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This article is sponsored by Afreximbank
Over the past few years, aware of the constant headwinds affecting trade and development on the continent, it has worked diligently to solidify its asset base.
It has achieved the remarkable feat of more than doubling its asset base, from $14.43 billion in 2019 to an impressive $32.82 billion as of 31 March, 2024.
This achievement is particularly noteworthy given the challenging market conditions since the onset of the pandemic in March 2020. Hard on the heels of the global economic shutdown during the pandemic came the triple-headed demons of war, massive supply chain disruptions and soaring interest rates.
African countries have had to grapple with the additional burdens of shrinking aid packages, higher than average sovereign loan rates, constricted credit, mounting inflation, stagnant commodity demand, rising unemployment and in many cases, galloping cost-of-living rises.
Africa’s financial institutions found themselves stretched to the limit trying to cope with the polycrisis and help keep their national economies, and themselves afloat. This called for nimble, innovative but sure-footed approaches.
Afreximbank has more than stood up to the challenges. It has not only expanded its asset base by 127%, but it has also carried out its enormous responsibility as one of the continent’s leading development financial institutions with bold, decisive action.
Its latest financial statements reveal that it deployed a staggering $26.84 billion for transformative initiatives across Africa as of 31 March. These projects span several critical sectors, including green financing and essential transport infrastructure.
There were several notable financing interventions in 2023, including a $1.3 billion green loan
to Angola and $2.7 billion to Tanzania for its railway project.
The Bank has continued its strong performance during Q1 2024. “Afreximbank Group delivered a strong performance even as we expanded our subsidiary companies’ operations and our activities in the Caribbean,” says Denys Denya, Afreximbank’s Senior Executive Vice President.
Supportive shareholder base
In response to Afreximbank’s robust performance, the market has rallied behind the institution, bolstering its capital reserves at a time when capital flows to Africa have been particularly constrained. The bank’s fortress balance sheet is a reflection of the steadfast support of its shareholder base, which has generously contributed additional funds in recent years.
In 2021, Afreximbank embarked on a significant General Capital Increase (GCI) of $6.5 billion. The GCI was designed to stimulate post-pandemic recovery and unlock opportunities within AfCFTA as critical African bulwarks against future shocks.
Investors have been supporting Afreximbank not only for its transformative impact but also due to its consistently strong credit ratings, a factor that lowers risk and enhances returns. A recent report from international credit rating agency Moody’s on Afreximbank states that one of the institution’s strengths is its “sound profitability and access to relatively low-cost funding”. The report also says: “The bank maintains proven access to varying funding sources”.
Commenting on the Q1 earnings, Denya reaffirmed the bank’s commitment to revenue growth, quality assets, and operational efficiency. He believes the AfCFTA and more efficient payments infrastructure hold the key to sustained growth on the continent.
“Looking ahead, the implementation of AfCFTA, supported by the robust PAPSS payment and settlement system, is poised to shield Africa from international volatility, ensuring sustained resilience in 2024,” he says.
