Tuesday, January 19, 2021

IFC launches pan-African bond program to support local capital markets

IFC, a member of the World Bank Group, and Standard Chartered are launching a bond-issuance program that will increase the availability of local-currency financing for private sector development in Africa.

The IFC Pan-African Debt Medium-Term Note Programme will initially focus on Botswana, Ghana, Kenya, South Africa, Uganda, and Zambia. Over the next several months, IFC will work with the respective authorities in these countries to obtain their consent to be part of the program.

Standard Chartered is appointed as the sole arranger for the program. Standard Chartered will also be the lead manager for many of the inaugural bond transactions under the program. Other financial institutions may co-lead individual bond issues.

Bonds issued through the program will raise funds that IFC will use to provide long-term, local-currency finance for African businesses, protecting them from foreign-exchange risks.

“A vibrant, local-currency capital market is essential for any country to achieve its full economic potential,” said IFC Executive Vice President and CEO Lars Thunell.

“Ensuring the development of such markets is a cornerstone of IFC’s strategy. By expanding long-term currency finance, we help businesses mitigate currency risks when they borrow capital to grow and create jobs,” he added.

Standard Chartered CEO Peter Sands said: “Standard Chartered shares IFC’s commitment to supporting the development of local capital markets in Africa, which has been a core part of our business for nearly 150 years. We are delighted to put our capital markets expertise, extensive Africa presence and knowledge of local markets to work in partnership with IFC on this landmark initiative.

IFC builds partnerships with regulators and local authorities to establish and strengthen local capital markets. In Africa, IFC has previously worked with Ghana, Zambia, and eight members of the West African Monetary Union to establish local-currency bond programs. IFC has also obtained approvals to issue local currency bonds in Nigeria and Kenya. In 2006 and 2009, IFC has issued bonds denominated in CFA francs.

IFC’s aim in sub-Saharan Africa is to improve the investment climate, promote the growth of small and medium enterprisesÔÇöthe foundation of economies across the continentÔÇöand support key infrastructure and agriculture projects. In fiscal year 2011, IFC invested $2.2 billion to support private sector development in the region.

According to a statement from Standard Chartered, the bonds will be offered to domestic and institutional investors who are active in the local capital markets of the participating countries. IFC also expects that the bonds will present an opportunity for international investors looking to take their first steps in investing in local currency and in Africa.

IFC, which is the member of the World Bank Group is the largest global development institution focused exclusively on the private sector.

The organisation helps developing countries achieve sustainable growth by financing investment, providing advisory services to businesses and governments, and mobilising capital in the international financial markets.

In fiscal 2011, amid economic uncertainty across the globe, it helped our clients create jobs, strengthen environmental performance, and contribute to their local communitiesÔÇöall while driving our investments to an all-time high of nearly $19 billion.

On the other hand, Standard Chartered is a leading international banking group operating for over 150 years in some of the world’s most dynamic markets and earning more than 90 per cent of its profits in Asia, Africa and the Middle East.

With 1,700 offices in 70 markets, the group offers exciting and challenging international career opportunities for nearly 87,000 staff.

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