In West Africa, structured finance remains marginal, with just a handful of deals closed annually. This is a paradox in a region, particularly within the West African Economic and Monetary Union (WAEMU), where infrastructure, energy, and housing needs amount to trillions of CFA francs. The gap highlights a failure to effectively mobilize capital markets to meet massive development needs.

Against this backdrop, Côte d’Ivoire launched a 60 billion CFA franc securitization deal backed by its Electricity for All Program (PEPT). The goal is to fund 400,000 additional power connections, reaching nearly two million beneficiaries, without increasing the public debt burden.

At the Structured Finance Africa (SFA) Forum in Dakar on September 25, Ecofin Agency spoke with Olivier Gui, CEO of ALC Titrisation. He believes that securitization, despite still being seen as a niche tool, is poised to become a major financing lever in the region.

Ecofin Agency: The Ivorian government has launched a securitization backed by electricity connection receivables. How does the operation work?

Olivier Gui: This involves the securitization of receivables from the Electricity for All Project (PEPT). This mechanism was designed to accelerate access to electricity, particularly in rural and peri-urban areas. Initially, the state would electrify villages, but only public streetlights were connected; households often remained unconnected because the cost of a private hookup was too high.

That's why the PEPT was launched: each household pays 1,000 CFA francs at the time of subscription, and the remaining balance for the connection kit—about 149,000 CFA francs—is spread out over a period of up to ten years. This really helped democratize access to electricity. However, since the connection kits must be financed immediately while the reimbursements stretch over a decade, a financing gap emerged. That is precisely the need that securitization is intended to fill.

How was this operation structured?

The overall program amounts to 120 billion CFA francs, split into two phases. The first phase, completed at the end of 2023, securitized most of the existing receivables. The second phase, now underway, covers 60 billion francs.

The structure is built around the FCTC (Fonds Commun de Titrisation de Créances, or Securitization Fund), which is licensed by the regulator to issue bonds and acquire the receivables. We are working with two types of assets: receivables from connections that have already been made, and future receivables that will be generated by new connections.

We are working with two types of assets: receivables from connections that have already been made, and future receivables that will be generated by new connections.

In the first phase, the portfolio was two-thirds existing receivables and one-third future receivables. In this second phase, it’s the reverse: two-thirds future and one-third existing.

The 60 billion francs for phase two are divided into three tranches: a seven-year Tranche A paying 7.5%, aimed at regional institutional investors such as banks, insurers, and pension funds; a 10-year Tranche B at 8%; and a 15-year Tranche C at 8.5% — the longest maturity ever seen in our market.

In phase one, the International Finance Corporation (IFC) subscribed to the entire Tranche C (20 billion francs), and the Emerging Africa Infrastructure Fund (EAIF) also invested. We’ve followed the same approach in this second phase and are seeing strong demand from institutional investors.

The operation is worth around 60 billion CFA francs. How does that compare with the electricity sector as a whole?

The sector’s annual revenue is between 500 and 600 billion CFA francs. So this transaction accounts for only about 10% of that, which is easily manageable. That’s actually what reassures investors: the cash flows involved are modest compared with the size of the sector.

Isn't it risky to rely so heavily on future receivables?

That risk is under control. The electricity operator, CIE, can handle around 550,000 connections a year, well above the 400,000 targeted in this phase. Since 2014, the PEPT has already connected about 2.5 million households. And the opportunity is still huge: another 2 to 3 million households remain to be electrified, representing more than 10 million people.

The sector’s annual revenue is between 500 and 600 billion CFA francs. So this transaction accounts for only about 10% of that, which is easily manageable. That’s actually what reassures investors: the cash flows involved are modest compared with the size of the sector.

How did you structure the deal to make sure lost receivables don’t put investor repayments at risk?

We built in several credit enhancement mechanisms, the main one being a 94% overcollateralization. In practice, that means for 60 billion CFA francs in bonds issued, about 67 billion in receivables are backing them. The surplus serves as a cushion against late payments or defaults. On top of that, the CIE — with its strong track record as operator — collects payments directly, which further secures the cash flows.

What happens to the surplus funds generated by the mechanism?

They go back to the assignor, in this case, the PEPT fund, and are reinvested exclusively in new connections. In other words, every franc is plowed back into expanding electricity access.

Does this operation carry a state guarantee?

No, it doesn’t. There’s no sovereign guarantee and no direct cash injection from the state, so the transaction has no impact on public debt. It’s a balanced, self-sustaining instrument, but still too little known, and one that deserves wider recognition among both public and private decision-makers.

Doesn’t the current electoral context risk deterring investors?

Not at all. Even in an election period, the program’s social impact is so significant that it won’t be put on hold, connections are moving ahead. In fact, institutional investors, particularly those with long-term horizons, haven’t raised politics as an issue. Subscriptions and disbursements are continuing as normal.

We’re seeing renewed momentum in the securitization market across WAEMU. What’s driving that?

Securitization is steadily gaining ground. ALC Titrisation was accredited in 2015 and completed its first deal in 2018. Since then, we’ve seen about ten transactions, with activity picking up more recently. After pioneers like Cofina and NSIA Banque, more players are now entering the market.

The PEPT transaction, which is backed by a public program, sends a strong signal and should encourage further public-sector initiatives. What makes securitization powerful is that it doesn’t require a sovereign guarantee and doesn’t add to public debt. It provides a way to finance tangible projects, whether in housing, infrastructure, or energy, without relying on traditional borrowing. That’s a major advantage, and still underused in the region.

What is the potential of securitization in the region, and is there a risk of a 2008-style crisis?

The potential is very large. Securitization should become a core financing instrument for our economies, serving both public and private needs. But unlike the subprime mortgages that triggered the 2008 crisis, our market is far from those kinds of high-risk products. Here, transactions are backed by tangible, verifiable receivables, with control mechanisms and strong overcollateralization in place.

The WAEMU regulatory framework was explicitly shaped by lessons from that crisis, which makes it a cautious and well-supervised system, tailored to our environment. Given the current momentum, we are only at the beginning of what could be a long growth cycle.

The WAEMU regulatory framework was explicitly shaped by lessons from that crisis, which makes it a cautious and well-supervised system, tailored to our environment. Given the current momentum, we are only at the beginning of what could be a long growth cycle.

What does competition in this market look like today?

At first, there were only two or three licensed players, including BOAD Titrisation. Today, there are six or seven. Some are backed by large banks or institutions, while we’re one of the few independents. But the market is nowhere near saturated; the demand is so big that there’s room for everyone.

Is there coordination among the different operators?

Yes. We recently created a professional association for securitization fund managers. The aim is to promote the instrument more effectively, build awareness among regulators and investors, and raise its visibility. The better the tool is understood, the more it will be used.

As a closing thought, what do you see ahead for securitization?

I’ll end on an optimistic note. I believe that within three to five years, securitization will be at the core of financing for our economies. It’s a modern, secure tool that fits our needs, with huge potential. Our job now is to keep raising awareness so that it becomes the go-to option for both governments and the private sector.

Interview by Fiacre E. Kakpo,

Adapted in English by Mouka Mezonlin