Africa’s corporate sector wants to finance its most ambitious infrastructure projects and M&A deals at home, in local currencies and through African financial institutions, from local banks to local pension funds, who appear as an increasingly important source of long-term capital. Regional banks may lack the balance sheet capacity to finance 7-to-12-year project debt or large acquisitions. Corporates therefore turn to foreign firms – typically US or European banks – which arrange two-thirds of Africa’s non-financial corporate debt, 53% of it in dollars. Others bypass banks and issue debt on exchanges outside Africa where liquidity is deeper. MTN Nigeria’s oversubscribed 2021 naira bond and Dangote Industries’ ₦300bn bond programme show local currency financing arranged by African banks can fund big-ticket deals – but they remain exceptions. African financiers meet corporate clients to ask: How can more of the continent’s largest deals be financed, structured and ultimately owned onshore?
Key points:
- What products and governance upgrades are CFOs looking for to source financing locally for their biggest deals – and how can banks boost their equity to be able to offer such products?
- What role can pension funds, insurers and locally-backed investment funds play in financing large projects and M&A transactions, and does the origin of LP capital matter?
- Deepening African markets: What will encourage corporate bonds listings on local exchanges, in local currencies and arranged by African banks?
- How can DFIs and regulators enable banks to lend long-term for big projects, when rules penalise long-tenor loans and reward parking capital in short-term government securities?