The Board of Directors of the United States of America (USA) government-owned development finance institution, the Overseas Private Investment Corporation (OPIC), has approved up to $700 million in new financing and insurance to support four projects in three regions including Sub-Saharan Africa.
In a press release made available on its website on December 8, 2016, OPIC’s president and CEO, Elizabeth L. Littlefield, said that OPIC approved $700 million in support of development projects with the private sector across the globe.
Analysts said that Nigeria’s infrastructure is a potential beneficiary of the latest OPIC financial commitment, if the right legal and regulatory framework is created.
“In Sub-Saharan Africa, we are supporting a project that will help address credit constraints that local businesses face,” the OPIC president said.
“And across Asia and Africa, we are supporting a project that will focus on financial inclusion to target low income populations and small and medium sized businesses that are historically underserved by traditional financial services. We look forward to the long-term positive impact that, together, these projects will have for the people living in these regions.”
Detailing the financial commitments to the target sectors, the press release disclosed that the development finance institution (DFI), which mobilizes private capital to help address critical development challenges, pledged financial support of up to $100 million to provide opportunities to large and widely dispersed low income populations and small and medium-sized enterprises in Africa and Asia.
“The fund seeks to use business models facilitated by the internet and technological innovations to accelerate access to financial services for individuals and SMEs, while decreasing the cost of service delivery.”
In addition, the release said that the $100 million financing will be invested in Apis Growth Fund II, L.P. which is managed by Apis Partners, LLP. Apis Partners is a United Kingdom-based private equity firm that is focused on Financial Services in Growth Markets.
OPIC will also commit up to $100 million in financing to Helios Credit Partners, L.P. managed by Helios Investment Partners LLP, to provide senior secured and second-lien loans to companies in Sub-Saharan Africa that require capital for growth, acquisitions or capital expenditures, concentrating primarily on senior credit to small and mid-sized companies.
“According to the World Bank, availability of bank lines of credit to African companies is severely limited and only 20 percent of Sub-Saharan African corporations have access to bank loans or lines of credit,” OPIC’s release said.
The release noted that OPIC’s support will provide catalytic access to capital for companies that face difficulty obtaining private financing and will have a developmental impact by investing in a variety of sectors including energy, financial services, transportation, logistics, technology, and telecommunications.
Also, Johannesburg-based private equity firm, LeapFrog Investments Ltd, plans to raise $800 million for its latest fund as it pursues stakes in African banks, insurance brokers and payment companies in order to exploit opportunities presented by the growing demand amongst low-income consumers in the continent.
KarimaOlokun-Ola, a partner at LeapFrog in London told Bloomberg that Africa’s largest population in Nigeria and more sophisticated consumers in Ghana make Africa’s emerging consumer market attractive.
“We’re looking at payment companies because it’s becoming a popular tool that just offers much cheaper ways of doing business across the continent,” she said.
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