Finance

Absa Group Secures $1.1 Billion in Guarantees

Absa Group Secures $1.1 Billion in Guarantees
Friday, 12 July 2024 16:54

The South African Absa Group has secured 13 guarantees totaling $1.1 billion from the Multilateral Investment Guarantee Agency (MIGA), a World Bank subsidiary, to support its investments in its subsidiaries across sub-Saharan Africa. This initiative underscores the World Bank's commitment to bolstering African banking groups in the wake of multinational withdrawals from the retail banking sector.

These guarantees cover Absa's general banking operations in nine countries: Ghana, Kenya, Mauritius, Mozambique, Seychelles, Tanzania, Uganda, and Zambia. They will help reduce Absa's risk-weighted assets and improve the required capital to extend more loans. This agreement is expected to generate approximately $706 million in new loans, with $489 million allocated to climate-related projects and the remainder supporting additional financing for small and medium-sized enterprises.

Hiroshi Matano, MIGA's Executive Vice President, stated, "Our partnership with Absa Group demonstrates our commitment to supporting climate finance. This collaboration significantly increases the availability of private credit in countries that are poor or affected by conflict and fragility." This expanded partnership aligns with efforts to promote sustainability and economic development in Africa.

The agreement highlights the crucial role the World Bank can play in supporting the expansion of pan-African banking groups, which may face capital challenges in their efforts to fill the void left by international banks. The targeted countries, such as Tanzania, Ghana, Kenya, and Mozambique, show promising growth dynamics or significant economic activity. However, mobilizing additional capital to meet the financing demands in these regions may still be challenging.

Absa Group's recent financial communications reveal a leverage ratio of 12 times, indicating the weight of debt compared to equity. While not alarming, it is less comfortable than the South African financial sector's average of 4.8 times. It will be interesting to see if MIGA's guarantees also enhance Absa's financial profitability, which stood at 13.5% over the past 12 months, significantly lower than direct competitors like Nedbank and Standard Bank.

On the same topic
Partnership with ANSER focuses on structuring and mobilizing financing Mechanism relies on phased funding tied to project...
Coris Bank International posted a 36% increase in net profit in 2025. The bank grew its customer base by 11.6% and deposits to CFAF 2,015.3...
Kenya has asked the World Bank for rapid emergency financing to cushion the economic shock from the war in Iran, Governor Kamau Thugge said...
Seven of Nigeria's top 11 listed banks missed the March 31 deadline for 2025 audited accounts, all citing pending Central Bank approval The bottleneck...
Most Read
01

(EBID) - EBID aims to allocate nearly 41% of its commitments to projects with environmental and...

EBID makes giant strides for a green transition in west africa
02

Mahindra & Mahindra is considering a CKD assembly plant near Durban to strengthen its presence i...

Mahindra & Mahindra Eyes Major Shift to Full Vehicle Assembly in South Africa
03

Four major operators—Mauritel, Mattel, Rimatel, and Chinguitel—submitted a combined bid of ...

Mauritanian Telecom Operators Submit $27 Million Combined Bid for 5G Licenses
04

Operators review 2025 investments, outline 2026 expansion plans Consumer complaints persist...

Cameroon Presses Telecom Operators on Service Quality as Complaints Rise
05

AFC disbursed €43 million for Côte d’Ivoire solar project Financing supports 66 MW pla...

AFC Backs First Green Project Finance Bond for 66MW Côte d’Ivoire Solar Plant
Enter your email to receive our newsletter

Ecofin Agency provides daily coverage of nine key African economic sectors: public management, finance, telecoms, agribusiness, mining, energy, transport, communication, and education.
It also designs and manages specialized media, both online and print, for African institutions and publishers.

SALES & ADVERTISING

regie@agenceecofin.com 
Tél: +41 22 301 96 11 
Mob: +41 78 699 13 72


EDITORIAL
redaction@agenceecofin.com

More information
Team
Publisher

ECOFIN AGENCY

Mediamania Sarl
Rue du Léman, 6
1201 Geneva
Switzerland

 

Ecofin Agency is a sector-focused economic news agency, founded in December 2010. Its web platform was launched in June 2011. ©Mediamania.

 
 

Please publish modules in offcanvas position.