Knowledge

A list of feature articles and thought pieces by the Verdant Capital team in leading industry publications.

The Race for Payments in Africa: Where are we now and what’s next?

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Date: 23 March 2022

Verdant Capital participated in an important panel discussion on the “race” for digital payments at the Africa Fintech Summit in Nairobi this past month. Imran Patel, Director at Verdant Capital, was joined by senior executives from Africa’s leading payments-focused fintechs: Amandine Lobelle, Head of Business at Paystack, Leon Kiptum, Kenya Country Director at Chipper Cash, Hilda Gathuya, Kenyan Country Manager at Global Accelerex, and Sike Bamisebi, Chief Business Officer at Cellulant. The panel was moderated by Tage Kene-Okafor of TechCrunch. The discussion covered key drivers of digital payments including competitive dynamics, cross-border expansion strategies, regulation, success in new markets, as well […]

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Zambia’s Newly-Elected President Announces the Creation of a Ministry of Small and Medium Enterprises to Address Challenges of Access to Finance

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Date: 17 November 2021

President Hakainde Hichilema’s victory in the August Zambian presidential election is said to have caused the winds of change to begin blowing within the country. His win was largely favoured and celebrated by the Zambian youth who constituted over 50% of the electorate. Alongside vows to foster a better democracy and restore the country’s economy, the President and his government also announced the creation of three new ministries: the Ministry of Technology and Science, the Ministry of Green Economy and Environment and the Ministry of Small and Medium Enterprise Development. Zambia’s new Ministry of Small and Medium Enterprise Development is […]

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The Need for Wholesale Funding Inclusive Financial Institutions to Strengthen their Lending Operations in Africa: The Nigerian Microfinance Banking Sector Case

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Date: 17 November 2021

In March 2020, and in the wake of the COVID-19 pandemic, the Central Bank of Nigeria (the “CBN”) announced the need to recapitalise the microfinance banking sector. The CBN in consideration of the impact of the COVID-19 pandemic on economic activities extended its deadline to April 2021 for microfinance banks (“MFBs”) to comply with the outlined minimum capital requirements. In March 2019, the CBN had reviewed the minimum capital requirements for MFBs, with a view to ensuring continued operations of these banks in rural, unbanked and underbanked areas of the economy. National MFBs were expected to meet the minimum capital […]

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Navigating Credit Risk in Africa’s Cleantech Sector

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Date: 17 November 2021

The shift towards disintermediated, de-centralised energy generation in Africa is moving at a fast pace. The failure of many African governments to meet the energy needs of their economies has forced individuals and businesses across the continent to seek alternate sources of power. To aggregate this demand, energy-as-a-service (EaaS) is becoming a scalable business model to entrepreneurs and companies that have been able to identify, implement, execute and derive its strategic benefits. OneWattSolar (Owatts) is a Nigeria-HQ, Africa focused “cleantech” decentralized EaaS aggregator, with a high end, transparent digital payment/blockchain platform. Owatts makes clean energy available to a wide spectrum […]

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Video Africa Virtual Investor Conference Drives Capital Raising Activities in Africa

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Date: 15 July 2021

Verdant Capital – IMAP South Africa recently hosted its proprietary Video Africa virtual investor conference. Edmund Higenbottam, Managing Director at Verdant Capital shares details on the conference’s origins and explains why investor conferences such as theirs are so vital in terms of helping drive essential capital raising activities especially during the current economic crisis triggered by COVID-19. What led to you to decide to host your own investor conference? The first Video Africa was held last year during the first weeks of the disruption caused by the pandemic. We had been due to attend a large investor event in London, […]

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Africa – The Fintech Fulcrum Between East and West

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Date: 3 February 2021

Africa is currently home to just under 500 Fintech firms¹, with South Africa, Nigeria, and Kenya at the forefront of startup activity. So, what makes the continent so attractive? The African Fintech market is not only potentially very large, it is highly unpenetrated. Of the 1.1 billion people in sub-Sahara Africa, two-thirds of them are unbanked. Therefore, there is enormous scope for Fintechs to onboard these demographics into the financial sector. Furthermore, customers with access to credit is only a fraction of the proportion of the population with a bank account, so for innovative credit businesses, this is a huge […]

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African Fintech Sector: Growing up with Covid

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Date: 26 January 2021

In the December 2020 issue of the Africa Global Funds magazine, Verdant Capital’s Edmund Higenbottam discussed the trends driving growth in the African fintech sector, including drivers during the Covid-19 pandemic. The well-documented themes for the success of African fintechs include the under-penetration of financial services, but also the nominally low income levels and low density of its populations. “Last-mile” fintech businesses such as Baxi in Nigeria, whereby tens of thousands of merchants and micro-entrepreneurs “double” as agents in Baxi’s national network as well as in its digital platform provide critical “last mile” solutions to these challenges. Furthermore, a well-trained and cost […]

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Covid-19 and Congo: Opportunity Amidst the Crisis

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Date: 11 September 2020

Like elsewhere in Africa, the worst-case health impacts of Covid-19 in the DR Congo have so far not materialized. But like elsewhere, the economic impacts of the crisis have been swift and widespread. In response, the government announced several economic stimulus programs and initiatives. To increase liquidity and funding, the Banque Centrale du Congo (“BCC”) granted a moratorium on the increase in commercial banks’ minimum capital requirements to USD 50 million until January 2022. The BCC also opened a long-term funding facility for banks for up to 24 months and relaxed requirements on the classification of non-performing loans (“NPLs”), while […]

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The end of the CFA Franc? The debate continues…

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Date: 29 July 2020

Late last year, Ivorian President Alassane Ouattara and his French counterpart Emmanuel Macron jointly announced plans for the West African CFA Franc (the “XOF”) to be replaced by a new regional currency, the “Eco”, from mid-2020, reversing the decades-long currency regime in West Africa. The XOF is pegged to the EUR at 1 EUR to 655.957 CFA Francs. The critical tenant of the currency is that the French Treasury guarantees convertibility at this fixed-rate, in exchange for UEMOA-member countries depositing 50% of their respective reserves with the French Treasury. The timing of the December announcement was viewed with some surprise, […]

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Receivables Finance: Innovative approaches to unlocking Access to Finance for African SMEs

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Publication: Making Finance Work for Africa Blog

Date: 8 June 2020

Making Finance Work for Africa Logo

Restricted access to finance for SMEs remains a roadblock to growth for economies worldwide. Economies across the African continent remain no different: in South Africa, where SMEs are estimated to employ between 30 and 50% of the workforce and contribute 20% of GDP[1], the estimated credit gap for SMEs in SA between $6 and $23 billion;[2] in Kenya, recent estimates put the MSME Finance gap as a percentage of GDP at 31%, totalling nearly $20 billion.[3] Similar estimates put SMEs providing 80% of the country’s employment and contributing 20% of GDP;[4] and  in Côte d’Ivoire, 2016 government reports indicated that […]

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SPECIAL REPORT: One Size Does Not Fit All – Restructuring for Uncertain Times, from Verdant Capital

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Publication: MicroCapital Monitor, May 2020

Date: 1 June 2020

MicroCapital

This sponsored content was written by Edmund Higenbottam and Patrick Ball, who serve, respectively, as the Managing Director and a Director of Verdant Capital. Verdant Capital is a leading specialist financial advisory firm that operates across Africa. A combination of factors is challenging the economic sustainability of financial institutions and other businesses large and small across Africa. Globally, the COVID-19 crisis and associated lockdowns have had the effect of “calling the end of a long bull market” that has run since the credit crisis of 2008. In most African markets, however, the bull market had already ended some years before […]

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Restructuring – time for a change in direction?

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Date: 29 May 2020

A combination of factors in the current environment is challenging the economic sustainability of businesses and financial institutions large and small across Africa. Globally, the COVID-19 crisis and associated lockdowns had the effect of “calling the end of a long bull market” since the credit crisis in 2008.  In most African markets, the bull market had already ended some years before the pandemic. In Africa, the pandemic has compounded the difficulties presented by weaker commodity prices, sovereign credit challenges, volatile exchanges rates and uncertain public policy regimes. From an investment perspective, there has been an increasingly “risk-off” investor approach to […]

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Ghana – digital payments in the Covid-19 era

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Date: 29 May 2020

Ghana has been taking steps to sustain its economy amidst the coronavirus pandemic and related lock-downs and has started multiple initiatives. African countries, in general, have taken a hard knock from the impact of the pandemic and most countries remain in the early stages. The Ghanaian government’s quest to ease the pain of small businesses from the devastating consequences of the novel coronavirus is expected to reach at least 200,000 companies, as said by the National Board for Small Scale Industries (NBSSI). Finance Minister Ken Ofori-Atta in March announced that as part of the Coronavirus Alleviation Program (CAP), an amount […]

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Proactive Crisis Management – Enterprises Taking Action to Stay Ahead of Crisis

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Date: 30 April 2020

Verdant Capital’s clients have proactively addressed the pandemic-induced economic crisis, on behalf of staff and clients, acting in cooperation with stakeholders. The companies are looking ahead at their strategic positioning for the period post crisis. Some examples of the steps taken are set out below. Tugende, the leading MSME asset finance firm in East Africa, quickly suspended all penalties for two months and allowed clients to retain their assets and keep working where possible under local lockdown rules. Tugende also provided a $6.50 unconditional cash transfer to its 23,000+ clients across Uganda and Kenya to help with household essentials during […]

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Collateral Registry for Movable Assets: Helping unlock access to finance for MSMEs across Africa

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Date: 28 February 2020

Micro-, small- and medium-sized businesses (MSMEs) remain the engines of Africa’s economies. They are the principal job creators, and thus critical sources of liquidity. Paradoxically, most entrepreneurs behind these ventures do not have land or real estate to use as collateral to access expansion capital such as bank loans. A 2006 World Bank study affirmed this observation, reporting that 50% of credit applications to banks were rejected because of “insufficient collateral.”  Microfinance plays an integral role in fulfilling this liquidity gap in Africa, as elsewhere, but is often insufficient, keeping many MSMEs from realizing their potential. Furthermore, weak creditor rights, […]

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Hybrid Capital Solutions to Support the Next Phase of Inclusive Growth

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Publication: MicroCapital Monitor, October 2018

Date: 17 November 2018

In recent years, the Inclusive Financial Institution sector has grown significantly in Africa and elsewhere, driven in part by growth in the global specialist investor base supporting the sector, and in part due to the growth of local debt markets. In Africa, this growth has stretched the equity capital bases of many institutions – and of the sector as a whole – due to the narrow range of equity and equity-like capital sources and instruments available to these institutions. One solution to this problem is hybrid capital, an intermediate capital type that sits between debt and equity while meeting the regulatory capital requirements of financial institutions. In Africa, […]

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Banking on the Future (DRC)

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Date: 19 October 2018

The Democratic Republic of Congo (DRC) is a country with significant resources. Its surface area of 2.3 million square kilometres (km) spans the equivalent of two-thirds of the European Union. Despite its vast expanse, the country remains virtually unconnected due to the lack of basic infrastructure, agricultural production, and notable industrial base. As per the CIA World Factbook, only 2,794 km of paved road exists along with only 4,000 km of railways leaving the country disconnected and the population without access to affordable domestic transportation. In contrast to this reality, the DRC, with 80 million hectares of arable land and […]

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Special Report: “Aadhaar: Lessons for the African Continent?”

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Publication: MicroCapital Monitor, May 2018

Date: 5 May 2018

In 2009, India launched the world’s largest IT project, i.e. the Aadhaar biometric identification program. The program is intended to drive social and financial inclusion, reform public-sector service delivery, improve fiscal management, increase convenience, etc. An Aadhaar number can be viewed as a permanent financial address. Considering that almost the entire Indian population is now enrolled in Aadhaar – the underprivileged as well as the rich – it also can be viewed as a tool for justice and equality. The program consists of the following: A demographic database with a 12-digit number for each person, secured by fingerprint and retina […]

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Driving financial inclusion in Africa: Verdant Capital has identified four main themes as the driving forces behind financial inclusion

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Publication: Banker Africa Issue 42 March 2017, CPI Financial March 2017

Date: 24 March 2017

A critical theme in terms of the development agenda in Africa is financial inclusion, meaning increasing the proportion of poorer people (including those who live in rural areas) who have access to financial services, for example basic savings products, credit and insurance. Persons without access to such services are said to be financially excluded. We identify four key themes driving financial inclusion in Africa: (i) technological change, (ii) adoption of best practice, (iii) the broadening of wholesale funding markets available to the lending institutions on the ground, and (iv) finally, financial inclusion has become a mainstream segment for a broad […]

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The M&A Market in Africa’s Alternative Finance Sector

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Publication: MicroCapital Monitor, February 2017, Vol 12: Issue 2

Date: 16 February 2017

Headlines in the M&A market in Africa recent years seem to have been dominated by the to-ing and fro-ing of Anglo-South African giants such as Barclays Africa / ABSA and Old Mutual. However, the middle market in financial institutions has been perhaps more active. The M&A market in the alternative finance sector (non-bank or “speciality” lenders) has seen at least thirty transactions (excluding minority stakes) completed over the last five years, and activity levels remain robust over the last 18 months notwithstanding the slow-down of the M&A market overall. The alternative finance sector covers a range of credit institutions which […]

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Raising Funds for Non-bank Financial Institutions in Africa

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Publication: MicroCapital Monitor, January 2017, Vol 12: Issue 1

Date: 14 January 2017

The non-bank financial institution (NBFI) sector, often referred to as the alternative finance sector or the shadow banking sector, around the world is largely dependent on the institutional market for funding. By regulation, NBFIs in most markets are prohibited from gathering deposits or restricted from transactional banking services, which are critical to attract deposits. In most markets, banks themselves are reluctant to lend to NBFIs, given the potential long-term competitive threat. For example, Capitec of South Africa and Equity Bank of Kenya, which are now very much fully-fledged banks, have roots as NBFIs. In South Africa, the deepest and broadest […]

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Is technology the key disruptor of financial services across Africa?

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Publication: Deal Makers Africa, Vol 9: No 2, 2016

Date: 19 August 2016

In many markets on the African continent, significant growth in the number and breadth of financial services providers can be seen. This is in terms of the number of non-bank financial services providers who have reached critical mass in terms of size and scale, as well as the number of “non-traditional banks” (ie non-bank financial services providers) who have climbed the regulatory hierarchy and become deposit-taking banks (for example, Trustco in Namibia, and before them Capitec in South Africa). A number of critical factors have contributed to this trend including technology and innovation changing the shape of asset origination, as […]

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Has the gloss come off the Africa rising narrative?

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Publication: Deal Makers Africa, Vol 8: No 4

Date: 16 February 2016

The historic combination of favourable macro-economic conditions for Africa began to reverse in 2013, with a weakening of most commodity prices as well as the taper tantrum in the global financial markets. Over the course of last year the decline in commodity prices has continued and even accelerated, and in December, the US Federal Reserve finally announced its first increase in interest rates for nearly a decade. Two to three years of falling commodity prices has now left governments grappling with meaningful current account and fiscal deficits. Previous economic darlings, such as Nigeria and Angola – 18 months on from […]

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