Gaborone, Botswana, December 13, 2017—
IFC, a sister organization of the World Bank and a member of the World
Bank Group, today announced its debut Kgalagadi Bond to finance a $25 million
investment in the Botswana Building Society. IFC’s support to the Building
Society will promote financial inclusion and access to housing finance
in the country.
IFC investment in the Botswana Building Society
comprises a senior loan equivalent to $25 million in local currency. The
long-term funding will support the transformation of the Society into a
full-service commercial bank financing underserved clients, including small
and medium enterprises.
The Kgalagadi Bond, which was over-subscribed,
is funding the investment. It is the first local currency bond issued by
a non-resident issuer in Botswana and also the first by a AAA rated institution
in the country. This is the first amortizing bond in the market, and forms
part of the IFC Pan African Domestic Medium Term Note Program.
BBS is a leading domestically owned financial
institution and the largest residential mortgage lender in Botswana. The
transformation of BBS will ensure that the envisaged commercial bank enhances
both its financial inclusion and housing finance initiatives and help it
to compete more effectively against larger local commercial banks. The
IFC investment will help to strengthen BBS’s financial stability and assist
the demutualised Society to introduce new products and services for under-served
market segments, including Small and Medium Enterprises.
Pius Molefe, Managing Director of Botswana
Building Society said, “We welcome IFC’s support to our transformation
strategy. The financing will enable us to offer conventional banking products
at more competitive rates, making us a stronger player in the market.”
IFC supports clients by mobilizing private
capital to create, deepen and expand markets. Financial inclusion and growing
SMEs are a key focus of IFC interventions, job creation and their significant
impact in reshaping markets.
Oumar Seydi, IFC Regional Director for Africa
said, “IFC financing to Botswana Building Society will improve access
to finance for job-creating small and medium enterprises. The bond issuance
will mobilize long-term funds in the capital market and channel them to
BBS, consistent with our strategy to create markets that promote growth.”
IFC and BBS recognize that home ownership
is a key source of wealth creation for low and medium income earners, however,
in Sub-Saharan Africa, access to mortgages and other forms of financing
for purchasing homes is limited. In Botswana, only two percent of the population
has used housing finance, as most households still use non-mortgage credit.
IFC is providing long-term funding and eliminating obstacles to the development
of an enabling environment for affordable housing by supporting mortgage
refinancing companies across the continent.
IFC, a sister organization of the World
Bank and a member of the World Bank Group, is the largest global development
institution focused on the private sector in emerging markets. Working
with more than 2,000 businesses worldwide, we use our capital, expertise,
and influence to create markets and opportunities in the toughest areas
of the world. In FY17, we delivered a record $19.3 billion in long-term
financing for developing countries, leveraging the power of the private
sector to help end poverty and boost shared prosperity. For more information,