Ecobank Transnational Incorporated (ETI) has announced a $213 million partnership agreement with the International Finance Corporation (IFC) that will see the Pan-African bank simultaneously increase lending to SMEs and strengthen the banking sector.
According to Business Day, details of the agreement indicate that the IFC, private sector arm of the World Bank, will provide a finance package of up to $213 million to Ecobank, consisting of a $100 million convertible loan to support the regional expansion, another $25 million in loan and advisory services to Ecobank Nigeria.
The financial package will be used to facilitate loans for smaller businesses and up to $88 million in guarantees against the underlying trade transactions of several Ecobank subsidiaries – including those in Benin, Burkina Faso, Cote d’Ivoire, Mali, Niger, Nigeria, Senegal and Togo.
Commenting on the development, MD/CEO of ETI, Arnold Ekpe said plans were also underway to for a strategic partnership with the IFC to increase financing for crucial sectors such as agriculture, education, health, housing and infrastructure.
“In the past three years we have strengthened our network and operations across Africa, which has allowed us to reach a larger number of people more efficiently and increase our regional impact, said Ekpe.
According to the IFC’s Director for West and Central Africa, Yolande Duhem, improving access to finance and building strong financial markets is a key focus of IFC’s strategy to strengthen the private sector in Sub-Saharan Africa.
Duhem indicated that working with ETI’s extensive network of subsidiaries in 25 African countries will bring about greater development in the region.
According to the ETI group the funds would be invested in expansion into new countries, technology and process upgrade and capitalisation of existing subsidiaries, BusinessDay reported. Details of the offer showed that ETI is raising equity through a 3.76 billion rights issue that is being offered at $0.27 apiece at a ratio of five new shares for every nine held and another 5.12 billion shares being offered to the public at $0.29 each.
As at 15 June 2012, the bank’s net income stood at $207 million indicating a 57 percent increase from $132 million in 2010.
