Absa signs $497 million deal to expand African financing
DURBAN – Absa Group has signed a deal of $497 million (just more than R7 billion, according to current exchange rates) that will enable it to expand financing across seven sub-Saharan countries, it said on Tuesday.
The agreement was concluded with the Multilateral Investment Guarantee Agency (MIGA), which is also a member of the World Bank Group.
DescriptionThe Multilateral Investment Guarantee Agency is an international financial institution which offers political risk insurance and credit enhancement guarantees. These guarantees help investors protect foreign direct investments against political and non-commercial risks in developing countries.
"In terms of the agreement, MIGA will issue guarantees of $497 million to Absa. The guarantees are valid for as long as 15 years and apply to Absa’s subsidiaries in Ghana, Kenya, Mauritius, Mozambique, Seychelles, Uganda and Zambia," the South Africa-based lender said in a statement.
According to the company, the guarantees would help to protect Absa against risks related to the mandatory capital reserves that it and other banks were required to hold with central banks.
The guarantees would free-up financial capacity, enabling Absa’s subsidiaries to provide additional lending and generate more revenue. The subsidiaries would increase sustainable financing for corporates and small and medium-sized businesses, as well as projects with co-climate benefits, said the organisation.
“We are pleased to work with MIGA. Their guarantees allow us to provide additional financing in our subsidiaries in Ghana, Kenya, Mauritius, Mozambique, Seychelles, Uganda and Zambia,” said Jason Quinn, Absa Group financial director.
Absa is the first African banking group to enter into this type of guarantee transaction with MIGA, it said.
African News Agency (ANA)