GuarantCo provides Orabank Togo with a XOF 14.55 billion (c. USD 25 million) portfolio guarantee to support telecommunications and road projects in Togo

  • Date written
  • January, 2022

GuarantCo, part of the Private Infrastructure Development Group (PIDG), has provided a XOF 14.55 billion (c. USD 25 million) portfolio guarantee to Orabank Togo, the largest bank in the country. The guarantee allows Orabank to benefit from capital relief, enabling the bank to grow its infrastructure portfolio whilst remaining within single obligor limits. Supported projects include telecommunications and road projects in Togo.

GuarantCo provides Orabank Togo with a XOF 14.55 billion

It is anticipated that this transaction will result in the provision of improved infrastructure service to more than 500,000 people and support hundreds of jobs through Orabank’s continued lending to infrastructure projects. In addition, GuarantCo will contribute to the development of financial services in Togo where the rate of banking system usage is low.

In West African Economic Monetary Union (WAEMU) countries* the implementation of Basel II and III banking regulations have limited the lending capacity of banks to infrastructure projects. Through credit risk substitution, this portfolio guarantee provides uplifts to Orabank’s prudential ratios of 742bps and 837bps to Tier 1 capital and solvency ratios respectively. As Basel regulations continue to be rolled out across the African continent, GuarantCo expects this transaction to be replicated with other lenders to ensure that infrastructure project financing is not compromised whilst necessary prudential safeguards are implemented.

Layth Al-Falaki, CEO of GuarantCo, said:

“We are proud to support Orabank to finance essential infrastructure projects in Togo. This is the second GuarantCo transaction in Togo, after Kékéli Efficient Power in 2019, and it will bring significant benefits to the Togolese people. The increase in infrastructure project financing unlocked from our portfolio guarantee, combined with volumes from potential similar guarantees replicating this transaction in the region, will lead to a critical and much needed infrastructure improvement.”

Guy Martial Awona, CEO of Orabank Togo, said:

“Orabank Togo welcomes GuarantCo’s support for the portfolio guarantee which strengthens its capacity to finance the development of companies in the telecommunications, energy and infrastructure sector. Once again, the bank is proud to contribute to the efforts of the government in the implementation of the National Development Plan (PND) launched in 2018.”

NOTES TO EDITORS

Togo is classified as a Least Developed Country with over half of the population living below the poverty line according to World Bank data.

Basel III is a 2009 international regulatory accord that introduced a set of reforms designed to mitigate risk within the international banking sector, by requiring banks to maintain proper leverage ratios and keep certain levels of reserve capital on hand. On a more granular level, Basel III seeks to strengthen the resilience of individual banks to reduce the risk of system-wide shocks and prevent future economic meltdowns.

This is GuarantCo’s second transaction in Togo.  In 2019, GuarantCo provided a XOF 14.2 billion (USD 23.8 million) Liquidity Extension Guarantee (LEG) to enable local commercial banks in Togo, including Orabank, to provide a 14-year tenor loan to Eranove.  The LEG financed the construction of a 65MW natural gas-fired thermal plant and related infrastructure in the port area of Lomé (Kékéli Efficient Power Project), the capital of Togo, providing electricity to nearly 20 percent (1.5 million people) of the population in the country.

About GuarantCo

GuarantCo mobilises private sector local currency investment for infrastructure projects and supports the development of financial markets in lower income countries across Africa and Asia. GuarantCo is part of the Private Infrastructure Development Group (PIDG) and is funded by the governments of the United Kingdom, Switzerland, Australia and Sweden, through the PIDG Trust, the Netherlands, through FMO and the PIDG Trust, France through a stand-by facility and Global Affairs Canada through a repayable facility. GuarantCo is rated AA- by Fitch and A1 by Moody’s. GuarantCo’s activities are managed by GuarantCo Management Company which is part of Cardano Development www.guarantco.com

About PIDG

The Private Infrastructure Development Group (PIDG) is an innovative infrastructure project developer and investor which mobilises private investment in sustainable and inclusive infrastructure in sub-Saharan Africa and south and south-east Asia. PIDG investments promote socio-economic development within a just transition to net zero emissions, combat poverty and contribute to the Sustainable Development Goals (SDGs). PIDG delivers its ambition in line with its values of opportunity, accountability, safety, integrity and impact. Since 2002, PIDG has supported 171 infrastructure projects to financial close which provided an estimated 217 million people with access to new or improved infrastructure. PIDG is funded by the governments of the United Kingdom, the Netherlands, Switzerland, Australia, Sweden, Germany and the IFC www.pidg.org

About Orabank Togo

Orabank Togo is one of Oragroup subsidiaries, a pan-African banking group operating in 12 countries and covering 4 currency zones in West and Central Africa. Orabank Togo is a major player in the Togolese banking system, in terms of total balance sheet, equity and profitability, endowed with a solid financial situation. The bank offers a wide range of products and services to a large and diversified clientele of individuals, companies (small, medium and micro businesses and industries), institutions, merchants, liberal professions, etc. With a customer portfolio of more than 300,000 accounts, Orabank Togo supports its clients’ economic growth by relying on a workforce of 478 employees, a network of 40 branches, 230 sub-agents for money transfers, 87 Automated Teller Machines and on a set of innovative omni-channel devices (internet, mobile and service platforms). Orabank implements a daily strategy based on shared values, organized around structured and specialized customer lines to provide the best support. In the era of digital transformation, our goal is to provide digital solutions that enable us to bond with communities and give our customers a complete overview of their assets. We also aim to create an environment that leads our customers to renew their confidence in us, attract new customers and make our employees effective information relays. All this because our purpose is to “grow together and for Africa”.