IFC, an organisation 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, provides the local currency for the IFC loan. It is the first local currency bond issued by a non-resident issuer in Botswana and 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 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 demutualized Society to introduce new products and services for under-served market segments, including small and medium enterprises.
“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,” says Pius Molefe, Botswana Building Society Managing Director.
IFC supports clients by mobilising 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.
“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,” says Oumar Seydi, IFC Regional Director for Sub-Saharan Africa.