ACBS Secures U.S.$400 Million for Microfinance Banks

Apr 2010
Nigeria, April, 23 2010 - A Nigerian finance mediation firm, Africa Capital and Business Support Limited, has secured funding totaling $400million for microfinance banks in the country.

The funds were provided by Mainsail Trading Limited (Dubai) and secured with bank guarantees from Suisse Bank Plc, a private bank based in the United Kingdom.

The funds secured will allow MFBs to access long term debt funds of up to 10 years. Under the deal, Nigerian microfinance banks participating in the Mechanised Agricultural & Microcredit Investment Scheme (MAMCIS) will be given money as a Subordinated Convertible Debenture (SCD) through a specially designed scheme by Africa Capital and Business Support Limited called Africa Investor Protector Programme (AIPP).

MAMCIS is a special funding scheme designed by ACBS to provide finance to micro and small-scale farmers across the country through participating Microfinance Banks. The farmers must however be members of participating cooperative societies. This is intended to leverage the Agricultural Credit Guarantee Scheme (ACGS) of the Central Bank of Nigeria and make it accessible to the common man.

Explaining the dynamics of Africa Investor Protector Programme, Vice-Chairman of ACBS, Benjamin Aduli, said the benefit to Microfinance Banks participating in MAMCIS programme and taking advantage of Africa Investor Protector Programme (AIPP) funding programme are many.

"For any MFB taking advantage of this scheme, it will have access to long-term debt fund, which can be capitalised by the MFBs in the process of repayment. This means that the MFBs retain control. Also, the Subordinated Convertible Debentures are Naira denominated thereby mitigating exchange rate risks as hedging is done by an offshore trust fund (AfProf Investment Trust Fund)," he said.

Aduli added that the funds available are enough to guarantee liquidity for the MFBs in the long term and that the interest rate for the structure is likely to be single digit.

He said additional benefits include the provision allowing for equity Investment considerations to be triggered only by request or declaration of intent of sale or a public offer by the MFB, stating also that entire arrangement does not limit additional stock or equity offerings.

Aduli said AIPP and MAMCIS financial schemes would offer many MFBs in Nigeria the opportunity to access reliable funding that has the prospects of turning their businesses around.

He explained that the success at securing the fund is the result of several years of painstaking discussions and work both by Africa Capital & Business Support Limited (Nigeria), Mainsail Trading Limited (Dubai) and Suisse Bank Plc (London) to offer African MFBs the opportunity to offer services to people that really need funding.

According to him, up to 50 microfinance banks are expected to benefit from the first phase of the scheme provided they meet the conditions that ACBS would stipulate.

He said: "The funding is in place already and any MFB that is currently in our MAMCIS scheme qualifies to be among the first set of beneficiaries, while others can join in the future provided they are ready to fund farm projects."

He added that a major benefit of the funds is that it gives participating banks a rare opportunity of becoming a growing network of institutions offering creative banking services to clients without inhibitive conditions that put the funds out of the reach of those that require the services. The MFBs also do not need to build a large network of branches like commercial banks.

Source : All Africa

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