Sierra Leone: President Bio Calls for More Rural Banking

President Julius Maada Bio has told the opening of the Union Trust Bank, UTB, branch in Makeni that he is
proud of the only indigenous private bank in Sierra Leone promoting more access to services in
the rural areas.

“No doubt, its customer-focused banking products have helped deepen financial inclusion among
citizens who live and do business in rural communities. But beyond this, my Government believes
that we can gain a lot as a nation if we promote a savings and investment culture among citizens.
The days of ‘earn and spend’ are gone. Banks can therefore work with Government to foster that
savings and investment culture,” he said noted.

President Bio emphasised that the government expected that banks would be able to make
available low cost credit to credit-worthy Sierra Leoneans who had proven investment ideas,
adding that they had undertaken various efforts to promote financial inclusion in the country,
including creating a digital biometric registration for citizens wishing to open bank accounts.

“I am informed that Union Trust Bank Limited is a client institution for both the African
Development Bank Group and the Islamic Development Bank Group. It is also the first Western
Union Money Transfer agent in Sierra Leone with agencies in all districts. This international reach
and the diversified financial services portfolio is also very helpful.

“I am informed that Union Trust Bank did not experience a cash shortage during the two weeks of
the Christmas period. I want to encourage Union Trust Bank, as well as other players in the
sector, to adopt liquidity management practices that assure that depositors can access their
money in banks as and when they need it.

“Let me conclude by stating that I am proud that Union Trust Bank Limited is the only indigenous
private bank in Sierra Leone. It clearly demonstrates the capacity of Sierra Leoneans to develop a
corporate culture and compete actively in the banking sector. The establishment of several brick-
and-mortar branches all over Sierra Leone demonstrates that the bank is visibly re-investing its
profits in Sierra Leone,” he said.

Minister of Finance, Jacob Jusu Saffa, said since its establishment in 1995 the bank continued to
make significant gains in the financial sector, adding that its management was really committed to
creating wealth and contributing to the socio-economic wellbeing of the people of Sierra Leone.
Chief Executive Officer of UTB, Dr Sanpha Koroma, expressed gratitude to President Bio for
gracing the event, noting that he was pleased to host him in that part of the country

COVID-19 to Plunge Global Economy into Worst Recession since World War II

The swift and massive shock of the coronavirus pandemic and shutdown measures to contain it have plunged the global economy into a severe contraction. According to World Bank forecasts, the global economy will shrink by 5.2% this year.

COVID-19 to Plunge Global Economy

 That would represent the deepest recession since the Second World War, with the largest fraction of economies experiencing declines in per capita output since 1870, the World Bank says in its June 2020 Global Economic Prospects.

Economic activity among advanced economies is anticipated to shrink 7% in 2020 as domestic demand and supply, trade, and finance have been severely disrupted. Emerging market and developing economies (EMDEs) are expected to shrink by 2.5% this year, their first contraction as a group in at least sixty years. Per capita incomes are expected to decline by 3.6%, which will tip millions of people into extreme poverty this year.

The blow is hitting hardest in countries where the pandemic has been the most severe and where there is heavy reliance on global trade, tourism, commodity exports, and external financing. While the magnitude of disruption will vary from region to region, all EMDEs have vulnerabilities that are magnified by external shocks. Moreover, interruptions in schooling and primary healthcare access are likely to have lasting impacts on human capital development.

“This is a deeply sobering outlook, with the crisis likely to leave long-lasting scars and pose major global challenges,” said World Bank Group Vice President for Equitable Growth, Finance and Institutions, Ceyla Pazarbasioglu. “Our first order of business is to address the global health and economic emergency. Beyond that, the global community must unite to find ways to rebuild as robust a recovery as possible to prevent more people from falling into poverty and unemployment.”

Under the baseline forecast—which assumes that the pandemic recedes sufficiently to allow the lifting of domestic mitigation measures by mid-year in advanced economies and a bit later in EMDEs, that adverse global spillovers ease during the second half of the year, and that dislocations in financial markets are not long-lasting — global growth is forecast to rebound to 4.2% in 2021, as advanced economies grow 3.9% and EMDEs bounce back by 4.6%. However, the outlook is highly uncertain and downside risks are predominant, including the possibility of a more protracted pandemic, financial upheaval, and retreat from global trade and supply linkages. A downside scenario could lead the global economy to shrink by as much as 8% this year, followed by a sluggish recovery in 2021 of just over 1%, with output in EMDEs contracting by almost 5% this year.

The U.S. economy is forecast to contract 6.1% this year, reflecting the disruptions associated with pandemic-control measures. Euro Area output is expected to shrink 9.1% in 2020 as widespread outbreaks took a heavy toll on activity. Japan’s economy is anticipated to shrink 6.1% as preventive measures have slowed economic activity.

“The COVID-19 recession is singular in many respects and is likely to be the deepest one in advanced economies since the Second World War and the first output contraction in emerging and developing economies in at least the past six decades,” said World Bank Prospects Group Director Ayhan Kose. “The current episode has already seen by far the fastest and steepest downgrades in global growth forecasts on record. If the past is any guide, there may be further growth downgrades in store, implying that policymakers may need to be ready to employ additional measures to support activity.”

Kiva empowering Sierra Leoneans through credit database

Schan Duff, Vice President of Strategy for Kiva, a San Francisco-based tech charity that is using blockchain to create an online ID database in Sierra Leone allowing people who struggle to get loans to prove their credit history, speaks during the launching of the system in Freetown, Sierra Leone August 21, 2019. REUTERS/Copper Inveen

Kiva, a San Fransisco-based tech charity, us using blockchain to bring more Sierra Leoneans into the financial system.

Kiva is using blockchain to create an online ID database in Sierra Leone allowing people who struggle to get loans to prove their credit history, according to REUTERS.

Kiva and President Julius Maada Bio officially launched the system in the capital Freetown on Wednesday. Bio hopes it will bring more Sierra Leoneans into the financial system.

Kiva facilitates small loans in 80 countries, but Sierra Leone is the first country to implement an online credit system designed by the organization.

“This visionary step here today guarantees that Sierra Leoneans are not excluded from … the global digital economy,” Bio said at the launch.

Story credit: REUTERS

Global partners announce $61.8 million allocation to boost AfDB initiative for women entrepreneurs

“This substantial support from the Women Entrepreneurs Finance Initiative, We-Fi, will help us scale up our actions and achieve greater results for women entrepreneurs across the continent” – Vanessa Moungar, Bank’s Director for Gender, Women and Civil Society.

The Governing Committee of the Women Entrepreneurs Finance Initiative (We-Fi) has approved a funding allocation of $61.8 million for the African Development Bank’s Affirmative Finance Action for Women in Africa (AFAWA) program.

We-Fi is a partnership among 14 donor governments, eight multilateral development banks, and other public and private sector stakeholders, established in October 2017 and hosted by the World Bank Group.

“This substantial support from the Women Entrepreneurs Finance Initiative, We-Fi, will help us scale up our actions and achieve greater results for women entrepreneurs across the continent. Our ambition with AFAWA goes beyond regular assistance to women in business,” Vanessa Moungar, the Bank’s Director for Gender, Women and Civil Society said about the announcement.

With the We-Fi funding, AFAWA intends to improve access to finance for 40,000 women-owned/led small and medium enterprises in 21 African countries, mainly in low-income and fragile countries, where women entrepreneurs face greater challenges in accessing finance, markets, knowledge, and mentoring programs. Specifically, the program’s activities will be implemented in Botswana, Burundi, Chad, Comoros, Côte d’Ivoire, Democratic Republic of Congo, Ethiopia, Kenya, Mali, Mauritania, Mozambique, Niger, Nigeria, Senegal, Sierra Leone, South Africa, Tanzania, Tunisia, Uganda, Zambia, and Zimbabwe.

The activities funded by We-Fi will be aligned with AFAWA’s three-pronged approach to holistically addressing the $42 billion financing gap between women and male entrepreneurs.

The first AFAWA pillar aims to increase access to finance for women through innovative and tailored financial instruments, including guarantee mechanisms to back up women entrepreneurs.

In collaboration with strategic partners, the second pillar focuses on providing capacity-building services to women entrepreneurs, including access to mentoring and entrepreneurship training courses. AFAWA also helps financial institutions address the specific needs of women-owned/led businesses through tailored financial and non-financial products.

The third pillar concentrates on improving the business environment for women by engaging in policy dialogue with central banks and other relevant authorities and stakeholders.

Lastly, the We-Fi funding will reinforce initiatives of the Bank and partners, such as UN Women and CARE International, in favor of women entrepreneurs in various sectors that are frequently overlooked by traditional financiers, donors and governments. These special initiatives include Fashionomics Africa and the African women tech entrepreneurs program.

African Development Bank’s Board approves Policy on Non-Sovereign Operations

They also cover non-sovereign guaranteed financing of eligible public sector enterprises, as well as financing of regional development finance institutions

The Board of Directors of the African Development Bank Group (www.AfDB.org) has approved the Bank’s Policy on Non-sovereign Operations (NSO).

                   Africa Development Bank President                              Dr. Akinwumi Ayodeji Adesina 

The document provides the framework within which the Bank through its private sector lending window may provide financing or investment without sovereign guarantees to private and public entities that meet specific eligibility requirements on non-concessional terms.

Non-sovereign Operations (NSOs) refers to financing and investment operations that are not guaranteed by a State, covering mostly private sector transactions. They also cover non-sovereign guaranteed financing of eligible public sector enterprises, as well as financing of regional development finance institutions.

The approval of the Policy comes at a critical moment when the Bank is seeking to accelerate inclusive and sustainable economic growth, and crowd in more private sector funding for strong and inclusive growth  to drive economic transformation and sustainable development in its Regional Member Countries (RMCs).

The NSO Policy will complement the Bank’s overarching 2013 Private Sector Development policy framework, notably, by defining what the Bank will do in the area of non-sovereign lending. Within this context, the objective of the Bank’s non-sovereign operations is to help accelerate the continent’s transformation through various financial support mechanisms and products including loans, lines of credit, guarantees, blended finance, equity investments and trade finance. This would enable the Bank to contribute to the sustainable economic growth and inclusive social development of its RMCs individually and jointly, in fulfilment of the Bank’s mandate.

More specifically, the Bank’s engagement in its selected non-sovereign operations will aim to maximise the catalytic impact of its limited resources, while seeking to promote inclusive growth and the gradual transition to ‘green growth’ in its RMCs. It will also help scale up financing in the Bank’s High 5 priority areas of intervention.

Under this NSO Policy, the Bank would provide financing to non-sovereign operations subject to four conditions: (i) the borrower is a private enterprise or an eligible public sector enterprise; (ii) the operations are financially sound; (iii) the operations should result in satisfactory development outcomes, including supporting or creating opportunities for private sector development; and (iv) the Bank brings additionally, which could be either financial or non-financial.

The Policy would ensure that NSOs: (i) are well-prepared with clear value added/additionally brought by the Bank; (ii) are technically, economically and financially sound, and diligently managed, adhering to high ethical norms; (iii) are environmentally and socially sustainable; and (iv) have solid prospects of generating significant development results in the RMCs in which they are implemented.

The NSO Policy does not apply to the Bank’s sovereign loans and sovereign-guaranteed loans. Such operations will continue to be governed by the relevant policies that guide the Bank Group’s public sector operations.

GIMAC and TerraPay announce collaboration for enabling real-time cross border money transfers to CEMAC region

The partnership will enable instant cross border money transfer to bank accounts and mobile wallets in the CEMAC zone, comprising of Cameroon, Republic of Congo, Gabon, Equatorial Guinea, Central African Republic and Chad

GIMAC, the regional electronic money transfer platform of Central Africa and TerraPay (www.TerraPay.com) the world’s first mobile payments switch have signed a strategic partnership agreement that will strengthen the remittances ecosystem in CEMAC region. The partnership will enable instant cross border money transfer to bank accounts and mobile wallets in the CEMAC zone, comprising of Cameroon, Republic of Congo, Gabon, Equatorial Guinea, Central African Republic and Chad.

GIMAC aims to define and establish the regulatory and security framework of the remittance ecosystem, as well as to enhance interoperability between banks, public treasuries, postal and micro finance institutions, and electronic money transmitters in the Economic and Monetary Community of Central Africa (CEMAC). Powered by TerraPay’s global clearing and settlement service for mobile wallets, the partnership will make it faster and convenient for migrants across the globe to send money to mobile wallets and bank accounts, in real time to Central Africa.

“TerraPay’s collaboration with GIMAC is part of the company’s long-term strategy to enable interoperability and to democratise financial services in Africa. Our partnership would aid in realizing a vision for low-cost and convenient money transfers to the CEMAC region and accelerate the creation of an ecosystem to deliver essential value to stakeholders and consumers alike. The main economic and social objective of our partnership is to help the migrants of the CEMAC area to have an access to low-cost, secure and instant payment medium.” explains Ambar Sur, Founder & CEO, TerraPay.

“The digitization of money transfer services is the final step in improving the delivery of our financial services. Through this partnership, GIMAC will contribute to the reduction of transfer costs and the improvement of the quality of life of many in CEMAC. Transfers incoming via TerraPay will instantly be channelled to their destined bank accounts, mobile accounts, or prepaid card accounts.” says Mr. Valentin Mbozo’o, CEO of GIMAC.

African Trade Insurance Agency (ATI) to pay first dividends to African member governments & other shareholders

ATI has earmarked an initial USD2.5 million in payments to its shareholders which include 14 African member governments

In a much anticipated announcement, the African Trade Insurance Agency (ATI) (www.ATI-ACA.org), declared that its General Assembly had approved the first ever payments to shareholders. The announcement comes on the heels of ATI’s Annual General Meeting held in Abidjan, where the company also announced its record-breaking 2017 financial results for the sixth consecutive year.

ATI has earmarked an initial USD2.5 million in payments to its shareholders which include 14 African member governments.

The company’s CEO, George Otieno noted “We have been planning for this moment for several years and I am happy to finally announce that we are ready to give something back to our shareholders. This signals our intention to continue showing value to our member governments and shareholders, while providing non-member countries and institutional investors an incentive to join.”

In 2017, ATI recorded gross exposures of USD2.4 billion and, in the same period, the company covered investment and trade activities across the continent valued at USD10 billion. ATI also posted a USD10 million profit representing a 55% increase over 2016.

ATI owes its strong results in part to growing demand from investors and African governments for their products as the continent continues to position itself as an attractive destination for investors. Africa’s drive to increase trade within its borders is also fuelling ATI’s success.

The African multilateral insurer also announced the Government of India’s USD10 million shareholding, which will be represented by ECGC, India’s export credit agency.

ATI’s KEY 2017 RESULTS

Volume of Business Supported Since Inception: USD35 billion (+40%)

Combined Ratio: 62% (+11pps on a comparable basis)

Insured Trade & Investments (Gross Exposures): USD2.4 billion (+23%)

Return on Capital: 4.6% (+1.5pps on a comparable basis)

Gross Written Premiums: USD44.8 million (+52%)

Shareholders’ Equity: USD242.2 million (+16%)

Net Earned Premium s: USD14.0 million (+9%)

Rating (S&P): *A/stable

Profit: USD9.9 million (+55% on a comparable basis)

* S&P revised its outlook from “negative” to “stable” on 16 March, 2018. ATI is currently rated A/Stable.