buy from traders on the bourse before they can export and within a year the ECX was the main route for coffee exports.
In 2014 it traded ETB 26.2 billion birr ($1.3bn) worth of goods.
ETB 1.6m for trading seat
In May the 17th trading seat was auctioned and won by an individual, Abayneh Zerfu, who bid ETB 1.6m ($76,000), according to this story in Addis Fortune newspaper, which said there were 4 bids. The ECX manages the bid if a member sells his or her seat and they are only allowed to do this after trading for 3 years and meeting requirements. Yohannes Hamereselassie, member development specialist at the ECX, said the original price for a seat was ETB301,000.
The new e-TRADE facility (credit ICF Africa)
The ECX developers of the eTRADE platform (credit ICF Africa)
October 6th, 2015 by Tom Minney
Nairobi centre (credit www.kenya-advisor.com)
Kenya’s National Treasury will float a KES5 billion ($48.6 million) M-Akiba bond which will only be purchased through mobile-phone platforms. The minimum investment will be KES3,000 ($29.13) and the maximum KES140,000, which is the maximum allowed in a single mobile-money transaction (it can be increased by making more applications).
The 5-year infrastructure bond will float on 21 October. The National Treasury and Central Bank of Kenya will set the rate, which will be free of income tax. Finance Cabinet Secretary Henry Rotich said the rate will be higher than rates offered by commercial banks (currently 1.37% on cash in savings accounts) but did not give more details.
It is unlikely to be as high as the soaring rates in local money markets – a 91-day treasury bill was at 20.637% at the auction for value dated 5 Oct, up from 18.607% on 28 Sept according to the CBK and 182-day paper on 28 Sept was 14.5%. The Government’s 1-year KES30bn bond sold at a record rate of 19.062%, offering the biggest returns for investors in 3 years. Kenya’s inflation in Sept 2015 was 5.97%, up from 5.84% the previous month and above expectations, according to www.tradingeconomics.com.
The new bond will only be available to Kenyans, who currently make up 2% of investors into bonds listed on the Nairobi Securities Exchange (NSE).
Innovative mobile money tech
The innovative Treasury Mobile Direct (TMD) platform means individuals will buy the bonds instantly instead of the previous 2-day process. Potential customers will only need to have a mobile phone line and subscription to a mobile-money transfer service, which will enable telcos to open an electronic account with the CDSC on their behalf, as well as a valid ID. They will dial *889# and follow the prompts. Treasury will pay the coupons every six months through Safaricom mobile transfer service M-Pesa.
M-Akiba aims to help more people save and invest and make it easier for the Government to raise funds and diversifying their investor base. Stephen Chege, corporate affairs director of mobile phone company Safaricom, was quoted in this news story in Nation as saying it would help build a savings culture: “Currently, only 11% of Kenyans save on a regular basis as compared to 22% in Rwanda and Uganda, while in Qatar this figure stands at 60%.” Up to 23m Kenyans could participate. The National Bureau of Statistics says the rate of savings has stagnated and remains far below the medium-term targets.
The bond was launched on 28 September, and NSE chairman Eddy Njoroge said: “Our bond market is currently dominated by foreign and local institutional investors, M-Akiba is in line with NSE’s strategy of enhancing financial inclusion by driving retail investor participation.”
The prospectus will be released on or after 16 October.
Rose Mambo, CEO of the Central Depository Settlement Corporation (CDSC) was reported as saying: “This will be a vanilla bond attracting a fixed rate of interest and redeemable in full on maturity which will not be affected by changes in the market interest rates and the principal is secure.”
Previously the minimum investment possible in a Treasury bond was KES50,000.
Mobile money reach
Mobile money bond investments will be a technology revolution for world capital markets.
According to CNBC, mobile penetration across Kenya was last recorded at 83.9% for the period between April and June 2015, according to the Communications Authority of Kenya. The mobile money service M-Pesa has become a formidable competitor for local banks since it was launched by Safaricom in 2007 and last recorded a total of 23.3m customers, more than half of the country’s near 44m population. Statistics from digital finance researcher Financial Inclusion Insights show over 62% of Kenyans actively managed money on their mobile phones in 2013, compared to 21% who held bank accounts.