IFC Launches Pan-African Bond Program to Support Local Capital Markets
IFC and Standard Chartered have launched a bond-issuance program that will increase the availability of local-currency financing for private sector development in Africa. IFC expects to invest $2.6 billion in Africa this year, nearly double the amount five years ago, with the six-country domestic bond program launched today at the core of its activities.
The Pan African Domestic Medium Term Note Programme will initially focus on Botswana, Ghana, Kenya, South Africa, Uganda, and Zambia. Over the next several months, IFC will work with the respective authorities in these countries to obtain their consent to be part of the program.
Standard Chartered is appointed as the sole arranger for the program. Standard Chartered will also be the lead manager for many of the inaugural bond transactions under the program. Other financial institutions may co-lead individual bond issues.
Bonds issued through the program will raise funds that IFC will use to provide long-term, local-currency finance for African businesses, protecting them from foreign-exchange risks.
“A country can only reach its full economic potential when there's a vibrant, deep, liquid local currency capital market,” said Jingdong Hua, IFC Vice President, Treasury and Information Technology. “We're focusing our efforts to help African countries accelerate that phase of capital market development.”
Standard Chartered CEO Peter Sands said, “Standard Chartered shares IFC’s commitment to supporting the development of local capital markets in Africa, which has been a core part of our business for nearly 150 years. We are delighted to put our capital markets expertise, extensive Africa presence, and knowledge of local markets to work in partnership with IFC on this landmark initiative.
IFC builds partnerships with regulators and local authorities to establish and strengthen local capital markets. In Africa, IFC has previously worked with Ghana, Zambia, and eight members of the West African Monetary Union to establish local-currency bond programs. IFC has also obtained approvals to issue local currency bonds in Kenya and Nigeria. In 2006 and 2009, IFC issued bonds denominated in CFA francs.
IFC’s aim in Sub-Saharan Africa is to improve the investment climate, promote the growth of small and medium enterprises—the foundation of economies across the continent—and support key infrastructure and agriculture projects. In fiscal year 2011, IFC invested $2.2 billion to support private sector development in the region.