Trade and investment landscape in Africa has continued to draw interest from lenders, particularly in West Africa, with notable changes in origination strategies. 26% increase in the number of unique enquiries from lenders originating funding opportunities when compared with the same period in 2020. Some lenders have seemingly decided to focus more on particular regions (and in some cases, individual countries) citing “due diligence processes being disrupted due to travel restrictions” as a main reason, and “risk mitigation strategies” as the second most common reason. These have prompted lenders to focus on regions and/or countries where they have representative offices or a deep and reliable network.
Agriculture remains the sector with the most interest, present in almost 70% of investor mandates. Financial services and manufacturing (including FMCG) are also quite prominent, being flagged as sectors of interest in 64% and 44% of investor mandates respectively. Two hundred and thirty-one unique lender enquiries were recorded in Q1 2021. Of these, 58% of the companies are either headquartered in West Africa or have their main operations in West Africa; 17% are based in East Africa and 16% are based in Southern Africa. Only 5% of these companies have cross regional operations, compared to the 14% recorded in Q1 of 2020 (pre-pandemic). A considerable portion of the lender enquiries included a working capital component in the proposed transaction structure (35%). Supply chain finance and asset financing components were also notably present in discussions (34% and 30% respectively).