When Norfund’s West Africa Regional Office was launched in 2018, no one could have predicted that barely two years into its existence we would be plunged into increased turbulence in our West African sub-region – and into unprecedented times globally with the onset of the COVID-19 pandemic and its corresponding difficulties for so many economies and companies.
Just as (some) things appeared to be returning to normal, Russia’s invasion of Ukraine in early 2022 has provided a new set of hurdles to overcome. Disruption in supply chains for oil and gas products, and key inputs into food production and processing such as fertiliser and grains, has led to significant hikes in the prices of refined oil products and food – putting further pressure on economies like Ghana’s that are still recovering from effects of the COVID-19 pandemic.
In addition, increased terrorist activity, tension around elections and other forms of turbulence and potential turbulence have led to a rising feeling of insecurity in the sub-region.
Norfund’s mandate to drive development through investments in the private sector becomes even more relevant in these times. Norfund’s investments help to create sustainable and profitable businesses by supporting their growth ambitions. Norfund’s focus is in particular on companies in markets that typically face capital constraints due to the high risk involved in those markets. By virtue of its mandate to be additional, Norfund is able to take risks that other institutional investors might not and sees its role as counter-cyclical. Its key focus on creation of jobs in the private sector through its investments is even more needed in these times.
Norfund invests directly in the following investment sectors: Renewable Energy, Financial Institutions, Food and Agribusiness, Manufacturing and Green Infrastructure (waste management and water). A long-term investor can invest in equity, debt and instruments in between. Given its source of capital, Norfund is able to take long-term positions and be flexible in the structuring of its investments. Norfund also lends to financial institutions including banks, microfinance institutions and other non-bank financial institutions, who then on-lend to small and medium enterprises (SMEs) in many other sectors. Norfund also invests in private equity and venture capital funds, which then on-invest into many other sectors.
Alongside the provision of its capital, Norfund seeks to add value to its investee companies in diverse ways: including through participation in governance, support in the attainment and implementation of strategic plans, provision of access to markets and companies in which it is an investor, support in improvements on the environmental and social fronts, and provision of business support (grant) facilities for non-commercial uses.
In this difficult period, Norfund has continued to be active in Ghana and West Africa. Today, its investment portfolio (direct investments and indirect investments through funds and platforms) in West Africa totals US$496m, and its investment portfolio in Ghana totals US$99.5m.
Within the last six months Norfund has made direct investments in CBI Ghana, a leading cement manufacturer (equity); Valency Trading International, a leading cashew trader and processor in Cote d’Ivoire (loan); and a soon-to-be-announced loan to a fast-moving consumer goods company in Ghana.
In addition to these recent investments, Norfund’s portfolio of investments in West Africa – all made within the last four years – include direct investments in Ghana: First National Bank Ghana (loan); CAL Bank (loan); Starsight Energy (loan); and Oasis Africa Fund (fund investment).
In Nigeria: Sundry Foods (equity); First City Monument Bank (FCMB) (loan); Access Bank Plc (loan); Arnergy Solar (equity); Starsight (loan); and Verod Capital Growth Fund III. And in Francophone West Africa: Ecobank Transnational Incorporated (loan); Baobab+ (Senegal, Cote d’Ivoire and Mali) (equity); Aktivco (Burkina Faso, Cote d’Ivoire, Cameroon and Niger) (loan); and Cofina Senegal SA (loan).
Norfund remains ready and committed to making more investments and supporting companies in Ghana and West Africa during these trying times.
