Is Africa different in terms of our financial and funding needs?
Africa has 400 companies with more than $1bn in revenue and 700 companies with more than $500m in revenue. Over the past five years, debt transactions totalling $110.2bn have been placed in African debt markets or by African companies on international markets, the majority of which was US dollar-denominated, according to PwC.
Taking all of this into account, the size of the corporate loan market across subSaharan Africa (excluding South Africa) is estimated to be greater than $150bn. While at face value these nominal sums may seem surprising, if not impressive, they mask a massive shortage of finance.
The International Finance Corporation estimates that the credit gap for small- and medium-sized enterprises (SMEs) in sub-Saharan Africa is between $70bn and $90bn. This implies a requirement to increase bank advances by threefold to this sector, if there is any hope of closing that gap.
The lack of access to capital is by no means unique to subSaharan Africa. It is the concentration of that funding gap in specific areas, and the economic reasons why, that make for interesting reading. When delving deeper, there is almost a “preferred habitat” phenomenon which, in this case, appears to be not loading on term structure or duration, but rather loading on type of counterparty and size of borrower.
This story is from the 13 April 2017 edition of Finweek English.
Start your 7-day Magzter GOLD free trial to access thousands of curated premium stories, and 9,000+ magazines and newspapers.
Already a subscriber ? Sign In
This story is from the 13 April 2017 edition of Finweek English.
Start your 7-day Magzter GOLD free trial to access thousands of curated premium stories, and 9,000+ magazines and newspapers.
Already a subscriber? Sign In
THE HEALTH OF SA'S MEDICAL SCHEMES
As the Covid-19 pandemic abates, finweek takes a look at the financial performance of some of the largest players.
The effect of Gilbertson's departure
With Ntsimbintle Holdings now the major shareholder of Jupiter Mines, it could change SA’s manganese industry.
Making money from music
Why investors are increasingly drawn to the music industry.
Conviction is key
Sandy Rheeder plays a critical role in Mukuru’s mission to open up financial services to the emerging consumer market in Africa through tailor-made technology solutions and platforms.
The post-pandemic toolkit
How CFOs can use technology to support growth.
Big city living exodus
Mini cities like Waterfall City and Steyn City are redefining city-style apartment living.
Big compact, big value
Handsome, with a hefty level of standard specification, the roomy Haval Jolion compact crossover is a great value proposition.
On barriers to entry
There are various ways in which a company or sector can achieve competitive dominance. They usually make for good investments.
Fear and greed in one index
To buck the trend, when markets are hot or cold, is a tough thing to do. However, it can deliver solid returns.
Africa's largest data centre facility coming soon
Vantage Data Centers plans to invest over R15bn for its first African data centre facility in Attacq’s Waterfall City.
