Knowledge

EIB Awards for Innovation and Social Impact

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At the third EIB Southern Africa SME & Microfinance Academy, the European Investment Bank (EIB), the bank of the European Union, honoured three leading inclusive financial institutions in Southern Africa for innovative solutions and social impact in Micro, Small and Medium Enterprise finance...

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Female Participation in the Botswanan Economy

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  Botswana has taken significant steps towards diversifying its economy. These include diversification away from the historically diamond-heavy economy, reducing unemployment and the empowerment of women. Female entrepreneurs are on the rise in Botswana. The Mastercard Index of Women Entrepreneurs (which tracks the percentage of female business ownership in 54 countries), ranked Botswana second in the world in 2017, with female business ownership at 34.6% (a close second to Uganda at 34.8% – Saudi Arabia scored the lowest at 1.5%). Not only are Botswanan women stepping out of the shadow of their male counterparts in terms of business ownership, but... View Article

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Improving South Africa’s Payments Infrastructure

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  BankservAfrica has recognised the need for significant improvement of South Africa’s payments infrastructure. The focus of BankservAfrica for 2018 will be keeping South Africa’s payments infrastructure in-line with the advancing of a digital economy and to promote financial inclusion. According to Emile Burger, the COO of BankservAfrica, “Design-phase talks were being held with bank executives and the Payments Association of South Africa on what the future payments architecture should look like.” The consensus is that it should be affordable and easily accessible if it is to promote financial inclusion. An open-source software released by the Bill & Melinda Gates... View Article

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Scaling Up African MFIs

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This article is a synopsis of some of the key take-away points from the “Scaling Up African MFIs” panel discussion at European Microfinance Week in Luxembourg on 1 December 2017. The panelists were Soulemane Djobo (Senior Projects, ADA), Gregoire Danel-Fedou (Group COO, Advans Group), Alexandre Nayme (Head of Social Business and Microfinance Africa, BNP Paribas), Eric Campos (CEO, Grameen Credit Agricole Foundation) and Edmund Higenbottam (MD, Verdant Capital). Edmund Higenbottam discussed the importance of the availability of funding for microfinance institutions (“MFIs”) in Africa is largely dependent on the size of the institution. Most investors prefer larger investment sizes and... View Article

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The Future of Financial Services

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This article is a synopsis of some of the key take-away points from “The Future of Financial Services” panel discussion at SuperReturn Africa in Cape Town on 5 December 2017 with the following panelists: Chijioke Dozie (CEO, OneFi) and Edmund Higenbottam (MD, Verdant Capital). OneFi is an innovative consumer lender in Nigeria, using technology to underwrite, disburse and collect loans. Edmund and Chijioke expect technology to be the driving force that will shape the future of the financial services industry in Africa. Technology is expected to play a significant role on a strategic level, as well as on an operational... View Article

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Soc Gen Launches YUP

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  Societe Generale (“Soc Gen”), a multinational French bank (in partnership with Tagpay, a French fintech firm), has launched a new mobile banking app called YUP. YUP has thus far been introduced in Ivory Coast and Senegal, and provides an alternative to traditional banking. The app offers transactional and other financial services, even to those who do not have a bank account. The functionalities of “banking” with YUP include basic transactional services like deposits, withdrawals and money transfer among others. The introduction of more advanced services through the app, like credit advances, is in the pipeline. YUP is already being used... View Article

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The Impact of Basel III and IFRS 9 on Bank Lending

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  Much has been written about Basel III and IFRS 9 and their impact on bank lending. It is important to remember that, especially outside South Africa, banks are large lenders to non-bank financial institutions and other financial intermediaries. We estimate that around one-quarter of borrowings by non-bank lenders in Africa, outside South Africa, is sourced from banks. Basel III, and especially higher minimum common equity tier 1 ratios mean the banks have to increase their lending rates (or cut staff costs) to stand still in terms of their return on equity. Equally, banks must either raise equity or reduce... View Article

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Verdant Capital’s Sale of afb Ghana on behalf of JUMO World Recognised as the Best Financial Services Transaction in Africa 2017

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  Verdant Capital’s successful sale of afb Ghana on behalf of JUMO World has been awarded the accolade, best financial services transaction in Africa 2017. Full financial details were not disclosed but at the time of sale, afb Ghana had total assets of GHS 97 million (approx. USD 23 million). JUMO World is a leading Africa fintech business, which elected to sell the afb Ghana when it ceased to be core to its operations. The transaction was awarded the accolade in recognition of the breadth of interested generated in the transaction, including from local financial institutions, regional pan-African institutions and... View Article

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Discovery and TymeDigital set to Launch Digital Banks in South Africa

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  In September 2015, Discovery announced its intention to launch a bank. Fast-forward two years, and Discovery has obtained a banking licence. Discovery has a track record of achieving success by taking an unconventional approach and differentiating themselves from competition. One can be reasonably certain that this will be the case for Discovery Bank as well. What we know for certain is that the bank will be branchless and target the higher end of the market, i.e. LSM 8 and above. In a similar way to how Discovery Health incentivises people to live a healthy life, it is expected that... View Article

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Futuregrowth Investment in Retail Capital

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  In September 2017, Futuregrowth Asset Management (a specialist investment company within the Old Mutual Investment Group) acquired through its Development Equity Fund, a minority shareholding (39.4%) in Retail Capital after receiving approval from the Competition Commission of South Africa. Development Equity Fund has a long and successful track-record of making investments with a social and developmental focus. Having previously invested in the education and healthcare sectors among others, the fund hopes to increase their exposure to SMEs. Retail Capital was founded in 2011 and is headquartered in Cape Town with other offices in Johannesburg and Durban. Retail Capital funds... View Article

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Nigeria’s Financial Inclusion Education Campaign

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  A study by the Nigerian Deposit Insurance Corporation in 2012 revealed significant literacy gaps among Nigerian adults, and a positive correlation between literacy and income. The literacy gaps are more prominent with regards to money management, and a significant portion of the population do not possess the skills to manage their finances and make use of the available financial products. Many Nigerians who do make use of financial services are victims of unethical practices by financial institutions, which can be attributed to low financial literacy. A collaboration between the Central Bank of Nigeria (“CBN”), the Nigeria Education Research and... View Article

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BBS Demutualisation

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  Botswana Building Society (“BBS”), headquartered in Gaborone is the leading provider of property finance in the country. BBS is in the process of demutualising as a Society to become a Company limited by shares. The decision to demutualise received support from the majority of shareholders (99.97%) at the Special General Meeting held on 24 August 2017 in Gaborone. BBS expects to acquire the Conversion Certificate from the Registrar of Building Societies and the Certificate of Incorporation from the Registrar of Companies by November 2017. BBS will apply for a banking licence in January 2018 and expects to become a... View Article

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RenMoney – MSME Finance to Small Scale Retailers Adopting the Baxi Box

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In 2015, Capricorn Digital Limited introduced a unique technology-driven Point of Sale (POS) device known as Baxi Box (pictured above), to help improve online business transactions on a real-time basis for the mass market consumers (people who do not use smartphones) through a network of agents. Capricorn is a digital solutions and distribution company that supports the growth of agents, merchants and MSMEs through the efficient and effective distribution of digital products and services utilising its extensive distribution network across Nigeria. RenMoney is providing loans to small retailers and other agents to fund purchases of a Baxi Box and associated... View Article

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Africa Accounts for Over Half Mobile Money Transactions Worldwide

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The 2016 Groupe Speciale Mobile Association (“GSMA”) report “State of Mobile Money in Sub-Saharan Africa” revealed that the number of live mobile money services amounts to 140 across 39 countries in the Sub-Saharan region at the end of 2016 from its lowest level of 2 in 2006. This represents more than half of the 277 mobile money transactions across the globe.   In the last ten years, the global mobile money adoption has been driven by the growth in the Sub-Saharan Africa where this comprises of East Africa, Central Africa, Southern Africa and West Africa bringing the region at the... View Article

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South Africa Poses a Challenging Environment for Entrepreneurship

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  A study by the Organisation for Economic Co-operation and Development (“OECD”) released in July 2017 revealed that just 26% of business loans from banks in South Africa are granted to SMEs, and that the number of microfinance providers has dropped. This is significantly lower than other wealthy emerging countries. For comparison, banks in South Africa’s BRICS counterparts China and Brazil lend 64% and 40% of their business loans to SMEs respectively. A study by the International Labour Organisation in 2016 revealed that microfinance ranked last out 11 possible ways to finance a start-up business. The high unemployment rate and... View Article

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Amazon to Expand its Lending to Small Businesses in Challenge to Big Banks

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  Amazon, a Seattle-based company announced in June 2017 that Amazon Lending has surpassed USD 3 billion worth of loans and advances to small businesses since its launch in 2011. The company is targeting to expand its lending to small businesses in the US, the UK and Japan which will prove to be a direct threat to the big banks which have historically denominated these markets. We view Amazon Lending as interesting case study for the African market given the increasing successes of many e-commerce players and various supply chain financing institutions (more on this next month). Within the past... View Article

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Safaricom Rolling out Mobile Money after the Sale of Vodafone Stake

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  In May 2017, Vodacom announced it had agreed to buy from its parent company Vodafone, a 35% stake in Safaricom, a Nairobi-based mobile network operator company for USD 2.6 billion. The sale of such stake will enable Safaricom to look to new markets as it is now planning to expand its popular mobile-banking service M-Pesa into other African countries such as Nigeria and Angola. This move is expected to expose the company to growth opportunities outside its home country where it is under pressure from lawmakers and regulators with respect to its dominance in the market. M-Pesa has more... View Article

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Premier Credit – Asset financing business

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  Premier Credit, an MSE-lending business in Kenya, Uganda and Tanzania, has continued to expand and broaden its “Partnership Products” programmes, its high impact asset financing programmes. Premier Credit has financed 500 bio-gas digesters in Kenya since 2014. Each digester uses 2 kg of cow dung per day, approximately the product of two cows. Each digester produces three cubic metres of gas each day which is used by most households for cooking. The bi-product is a slurry that can be used as a fertiliser, especially for higher value crops such as vegetables. The bio-gas digesters are an Indian technology. The... View Article

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Senegal, a member of Western African Economic and Monetary Union (“WAEMU”) Creates Digital Currency History

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  December 2016, Senegal, a member of the West African Economic and Monetary Union (“WAEMU”) became the second largest country in the world after Tunisia to launch a block-chain based national digital currency which could either provide big opportunities or competition in the banking sector. Known as the eCFA, it is designed to operate alongside the CFA Franc, the country’s and the region’s national currency, adopted by fourteen countries in the region. The new currency will be compatible with other digital cash systems like MPesa which have themselves been revolutionary for the millions of unbanked population in the African continent.... View Article

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Mobile Money Panel at East Africa Com – May 2017

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  A number of issues were raised on the East AfricaCom Mobile Money panel in May regarding the future of the USSD mobile money channel, the breadth of services offered through the channel and the potential threats to and opportunities for this business model. The panel was hosted in Nairobi, Kenya, the birthplace of mobile money. Ed Higenbottam, Managing Director of Verdant Capital identified two competing themes: (i) the ever-broadening product offering through the USSD channel: payments, micro-loans, micro-insurance, remittances, micro-investments (for example the recent M-Akiba bond); and (ii) the long-term potential threat to the USSD-business model as a result... View Article

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Caisse Centrale de Garantie wins the “Financial Inclusion” Award at the 2017 African Banker Awards

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Caisse Centrale de Garantie (“CCG”) based in Morocco won the “Financial Inclusion” trophy hosted at the African Banker Awards 2017, organized on the side-lines of the annual meetings of the African Development Bank (“AfDB”) held in Ahmedabad, India. Such an award recognizes CCG’s commitment and successful strategy in terms of financial inclusion with a demonstrated impact on improving access to financing for MSMEs and low-income individuals. Established in 1949, the CCG is a public financial institution, which is assimilated to a credit institution under the banking law. The CCG is administered by a Board of Directors chaired by the Minister... View Article

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Verdant Capital advises JUMO World Limited on the sale of 100% of afb Ghana to Letshego Holdings Limited.

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Letshego has announced the completion of the acquisition of afb Ghana following final regulatory approvals.  afb Ghana was launched in 2010 and has total assets of GHS 97 million (approx. USD 23 million), making it now one of the largest consumer and micro lending institutions in Ghana.  JUMO World advised by Verdant Capital, has sold the business in order to focus on its core financial technology business. Letshego Holdings Limited, is a leading pan-African inclusive finance institution, listed on the Botswana Stock Exchange, with total assets of BWP 7.5 billion (approx. USD 710 million).  The transaction is one of a series of successful transactions... View Article

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47% of Tanzania’s GDP Transferred through Mobile Phones

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Tanzania has witnessed a significant increase in financial inclusion reaching 86% from its lowest level of 16% eight years ago. Mobile money revolution is the driver of such growth with TZS 43 trillion (equivalent to 47% of the country’s GDP) being transferred through mobile phones. Mobile money has helped many Tanzanians including the poor to transact in a fraction of seconds despite the vast distances between some of them. Mobile money services have become popular just in a decade with major players including Vodacom’s M-Pesa, Tigo Pesa, Airtel Money and Ezy Pesa competing against each other for customers. This brings... View Article

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