By Phephile Motau
Financially struggling businesses in the SADC region are set to benefit from a new facility which aims to assist distressed entities.
The International Finance Corporation (IFC), asset manager Nimble Group, and South African financial partners launched a facility that will invest in distressed assets in six countries in sub-Saharan Africa, including Eswatini and South Africa.
The IFC, a member of the World Bank Group, is the largest global development institution focused on the private sector in emerging markets with a facility of up to E2.8 billion capital (equivalent to $165 million), will acquire Non-Performing Loan (NPL) portfolios in Botswana, Eswatini, Kenya, Lesotho, Namibia, and South Africa and invest in financially distressed businesses in South Africa, the IFC said in a statement.
The IFC said the facility came as businesses across Africa continue to recover from the effects of the Covid-19 pandemic but now face fresh challenges, including global inflation and rising prices for fuel, food, and other essential items.
The facility is funded by IFC, Nimble Group, South African banks Standard Bank and Rand Merchant Bank, financial services company Sanlam, and South Africa-based asset manager Stanlib. It falls under IFCs Distressed Asset Recovery Program (DARP), which focuses on acquiring and resolving distressed assets, refinancing, and restructuring enterprises.
“With this new facility, we will be able to support more consumers and businesses in sub-Saharan Africa and offer them solutions and alternatives to sustainably deal with their debts. We are hopeful that our expansion across Africa will also free the resources on credit grantors; balance sheets and make these available to positively expand their businesses,” said Rowan Gordon, Founder and CEO of Nimble Group.
IFC Regional Director for Financial Institutions Aliou Maiga said with the facility, they wanted to promote financial stability and prevent the loss of assets, freeing up capital for new lending and allowing individuals and businesses to restore their creditworthiness.
“With Nimble and our other South African partners, we are expanding access to finance and credit during these challenging economic times,” said Maiga.