Norsad Capital signs Memorandum of Understanding (MoU) with the Infrastructure Development Bank of Zimbabwe (IDBZ) to create new opportunities for Zimbabwean businesses.

18/09/2022

Recognising their common goals, the Infrastructure Development Bank of Zimbabwe (IDBZ) has joined forces with Norsad Capital, a provider of private credit to scalable businesses focused on growth. This partnership was announced at a ceremonial event in Harare, Zimbabwe, on 13 September 2022.

The parties have signed an MoU which sets out the terms of the partnership. According to Kenny Nwosu, CEO of Norsad Capital, “Our agreement means that we will introduce each other to potential transactions and seek to collaborate and share risk. We each have our own expertise and funding models, and together we can provide far more in-depth insights when putting together a deal.”

Both financial institutions focus on providing much-needed capital to businesses, which can be used to promote economic growth and improve livelihoods. “We recognise that we share common objectives in terms of private sector development in Zimbabwe, and this is what drives our decision to collaborate with each other,” explains Zondo Sakala, the CEO of the IDBZ.

In terms of the agreement, the two parties will share contacts for potential business financing in Zimbabwe; assist each other when putting together sizable deals; and share investment opportunities of appropriate thresholds that meet the funding requirements of each party.

“In addition to the various benefits, it will be helpful for us to have a partner on the ground in Zimbabwe who has local knowledge and can provide us with insights on businesses located in the country that we are considering doing business with,” Nwosu says.

From a regional perspective, the deal fits the Norsad Capital focus on the Southern African Development Community (SADC), where Zimbabwe is located. “This is a region and market under-served by financial institutions, yet there are enormous business opportunities in the area,” says Nwosu, explaining the reason for the company’s focus.

Identifying itself as an impact investor aligned to the United Nations Sustainable Development Goals (SDGs), Norsad Capital has a thematic approach and selects investments that clearly contribute to solving social and environmental challenges. This objective aligns with the overarching aim of the IDBZ: to improve the quality of life of Zimbabweans. Many of the sectors that are of importance to Norsad Capital are equally significant for the IDBZ, such as the transition to clean renewable energy and the pressing need for financial inclusion.

Norsad Capital, previously known as Norsad Finance, was first established in 1990. Norsad offers tailor-made debt solutions to profitable growth companies in Africa and has a goal to impact 100 million lives over the next decade in line with its strategy to scale and deepen its impact in Africa.

All in all, this partnership augurs well for the future of the economy of Zimbabwe. Likely to make more capital available to growth-stage businesses in the country, this relationship will promote economic growth in the region.

Despite progress in recent years, formal financial services remain beyond the reach of many people in Africa. And, even when these services become available, the rate of usage is low because of a range of factors, including the costs and the security of transacting.

It has been shown that mobile money and other non-traditional forms of financial services are key enablers for financial inclusion in Africa – They have disrupted traditional financial services by providing better ways to transfer funds than using cash. With mobile and other digital payment systems, customers in Sub-Saharan Africa are gaining access to business loans, savings, and other services that a traditional bank would otherwise provide. The greater availability of financial services has an incredible impact on many aspects of life in Africa and plays a role in alleviating poverty for communities.

One player in the omnichannel payment field helping to make the sort of impact that the continent needs is MFS Africa. It is the largest hub for omnichannel payments in Africa, which connects over 400 million mobile money users on the continent. Impacting largely the unbanked and the underbanked demographic on the continent, MFS Africa connects mobile network operators, money transfer organisations, cross-border payments remittance firms, financial service providers, and worldwide merchants to millions of mobile wallets on the continent.

“Our services focus on creating more possibilities for Africans needing to make payments, to carry out money transfers, and to remit funds to others,” explains Dare Okoudjou, Founder and CEO of MFS Africa.    “Merchants, banks, mobile operators, and mobile money transfer firms have come to rely on our compliant and cost-effectiveness service, and this is why the MFS Africa network has grown so extensively across the continent of Africa.”

MFS Africa has achieved a significant presence in Sub-Saharan Africa, being connected today to over 60% of all mobile money wallets in the region. Understanding the need for connecting mobile money to the rest of the world, MFS Africa recently broadened its bank and fintech base offering through the acquisition of US fintech GTP. This will enable the company to tokenize mobile money space and connect to traditional card scheme ecosystems such VISA and Mastercard. Okoudjou explains that “Our guiding principle is that African consumers and businesses should be able to pay for anything, both offline and online. We’ve always known that in order to really eliminate borders, we needed to connect mobile money to the rest of the world; card networks seem to be the most effective means to do so.”

The firm works in over 35 countries in Africa but believes that there are still more areas that it can provide its services to. It is against this background that MFS Africa negotiated a deal for additional funding from Norsad Capital, an impact investor offering tailor-made debt solutions to mid-market growth companies in Sub-Saharan Africa.

Kenny Nwosu, CEO at Norsad Capital, says: “The Norsad Capital term facility will assist MFS Africa to break into Nigeria, a market that is key to MFS Africa’s growth strategy. With its extensive population and capacity to do business, Nigeria accounts for the largest movement of money around the continent, and our funding is important as it comes at a point in the company’s development where it is poised for significant growth.”

According to Nwosu, “This is a very attractive investment for Norsad as MFS Africa has a strong market position, and this market share puts MFS Africa in a position to be at the forefront of financial inclusion and digital payments in Africa.”

There is also great synergy between the two service providers since MFS Africa is aligned with Norsad’s Purpose of Building a Better Africa. As Okoudjou of MFS Africa explains: “MFS aims to decrease the cost of money remittances to Africa. We currently connect mobile money systems to one another and to money transfer organisations, banks, and other financial institutions, enabling money remittances to and from mobile money accounts. Our move into the Nigerian market will allow us to extend our footprint extensively on the African continent, bringing much-needed financial services to thousands more people.”

In line with Norsad impact objectives, MFS Africa is aligned to Norsad’s Purpose of Building a better Africa. Mobile money has disrupted traditional financial services by providing a better way to transfer funds instead of cash. With mobile payments, customers in Sub-Sharan Africa are gaining access to business loans, savings, and other services as they would get in a bank. Mobile money has incredible impact on many aspects of life in Africa and plays a role in alleviating poverty for communities.

About Norsad Capital

Norsad Capital is an impact investor providing tailor-made debt solutions to mid-market growth companies in Sub-Saharan Africa. With a track record spanning over 32 years, Norsad Capital has invested in 150+ companies across the continent. For more information:  www.norsadcapital.com 

About MFS Africa

MFS Africa is the largest digital payments hub in Africa, with over 400 million Mobile Money users connected. The Company works closely with Mobile Network Operators (“MNOs”), Money Transfer Organisations (“MTOs”) and financial institutions to bring simple and relevant financial services to un-banked and under-banked clients in Africa: www.mfsafrica.com

Norsad Capital, an impact investor offering tailor-made debt solutions to mid-market growth companies in Sub-Saharan Africa, has provided a USD10 million long-term debt facility to Platform Capital (Platform).   Platform Capital’s portfolio companies have more than 3,000 employees operating across 15 countries. Platform has a staff complement of over 70 employees, with offices in Ghana, Kenya, Nigeria, South Africa, Uganda, USA and Mexico.

The continent also has circa 70 million MSMEs, however, the perennial challenge has been transitioning these MSMEs into companies that are institutionalised with systems, processes, teams, and products that are able to attract capital for growth and scale.

Platform Capital exists to solve these two issues: beneficiation and the development and nurturing of scalable entrepreneurial ventures. This is done through the company’s two-pronged business model; i) Investments – where the company owns and operates assets and invests (directly and indirectly) into entrepreneurs and ii) Advisory and portfolio management services where Platform provides services, relationships, and infrastructure to entrepreneurs to scale their businesses.

Oteng Sebonego, Investment Director at Norsad Capital and transaction lead said: “We are excited to partner with Platform Capital which is trying to solve one of the key issues faced by SMEs and early-stage companies in Africa; market access/growth and funding.

Dr Akintoye Akindele Founder and Executive Chairman: Platform Capital Group said: “In Africa, MSMEs provide an estimated 80% of jobs across the continent, representing an important driver of economic growth. Sub-Saharan Africa alone has 44 million micro, small, and medium enterprises, almost all of which are micro. Platform has indicated that with Norsad’s funding we will be able to assist 1,000 companies in high-growth sectors that are solving Africa and global problems over the next 5 to 6 years. Furthermore, the funding will enable Platform to roll out additional campuses & programs across Africa to identify, educate, train and impact 100,000 entrepreneurs over the next 5 to 6 years to build the Africa of the future. Norsad’s investment in Platform, will help Norsad achieve its goal to positively impact the lives of 100 million Africans by 2030.

About Norsad Capital

Norsad Capital is an impact investor providing tailor-made debt solutions to mid-market growth companies in Sub-Saharan Africa. With a track record spanning over 30 years, Norsad Capital has invested in 150+ companies across Africa. For more information:  www.norsadcapital.com

About Platform Capital

Platform Capital is a growth market focused, sector agnostic, principal investment, and advisory firm. We deploy patient, value accretive capital alongside international and local value investors to create champion businesses with the potential for regional or global scale. Platform also provides end-to-end bespoke Corporate Finance & Capital Markets advisory services. What makes us different is our obsession with changing the African narrative.

For more information: www.theplatformcapital.com

Norsad Finance, a leading impact investor, has been awarded the Emerging Markets Initiative of the Year 2021 award by the Principles for Responsible Investment (PRI), a world leading proponent of responsible investment. PRI is a United Nations-supported international network of investors, and it works to understand the investment implications of environmental, social and governance (ESG) factors and to support its international network of investor signatories in incorporating these factors into their investment and ownership decisions.

This announcement comes after Norsad was shortlisted by the judging panel in two categories: ‘Real-world impact initiative of the year’ and ‘Emerging markets initiative of the year’. Norsad subsequently won the ‘Emerging Markets Initiative of the Year 2021’.

The prestigious award recognises a PRI signatory who seeks to achieve impact by setting intentional impact strategy and targets to shape sustainability outcomes, using a range of levers to achieve impact, and being able to demonstrate how it is monitoring progress towards achieving its impact goals.

SETTING REAL-WORLD OUTCOME TARGETS

“The principal objective of Norsad is to contribute to private sector development in our markets, by making funding available to enterprises that are financially, socially, and environmentally sustainable and which create jobs with decent working conditions, adopt good governance practices, and assist economic growth and poverty alleviation,” says Kenny Nwosu, CEO of Norsad.

Norsad’s core purpose is to “Build a Better Africa” which it believes will result in a more prosperous continent with larger and more stable markets that encourage innovation and trade. It does so by investing in sustainable and profitable businesses in key markets. Norsad’s approach gives preference to companies that:

• Support sustainable growth and job creation;
• Diversify and strengthen local economies;
• Contribute to sustainable infrastructure growth and industry 
development; and
• Achieve impact in line with the Sustainable Development 
Goals (SDGs) and Norsad impact objectives.

USING A RANGE OF LEVERS TO ACHIEVE IMPACT

“To fulfil our commitment to sustainable growth, we integrate the assessment of social and environmental risks, impacts, and opportunities, into all our business processes,” says Nwosu.

Norsad requires all investee companies and financial services providers to comply, or commit to comply, within an agreed timeframe with the sustainability criteria outlined in Norsad’s Social and Environmental (S&E) Sustainability Policy.

A prerequisite for Norsad financing is that clients comply with local S&E laws, and partner investee companies are required to comply with international principles and standards when applicable, such as IFC Performance Standards and The World Bank Group Environmental, Health and Safety Guidelines.

TRACKING PERFORMANCE AGAINST SUSTAINABILITY OUTCOME TARGETS

Norsad continuously monitors investments through close engagement with partner investee companies. Annual surveys are conducted, and the results are shared in annual impact reports.

As part of its ‘open-door’ policy and close engagement, Norsad offers regular ESG support and training to its partner investee companies. During the COVID-19 pandemic, partner investee companies were provided with various best practice resources regarding ways to deal with and navigate the pandemic. This included webinars, training, regular check-ins, and assistance from shareholders. As a result, partner investee companies were better equipped to respond to the COVID-19 pandemic and have been more resilient to the impact.

As a signatory to the PRI, Norsad encourages its partner investee companies to adopt sustainability principles and to align themselves with the SDGs, “as we believe that incorporating ESG aspects into daily business operations assists in developing sustainable businesses, fostering partnerships between companies, their employees, and other stakeholders,” says Mr Nwosu.

‘’This win is a true testament to our purpose of ‘Building a better Africa.’”