General News
Finance for Development Lab Calls for an African Liquidity and Stability Mechanism (ALSM)
The Finance for Development Lab (FDL), a new Paris-based economic think-tank dedicated to building a fairer and more effective architecture for international finance, was officially launched earlier this week, in presence of WTO Director-General Ngozi Okonjo-Iweala and 2019 Nobel Prize in Economics winner Esther Duflo.
Central to its launch was the presentation of the African Liquidity and Stability Mechanism (ALSM), a new regional financial arrangement for Africa and the first policy recommendation crafted by the Finance for Development Lab, in collaboration with Egypt’s Economic Research Forum (ERF).
The proposal aims to tackle the need for African countries to address short-term liquidity and long-term solvency challenges in the face of declining financial flows, lower economic growth and the rising cost of sustainable development.
Daniel Cohen, Chair of the Finance for Development Lab, said: “The purpose of the ALSM is to shield African sovereigns from external shocks by fostering deeper and more stable local financial markets, protecting against commodity price shocks and providing technical and financial assistance to help governments manage external debt burdens.”
Ibrahim Elbadawi, Managing Director of the Economic Research Forum said: “While fiscal problems in African countries can be attributed in part to policy-made development failures, the ALSM can complete the continent’s financial architecture by providing a layer of regional financial safety net.”
The Covid-19 pandemic and the war in Ukraine have put African countries under severe financial pressure while tightening global monetary conditions and waning risk appetite from international investors are raising the risk of debt defaults.
Ensuring macro-financial stability and reasonable funding costs is of the utmost importance for the African continent given on one hand, the heavily constrained policy space of African national authorities, and on the other, the urgent challenge of investing in the energy and sustainable transitions.
Financing costs tend to be higher for the region, at least in part because bonds are less liquid and markets perceive them as riskier than other emerging markets, even when fundamentals are equivalent.
Existing financing arrangements have proven inadequate to respond to emergencies and crucially lack scale to achieve global development and climate objectives. Other developing regions have set up their own Regional Financing Arrangements (RFAs) in the aftermath of crises, but the African continent lacked its own.
To achieve this, FDL and its partners advocate for the creation of four facilities which will alleviate countries’ short-term liquidity constraints by enhancing credit and increasing liquidity on debt markets and by tackling the liquidity costs of commodity price volatility. Grouped together, they will form the so-called ALSM fund.
(1) UNECA’s Liquidity and Sustainability Facility, which will improve liquidity and reduce government borrowing costs by providing repo (short-term loans) in exchange for sovereign debt collateral.
(2) A Commodity Hedging Facility, which will protect against the fluctuations in global commodity prices by guaranteeing margin calls which are triggered when prices rise.
(3) A Credit Enhancement Facility which will stabilize the existing debt stock by offering rolling interest payment guarantees.
(4) A Debt Restructuring Facilitation Facility which would facilitate debt restructuring negotiations by providing cash ‘sweeteners’ of a fixed price to marginal creditors in the event of debt restructuring. This liquidity line would reduce the length and the costs of restructuring negotiations
Central Bank of Nigeria (CBN) has yet to publish its annual financial statements beyond the 2022 financial year, despite legal provisions requiring the apex bank to release its audited accounts annually.
An annual report is a comprehensive report on a company’s activities throughout the preceding year.
Annual reports are intended to give shareholders and other interested people information about the company’s activities and financial performance.
The most recent annual report and financial statements of the CBN available to the public remain those for the 2022 financial year.
Under Section 50 of the Central Bank of Nigeria (CBN) Act, the bank is required to prepare, submit and publish its audited annual financial statements.
Section 50(1) stipulates that the CBN must transmit its annual accounts, certified by an external auditor, to the President and the National Assembly within two months after the end of each financial year.
Section 50(2) further provides that the annual report submitted to the President and the National Assembly should be published in a manner determined by the CBN Governor, while Section 50(3) mandates the CBN Board to ensure the accounts are published in the Federal Government Gazette as soon as possible.
Despite these statutory requirements, the apex bank has not made public any annual financial statements after the 2022 reporting year.
The development comes after the CBN, on August 11, 2023, released its consolidated financial statements covering seven years the first such publication since 2015.
President Bola Tinubu appointed Olayemi Cardoso as Governor of the CBN on September 15, 2023, following the removal of former Governor Godwin Emefiele in June of the same year.
Emefiele is currently facing trial over alleged corruption-related offences.
Last week, the Supreme Court ordered the final forfeiture of several of Emefiele’s properties, along with $2.045 million in cash.
Dangote Petroleum Refinery and Petrochemicals has successfully completed a landmark US$2.5 billion private equity placement, in what is believed to be Africa’s largest publicly disclosed primary equity private placement by value.
This marks a major milestone in the company’s long-term expansion strategy.
In a statement issued on Thursday, the company said the offering was 3.7 times oversubscribed relative to its initial offer size, reflecting strong investor confidence in the refinery’s growth prospects and resulting in the issuance and allotment of approximately US$2.5 billion in new equity.
The fundraising follows the recent equity capital raise in which existing investors expanded their holdings alongside new institutional investors, strengthening the refinery’s capital base to support its next phase of growth.
According to the company, proceeds from the private placement will finance the continued expansion of its refining and petrochemical operations, reinforce its capital structure and enhance financial flexibility for future investments.
The transaction attracted broad participation from international and African institutional investors, sovereign-related investment vehicles, development finance institutions and long-term strategic partners.
Among the key investors were the Africa Finance Corporation (AFC) and India Infra Buildco, an investment vehicle facilitated by the African Export-Import Bank (Afreximbank). The offering also drew participation from a diverse mix of institutional and individual investors, underscoring strong market confidence in the refinery’s long-term strategy.
Chairman of Dangote Petroleum Refinery and Petrochemicals, Aliko Dangote, described the successful capital raise as a strategic move to deepen and institutionalise the company’s shareholder base while complementing internal cash flows and external financing.
“This further demonstrates our profound commitment to developing domestic refining and petrochemical capacity, reducing Africa’s reliance on imported refined products and strengthening the continent’s energy security,” Dangote said.
Managing Director and Chief Executive Officer of the refinery, David Bird, attributed the strong investor response to the company’s operational performance and leadership.
“The exceptional demand we saw is a testament to our operational excellence, execution capacity, and investor confidence in DPRP’s leadership,” he said.
Following the completion of the transaction, the company said it is well positioned to continue executing its long-term growth strategy by expanding world-class refining and petrochemical capacity while strengthening Africa’s energy security.
Once again, The Gathering on 100 Pitchathon has rewarded some of Nigeria’s most promising young entrepreneurs, with three startups sharing ₦5 million in funding.
Pitchathon
The pitchathon took place at the Abuja edition of the Gathering on 100 held between July 18 and 19, at This Day Dome, Central Business District, Abuja.
The competition brought together founders from different sectors to pitch their businesses before a panel of judges.
The Pitchathon remains one of the most sought after experiences at The Gathering on 100, an MTN Nigeria initiative that connects young Nigerians with opportunities for entrepreneurship, innovation and personal development.
Omolola Rebecca, founder of Agrovest, emerged overall winner, receiving ₦2.5 million for her agritech solution, which provides funding for farmers to improve access to capital and boost agricultural productivity.
Reacting to her victory, Rebecca said the recognition would give her business greater visibility and open doors to more investors. “Winning this competition means more people will notice what we’re building.
“It puts Agrovest in front of potential investors and partners, and gives us the opportunity to grow our impact by supporting even more farmers,” she said.
The second prize of ₦1.5 million went to Agbo Obinnaya, founder of Case Radar, a legal technology platform that uses generative artificial intelligence to simplify access to legal services in Nigeria.
The platform enables users to obtain legal guidance, understand legal documents and connect with legal professionals through a single digital platform.
Abdulmuiz Adam secured third place and ₦1 million with WaveBudget, a fintech platform that combines savings and responsible financing.
The platform allows users to save towards financial goals, access buy now, pay later services through partner merchants with a 50 per cent down payment, and manage their savings in one place.
Presenting the prizes to the winners, Lanre Coker, Manager, Customer Acquisition and Compliance, North-West, MTN Nigeria, said the initiative reflects MTN’s commitment to supporting young Nigerians with the resources they need to grow their ideas into sustainable businesses.
“The Gathering on 100 is about helping young Nigerians achieve the height of their endeavours, whatever they may be.
“We know there are brilliant ideas across the country, and through initiatives like the Gathering on 100, we are creating opportunities for innovators to access funding and the confidence to keep building,” he said.
The Abuja edition builds on the success of previous Pitchathons held during The Gathering on 100 across the country.
In Lagos, eight startups received a combined ₦45 million in funding, while three startups shared ₦5 million at the Aba, Enugu, and Kano editions. With the Abuja winners now joining the growing list of recipients, the Pitchathon continues to position itself as a platform for discovering and supporting the next generation of Nigerian entrepreneurs.
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