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AFC secures $250 million capital loan from International Development Finance Corporation

AFC has secured a $250 million capital loan from International Development Finance Corporation.

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AFC secures $250 million capital loan from International Development Finance Corporation

Africa Finance Corporation (AFC) announced that it has successfully secured a $250 million tier-2 capital loan from U.S. International Development Finance Corporation (DFC).

In addition to strengthening AFC’s investment capacity, it is also expected that the facility further complements AFC’s strategy of diversifying its investor base.

READ: AFC to ink $100 million investment deal in Nigeria’s mining sector

Why this matters

The proper provision of infrastructure is crucial for economic and social development across Africa. Physical infrastructure systems ensure that basic human needs are met.

The Association of Chartered Certified Accountants (ACCA) has suggested that cumulatively, between 2018 and 2040, the infrastructure investment gap in Africa is expected to stand at $1.59 trillion, with the amount of infrastructure investment needed expected to be 39% higher than under the current trends.

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READ: InfraCredit guarantees TSL’s issuance of a N12 billion 10-year Series 1 Infrastructure Bonds

ACCA argued that in comparison with global benchmark, which requires about 19% increase over current investment levels, Africa is doing worse given that it needs to increase investment levels by 39% in order to close the forecasted infrastructure investment gap by 2040.

In line with the above, the $250 million facility, which AFC has asserted will strengthen its capacity to close Africa’s infrastructure deficit, is key and should be properly utilised.

READ: Katsina Govt. to secure 7-year Islamic bond worth N55 billion

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What they are saying

Speaking on the development, Samaila Zubairu, President & CEO of Africa Finance Corporation said:

  • “Africa and the United States have enjoyed a longstanding partnership spanning several decades. Indeed, AFC has partnered with the US on several infrastructure initiatives, including the Power Africa initiative, and regularly receives investments from US-based investors in its Eurobond issuances.
  • “This announcement therefore marks a natural evolution as the US Government seeks to play a greater role in Africa’s development by establishing a dedicated DFI. Crucially, this funding will also ensure the Corporation is able to continue fulfilling its objectives in the wake of the ongoing COVID-19 pandemic, which has placed a greater responsibility on development finance institutions in helping to drive a sustainable recovery across Africa.”

READ: A higher profile for the DFIs under COVID-19

Also commenting on the development, Adam Boehler, CEO of DFC submitted that:

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  • “DFC is proud to expand our relationship with a key infrastructure investor in Africa. This financing advances DFC’s strong commitment to Africa by supporting investment in the modern infrastructure that is essential to economic growth and expanded connectivity with the world.”

READ: AFC grants Waltersmith Refinery $35 million debt facility

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What you should know about the AFC

  • AFC is a multilateral Financial Institution, created by sovereign African states to provide pragmatic solutions to Africa’s infrastructure deficit and challenging operating environment, by developing and financing infrastructure, natural resources and industrial assets for the enhanced productivity and economic growth of African states.
  • AFC was established in 2007 with an equity capital base of US$1.1 billion, to be the catalyst for private sector-led infrastructure investment across Africa.
  • DFC is the United States Government’s development bank established with a lending capacity of up to US$60 billion to provide financing for solutions to some of the most critical challenges facing the developing world. DFC expanded and modernized the tools of the Overseas Private Investment Corporation (OPIC). DFC was formed in December 2019,

Adeyemi holds a PhD in Accounting Sciences. He has worked in the Educational Sector and as an Independent Consultant.

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Financial Services

CBN issues framework for QR payments

CBN has issued a framework that would guide Quick response (QR) code payments in Nigeria.

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The Central Bank of Nigeria has issued the framework that would guide Quick Response (QR) Code Payments in Nigeria.

This is a proactive move by the Apex bank towards ensuring the safety and stability of the Nigerian Financial System, as well as promoting the use and adoption of electronic payments and foster innovation in the payments system.

READ: Over 1 million people took loans from banks below 20% interest rate in 1 year- CBN

Quick Response (QR) Codes are matrix barcodes representing information presented as square grids, made up of black squares against a contrasting background that can be scanned by an imaging device, processed and transmitted by appropriate technology.

The codes are used to present, capture and transmit payments information across payments infrastructure and further enable the mobile channel to facilitate payments and present another avenue for promoting electronic payments for micro and small enterprises.

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READ: Binance offers DeFi coders $100,000; DeFi market value hits $8 billion

What you should know

  • Quick Response (QR) codes are two-dimensional bar codes. QR code payments allow merchants to receive payments from customers simply by scanning generated QR codes using a smartphone camera. The QR code payments carry the purchase transaction information to the mobile device of the buyer/customer.
  • Making payments via QR codes is very secure. It is because the QR code is nothing but just a tool that is used to exchange information. Any data which is transferred via QR codes is encrypted, thus making the payment secure.
  • The Participants in QR Code Payment in Nigeria include Merchants, Customers, Issuers (Banks, MMOs and Other Financial Institutions), Acquirers (Banks, MMOs and Other Financial Institutions) and Payments Service Providers.
  • QR payments are increasingly becoming a popular means of payments in Nigeria, and some industry players would see the framework as a perfect way of regulating the sector.
  • QR codes are capable of storing lots of data. But no matter how much they contain, when scanned, the QR code should allow the user to access information instantly. It can be used for payments, sharing contacts and Wi-Fi passwords and lots more.
  • The popular and common argument is that since POS machines are expensive, cheaper options such as QR scanners should be pushed forward to local traders.

READ: Telecoms, FSI to hugely boost Nigerian Economy in 2021 – CWG’s Business Director

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Financial Services

CBN unveils framework for regulatory sandbox operations

CBN has issued a regulatory Sandbox framework towards engaging with the operators in the Fintech space.

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The Central Bank of Nigeria has taken proactive steps towards ensuring more flexible ways of engaging with operators in the payment solutions/fintech space, in a bid to tacitly regulate how operators churn out their new products and services.

To this end, CBN has introduced Regulatory Sandbox which is a formal process for firms to carry out live tests of new, innovative products, services, delivery channels, or business models in a controlled environment, with regulatory oversight, subject to appropriate conditions and safeguards.

It is expected that the CBN would stay abreast of innovations while promoting a safe, reliable and efficient Payments System to foster innovation, without compromising the delivery of its mandate.

What you should know

  • A regulatory sandbox is a framework set up by a regulator that allows FinTech start-ups and other innovators to conduct live experiments in a controlled environment under a regulator’s supervision. It encourages innovation that can improve the design and delivery of payment services.
  • No doubt, regulations around Fintech are still emerging and developing, there is still a high entry barrier for new entrants and it is expected that Sandboxes would present them with a safe testing environment and ease regulatory onboarding.
  • Sandbox is quite suited for new products, services or solutions that are either not contemplated under the prevailing laws and regulations, or do not precisely align with existing regulations.
  • Sandbox is intended to promote effective competition, embrace new technology, encourage financial inclusion and improve customer experience, with a view to engendering public confidence in the financial system.
  • The framework provides guidance on the establishment, the applicable rules and operations of a Regulatory Sandbox for the Nigerian Payments System, as well as providing standards for the operations of a Regulatory Sandbox, prescribes the processes and procedures for analysing, collecting, updating, integrating, and storing consumer data and information.

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Financial Services

Standard Chartered Nigeria Plc crashes ‘personal loans’ interest rate to 1% monthly

The Bank crashed its interest rate to one of the lowest in Nigeria’s lending space.

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Standard Chartered: Easy Banking at no cost

Standard Chartered Nigeria Plc, has crashed its interest rate for ‘personal overdraft’ from 1.25% to 1% per month, according to information seen by Nairametrics.

Nairametrics understands that this review makes the rate, one of the lowest in Nigeria’s lending space, especially when compared to other players in the industry.

READ: Telecoms, FSI to hugely boost Nigerian Economy in 2021 – CWG’s Business Director

This is a strategic move by the bank as it makes major inroads into Nigeria’s competitive but lucrative retail end of lending. The retail end which includes divisions such as personal loans, payday loans is highly competitive with Fintechs, and other banks all jostling for the same market.

READ: InfraCredit guarantees TSL’s issuance of a N12 billion 10-year Series 1 Infrastructure Bonds

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Despite efforts by some of the banks to restructure their loan books due to the adverse effect of the pandemic, banking sector credit to the private sector improved to N19 trillion in the third quarter of 2020 representing a 15.6% increase from 2019.

READ: Nigeria’s GDP growth to rebound between 1.7% and 2.0% in 2021 – United Capital report

Notably, according to a CBN survey on credit conditions as reported by Nairametrics, supply of secured and unsecured credits to households is expected to increase in the first quarter of 2021, having recorded an increase in the previous quarter (Q4 2020).

Meanwhile, a cursory review of lending data on the websites of some sampled financial institutions, revealed that some financial institutions retained or downwardly reviewed their monthly interest rate on payday loans. For example, GT Bank Quick credit crashed its rate from 1.75% to 1.33%.

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READ: Over 1 million people took loans from banks below 20% interest rate in 1 year- CBN

Furthermore, UBA Click credit maintained its 1.58% charge, Zenith Bank term loan remained at 2.16%, Renmoney retained its 2.98% interest rate, and a host of others.

READ: Nigeria Fintech startup, CredPal raises $1.5million funding

What you should know:

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  • According to Standard Chartered, Personal Overdraft facility provided by Standard Chartered Plc is a revolving facility targeted at salaried customers with 12 months tenor and usually based on 50% of the net monthly salary of customers.
  • A minimum salary qualification of N50,000 is specified.

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