South Africa’s Johannesburg-based Absa Group Ltd. seals a ($497m) R7 billion deal with MIGA, a member of the World Bank Group to help expand or boast lending across seven countries in Africa. This is a 15-year deal on Absa’s investments in Ghana, Uganda, Mauritius, Zambia, Seychelles, Mozambique, and Mauritius.
“The guarantees provide coverage on mandatory reserves held by the domestic subsidiaries in their respective central banks”, said MIGA in a statement.
This is in an effort to reduce the regulatory risk weighting of mandatory reserves enabling subsidiaries to provide lending in Africa.
“While essential for regulatory reasons, reserves held with central banks consume consolidated capital and do not generate income for subsidiaries and their international parent,
“MIGA is freeing up risk capacity associated with the reserves and helping make more financing available for corporates and small and medium enterprises.”, said the MIGA Executive Vice President Hiroshi Matano
Other Absa’s subsidiaries such as Mauritius and Kenya are expected to lend $325 million. Jason Quinn, who is the Absa Group Financial Director said, it’s a delight to work with MIGA
“We are pleased to work with MIGA. Their guarantees allow us to provide additional funding in our subsidiaries in Ghana, Kenya, Mauritius, Mozambique, Seychelles, Uganda, and Zambia.
“We are a founding signatory to the UN’s Principles of Responsible Banking and aim to play a shaping role in society, to enable sustainable economic development in our presence countries and to increase our funding to environmental and sustainable opportunities,” he added.
MIGA acknowledges that growth in sub-Saharan Africa requires taking risks, and deepening financial systems by expanding credit for local and foreign investors.LISTEN TO LIVE RADIO
iBusiness on COVID-19