Investors update: IMF agrees $3bn bailout for Ghana

IMF agrees $3bn bailout for Ghana to stabilize economy

Highlights

• Ghana has secured a staff-level agreement with the International Monetary Fund (IMF) for a $3 billion bailout, an essential step in the West African nation’s plans to restructure its unsustainable debt.
• The accord, which still requires IMF board approval, enables the government to address its precarious public finances and support the cedi — the world’s worst-performing currency this year. 
• The IMF statement said Ghana’s government had committed to “a wide-ranging economic reform program” that will restore stability and debt sustainability.

Source: GhanaWeb

Our Takeaway

A top cocoa and gold producer, Ghana also has oil and gas reserves, but its debt service payments have soared. Like the rest of sub-Saharan Africa, it has been hit hard by fallout from the COVID pandemic and the Ukraine war. Investor concerns about ballooning government debt — forecast to exceed the size of its economy this year — led to a selloff of government bonds that effectively locked the country out of international capital markets.

---

Equinix to invest $160m in South Africa data center entry

Highlights

• Equinix Inc. plans to invest $160 million to build its first data center in South Africa, as part of the firm’s African expansion push. 
• The US data center company will build its first facility in Africa’s richest city, Johannesburg, and expects to be operational by mid-2024. 
• The deal follows its acquisition of Nigeria’s MainOne, which valued the west African data center business at $320 million. 

Source: Bloomberg

Our Takeaway

Equinix’s decision to double down on its presence in Africa further underlines the huge untapped potential in the continent’s cloud computing market, which has pulled other big operators like Microsoft, Google, Huawei, Amazon, and Teraco, with huge investments being poured into data centers and cloud infrastructure on the continent. The Middle East and Africa’s cloud computing industry is expected to grow to $31.4 billion by 2026, from $14.2 billion in 2021, as more organizations digitize their operations.

---

BII & African Guarantee Fund sign $75m program for African SMEs

Highlights

• British International Investment (BII), the UK’s development finance institution, and African Guarantee Fund (AGF), a leading Pan African guarantee provider, are partnering on a $75 million re-guarantee agreement for SMEs across Africa.
• Through this facility, AGF and BII will provide credit guarantees to partner financial institutions for up to 75% of the risk on SME loans, thereby increasing access to credit and reducing collateral requirements. 
• The eight-year partnership is expected to facilitate up to $150 million in loans to 17,300 SMEs through partner financial institutions and also encourage lending to SMEs that are women-owned or led as well as climate-focused.

Source: ABC

Our Takeaway

SMEs in Africa continue to face significant challenges in accessing credit. Financial institutions are often constrained by regulatory requirements, limited appetite for a segment that is perceived to be higher risk, a lack of adequate collateral available from SMEs, knowledge gaps by the lenders, and skill gaps demonstrated by SME borrowers. Risk-sharing facilities address support knowledge gaps by the lenders and in broadening their SME lending while mitigating risk and allowing them to build capabilities and track record in serving this market segment.