Wednesday, July 6, 2022

Blue acquires micro lending business in Zambia

Blue Employee Benefits (Pty) Limited (BEB), a Botswana-incorporated wholly-owned subsidiary of Blue Financial Services, has acquired Zambian micro lender, Nedfin Limited (Nedfin), for US $ 9 million (about P 58 million) cash consideration.
Blue is currently positioning itself for dual listing on the Botswana Stock Exchange (BSE) on Thursday in an attempt to raise cash for its expansion plan across the African region, considered to be the biggest micro-lending firm in Zambia under the current move.

BEB has purchased the entire share capital and shareholder loan accounts of Nedfin, which holds a Non-Banking Financial Institution Licence granted to it by the Bank of Zambia in September 2005.
The business focuses on short-term lending through its eight Zambian branches.

Blue’s CEO, Dave van Niekerk, said on Friday from his office in South African that the acquisition will result in Blue, which already has a presence in Zambia, having a combined branch network there of 20 branches and will effectively make Blue the single biggest micro financier in that country.
“Nedfin, who has always been a competitor in Zambia, is focussed on shorter term loan products and is a cash generative business that has seen consistent growth in volumes and profitability in the last year. This acquisition is part of Blue’s longer term strategy to become the largest micro financier in Africa,” he said.

The acquisition is effective 1 April 2008 for a cash purchase price of $9 million. The transaction agreement contains warranties and indemnities normal to a transaction of this nature and incorporates restraints of trade with regard to certain outgoing shareholders.

The pro-poor organization with a raft of financial products said its initiatives are aligned with the objectives of NEPAD (New Economic Partnership for Africa).

Blue Financial Services has operations in Botswana, South Africa and Zambia and it is also planning to open other branches in Cameroon, Kenya and Uganda as it strives to expand across the Africa continent.

“By riding the current of the newly emerging middle-class in South Africa and neighbouring countries, Blue has opened previously untapped markets in the financial sector by providing legitimate financial solutions to those who previously were denied access to the market,” the company said.

“Blue has found that traditional banking systems and banks as a whole in the African environment are not as advanced electronically as their peers in other areas of the globe, and they are not addressing a broad range of the needs of their customers.

“Sub-Saharan banks are very risk averse and, as such, many employers are forced to become involved in providing housing to their staff or providing benefits or credit that their personnel can not obtain elsewhere,” it added.

The provision of financial services in countries like Botswana, where close to 60 percent of the working people are said to be unbanked, is a critical factor as that population is shunned by the traditional banks.

The company is one of the major players in Botswana’s micro-finance, with two other major ones being the Botswana Stock Exchange-listed, Letshego Holdings and Penrich Employee Benefits. The company is already tapping on government’s liberalization policy which is geared towards automatic deduction of salaries from source which used to be tightly controlled.

Among some of the products provided by the company are home improvements, funeral insurance, salary advances, pension and provident funds, payroll solutions and cellular solutions.
It said one of the biggest markets that it serves is that of South Africa, which is littered with a number of players but with risk averse attitudes.

As part of its strategy to expand throughout Africa, AltX-listed Blue will be listing on the Botswana Stock Exchange on May 15. This will be a dual-listing of existing shares and no new shares will be issued and no new capital is to be raised.


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