June 4th, 2012 by Tom Minney
Local savings institutions are one of the rising forces in African capital markets and we are interested in learning more about them. Here is some information from Kigali, Rwanda. Do you agree that savings and credit cooperatives should be investing in equity markets?
Rwanda’s Savings and Credit Cooperatives (known as SACCOs) are being encouraged to take more interest in the capital market. A meeting organized by the Capital Markets Authority in Kigali attracted over 50 managers and leaders of several SACCOs in May, according to a story in local media including East African Business Week.
SACCOs are estimated to hold deposits worth over RWF15 billion (US$24.7 million). The CMA suggested they could get better returns for their members’ money compared to investing in deposits at commercial banks, but acknowledged they needed more knowledge of financial investment and there are not enough investment opportunities. It was suggested they could purchase shares in companies listed on the Rwanda Stock Exchange – Bank of Kigali and brewer BRALIRWA are the local listings, or in government securities such as treasury bills and bonds or corporate bonds or commercial paper. BRALIRWA listed in February 2011 and the share price has since more than doubled, and BoK listed last August after raising US$34.8m.
Charles Furaha, the Legal & Corporate Manager at the CMA, was reported as saying:”We want to interest SACCO leaders in the advantages of investing in capital markets as a way of maximizing benefits for their members whose deposits are tucked away in banks.”
Robert Mathu, Executive Director at the CMA, was reported saying that the Rwanda bond market has a total worth of $46.7m. If investors were worried about government bonds after the bad news from Europe, they should think about shares, not only the Rwandan companies but also companies throughout the East African region.
At least 220 SACCOs had been fully licensed in Rwanda to grant loans by 31 January 2012.
A previous article in the local media reported that the Government launched Umurenge SACCO in all districts of the country in November 2011. It is a legal entity which is a cooperative and individuals invest their money and get loans to invest in farming, trade, basic needs and other purposes. Damien Mugabo, the director general of Rwanda Cooperative Agency (RCA), was reported last November that 1.3m peo¬ple are members of Umurenge SACCO country wide. Government started thinking about it in 2008 after a study showed that 52% of Rwandans had no access to formal financial services and were saving money in holes and other unsafe places. Mugabo said: “Umurenge SAC¬COs reach out to members and areas that are unattractive to banks, they can provide access to members of the population who would not normally save in the formal sector and physically not access a classic financial institu¬tion, due to locality and deposit restrictions.”
He added that many people had bad experiences in 2006 with micro-finance institutions (COOPECS) that were mushrooming but were bady managed. Umurenge SACCOs had been making good progress since 2009.
May 31st, 2012 by Tom Minney
Pioneering private equity group CDC (www.cdcgroup.com), 100% owned by the UK Government’s Department for International Development, has recorded a paper loss of £72 million ($111.6m) across its £2.6 billion portfolio for 2011, according to results released yesterday. It is the second loss since 2000, the previous one was in 2008 at the height of the global financial crisis.
According to a results press release : “.. difficult financial market conditions in many developing countries meant that CDC showed a valuation loss of £72m in 2011 (compared to a valuation increase of £269m in 2010). Despite this loss, valuations for companies in CDC’s portfolio still outshone the MSCI benchmark by 19% in 2011 (and by 25% over a rolling five-year basis).” Last year CDC announced a high-level new business plan, with a geographic remit focused on sub-Saharan Africa and South Asia
According to Diana Noble, CDC’s Chief Executive: “Long-term finance is the lifeblood of businesses in developing countries across Africa and South Asia. Without the economic growth that these businesses play a part in generating long-term development and poverty reduction will be undermined.
“That’s why I’m pleased that CDC’s capital is reaching more businesses than ever before. Some of these businesses would not exist without CDC’s capital. For others, our investment brings growth, new jobs and improved environmental, social and governance standards.
“By reaching over 1,000 investee companies in 2011, our capital is having a positive impact in some of the hardest places – and all at no cost to the UK taxpayer.”
In 2011, CDC backed 1,126 private sector businesses in 74 developing countries (up from 930 in 2010). It made £364m of new investments in businesses in 2011 (down from £420 in 2010) including 12 new fund commitments totalling £188m (down from £231m in 2010), of which 6 were made to first-time fund managers. This demonstrates CDC’s continued work to build investment capacity in poor countries by backing new investment teams. Since 2004, CDC has made 136 fund commitments, of which 69 were to first-time teams. Portfolio companies paid at least US$3.5bn in business taxes (up from US$3.1bn in 2010);
In Africa CDC:
• invested £149m in businesses in Africa;
• grew the value of its portfolio of African businesses to £858m;
• made new commitments of US$176m to funds focused on Africa; and
• backed 6 Africa-focused funds, including a new first-time fund investing in agribusiness in
East and Southern Africa and the first commitment to a sub-Saharan African microfinance fund.
Historically CDC has invested through a fund-of-funds model, but over the past year the group has begun to provide debt and direct investment to businesses in sub-Saharan Africa and South Asia. Businesses backed by CDC capital in 2011 also increased their development impact by employing more people – they supported 976,000 jobs (up from 796,000 in 2010). The portfolio is up from a value of £1bn when CDC was previously restructured in 2004.
Noble said: “In 2012, I want CDC to build upon what we achieved last year and reach even more companies with long-term, responsible investment. Whether it’s investing in companies that create hundreds of jobs in the Indian pharmaceutical sector, bring wireless communications to remote villages in Mali, DRC and Togo or support the upgrading of the electricity supply in Cote d’Ivoire, CDC will continue to support the entrepreneurs and ideas that have the biggest development impact, bringing jobs and infrastructure to poor countries.”
July 29th, 2011 by Tom Minney
[SPONSORED STORY] A top conference in October will be “Investment & Innovation in Microfinance: Africa” (www.microfinance-africa.com, date 17-19 October, at Hilton Nairobi Hotel, Kenya). This will cover new regulations, loan products, technologies and social performance tools that would make microfinance institutions (MFIs) more profitable.
Microfinance is financial services aimed at the “bottom of the pyramid”, representing more than 100 million low-income Africans. Services, including financial products, can help them work themselves and their families out of poverty. Effective microfinance can make a huge difference – if done right.
The conference is themed “Transform Your MFI: Comply with Regulation, Strengthen
Governance, Increase Funding, Adopt New Technology” and is the tenth global conference on this topic organized by Hanson Wade. It has a top line-up, including 24 expert speakers, workshops and side events, plus an Investor Fair featuring more than 40 microfinance investors active in Africa, from social investors to banks. Leading MFIs will come from across Africa including Tanzania, Kenya, Malawi, Ghana, Nigeria and Uganda to show participants how to transform their MFIs and their investment strategies.
The meeting is billed as a 3-day intensive learning experience, covering:
• Regulatory update: Recent changes to policy and regulation – Prof Njuguna Ndung’u, Governor, Central Bank of Kenya on enhanced financial inclusion.
• Get ready to become deposit-taking: PRIDE Tanzania and Opportunity Ghana showcase steps they took to keep costs down, maintain client confidence and fulfil the regulator’s expectations. Learn how to strengthen governance, build capacity and infrastructure and commit to social performance measurement to encourage increased funding.
• Who is investing in your country? Hear directly from investors what they are looking for and how you can ensure you benefit from their capital.
• Increase reach through new financial products: Jamii Bora, The Kuyasa Fund, Tujijenge Tanzania and MicroEnergy International showcase how they are increasing access to housing, health, agriculture, education and energy at the “base of the pyramid” (large numbers of poor borrowers and savers).
• Tackle over-indebtedness effectively through credit bureaus, social performance measurement and training. An in-depth working group will confront the challenge of competition and under-cutting and maintain the balance between commercial and social goals.
• Meet the technology providers of the future: From Management Information Systems to mobile, pinpoint which software is most user-friendly and least hassle to implement, and how tomorrow’s biggest service providers help you grow.
Participants at the 2011 conference will be senior directors from MFIs; commercial, social and development banks; local and national governments; non-governmental organizations and foundations; advisory firms; investors; companies which specialize in “base of pyramid” services and products; bankers’ associations; development finance institutions such as the International Finance Corporation (IFC); and bilateral aid agencies including the UK’s Department for International Development (DFID).
The conference is organized by top international organizer, Hanson Wade. Stephanie Cohn Rupp (Principal: Investments at Omidyar Network) commented: “Hanson Wade are fast becoming the deliverers of content and networking in this space”.
The conference already has an excellent website, where you can get full details and make bookings www.microfinance-africa.com. Or call: +44 20 3141 8700 or email: firstname.lastname@example.org. For a 10% discount for readers of this blog, please quote the booking code: ACMN.