A list of feature articles and thought pieces by the Verdant Capital team in leading industry publications.
The Prudential Authority (PA) is actively considering introducing additional tiers within South Africa’s commercial banking licensing framework. This initiative aims to lower entry barriers for smaller banks, promoting competition while safeguarding the stability of the financial system. Such a shift is essential not only for increasing competition but also for advancing financial inclusion and supporting small and medium-sized enterprises (SMEs), which are the backbone of South Africa’s economy. Historically, South Africa’s banking sector has been dominated by a handful of large institutions, with few new entrants since the early 2000s. However, there has been a recent resurgence in interest in […]
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The past few years have seen the African fintech sector experience a remarkable surge in activity, with the number of tech start-ups in Africa tripling, nearly half of which were fintech ventures. This proliferation, often termed a “fintech eruption,” captured the attention of both local and international investors, prompting a comprehensive assessment of post-pandemic investor sentiment by Verdant Capital in December 2023. The survey assessed investor sentiment regarding the target companies within their mandates, the position of the pre-money valuations in 2023, risk mitigating factors implemented to curb value erosion in their portfolios, challenges in the African Fintech landscape, and overall […]
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Globally, macro-economically volatility has increased over the last four years, and along with country specific factors has led to volatility, stress, and in some cases sovereign default in specific countries in the continent. As specific markets recover, investors are offered the opportunity to re-engage, but how soon is too soon to reinvest after a default? Verdant Capital chaired a panel session at the European Microfinance Week (EMW), which took place in November 2023 in Luxembourg. The panellists were Felistas Coutinho, Managing Director at Tujijenge Tanzania Limited (a subsidiary of LOLC), Isabel Wanjohi, Group Treasurer at Platcorp Group Holdings, and Orli Arav, […]
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By Edmund Higenbottam, Managing Director, Verdant Capital, manager of the Verdant Capital Hybrid Fund Greater macro-economic volatility, as well as outright macro- economic headwinds, are likely to impact the asset allocations of both LPs and GPs for the balance of the decade. The early years of the 2020s, which were overshadowed by the COVID-19 pandemic and preceded armed conflict in Europe and sharp monetary policy changes in the US, saw a growth in the private credit asset class as a proportion of private capital in Africa, albeit from a low base. Will private credit continue to enjoy growth – both relative and absolute – in these […]
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Verdant Capital’s Inclusive Financial Institutions (“IFIs”) Survey for FY2022 captures the effect of key macroeconomic conditions, including increased interest rates, currency volatility and inflation, and responses by IFIs. The survey also looks at how IFIs have responded to the ‘new normal’ brought about by the Covid-19 pandemic. This report summarises the survey’s key takeaways. 83% of respondents indicated that they felt the impact of increased USD and domestic currency interest rates in 2022. 30% of respondents have restructured or renegotiated any of their borrowings with lenders. 17% of respondents reported that they had challenges repatriating foreign currency debt service payments. […]
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The financial ecosystem in Africa is reaching an exciting new phase of development, especially in terms of the provision of financial services for the underbanked and unbanked. Inclusive financial institutions (IFIs) focusing on this segment of the market, and rather than traditional banks, continue to be at the vanguard of financial inclusion. For the IFI sector to continue expanding, it must attract additional capital, which in turn requires commercial success. The 2010s was a period of rapid evolution in important technologies, including mobile wallets, mobile payments, and means of data acquisition and aggregation. The middle and latter parts of the decade […]
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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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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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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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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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Category: Media, Opinion
Date: 26 August 2021
https://www.cnbcafrica.com/media/6269444453001/
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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 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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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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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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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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Category: Opinion
Author: Edmund Higenbottam, Patrick Ball
Publication: Making Finance Work for Africa Blog
Date: 8 June 2020
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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Category: Opinion
Author: Edmund Higenbottam, Patrick Ball
Publication: MicroCapital Monitor, May 2020
Date: 1 June 2020
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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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 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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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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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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Category: Financial Inclusion Africa, Media, Opinion
Author: Edmund Higenbottam
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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Category: Media, Opinion
Author: Imran Patel
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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Category: Financial Inclusion Africa, Media, Opinion
Author: Ed Higenbottam
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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Category: Opinion
Author: Edmund Higenbottam
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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Category: Opinion
Author: Edmund Higenbottam
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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Category: Opinion
Author: Edmund Higenbottam
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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Category: Opinion
Author: Edmund Higenbottam
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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Category: Opinion
Author: Edmund Higenbottam
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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