GuarantCo, part of the Private Infrastructure Development Group (PIDG), has provided a XOF 14.55 billion (c. USD 25 million) portfolio guarantee to Orabank Togo, the largest bank in the country.
The guarantee allows Orabank to benefit from capital relief, enabling the bank to grow its infrastructure portfolio whilst remaining within single obligor limits. Supported projects include telecommunications and road projects in Togo.
It is anticipated that this transaction will result in the provision of improved infrastructure service to more than 500,000 people and support hundreds of jobs through Orabank’s continued lending to infrastructure projects. In addition, GuarantCo will contribute to the development of financial services in Togo where the rate of banking system usage is low.
In West African Economic Monetary Union (WAEMU) countries* the implementation of Basel II and III banking regulations have limited the lending capacity of banks to infrastructure projects. Through credit risk substitution, this portfolio guarantee provides uplifts to Orabank’s prudential ratios of 742bps and 837bps to Tier 1 capital and solvency ratios respectively. As Basel regulations continue to be rolled out across the African continent, GuarantCo expects this transaction to be replicated with other lenders to ensure that infrastructure project financing is not compromised whilst necessary prudential safeguards are implemented.
Layth Al-Falaki, CEO of GuarantCo, said:
“We are proud to support Orabank to finance essential infrastructure projects in Togo. This is the second GuarantCo transaction in Togo, after Kékéli Efficient Power in 2019, and it will bring significant benefits to the Togolese people. The increase in infrastructure project financing unlocked from our portfolio guarantee, combined with volumes from potential similar guarantees replicating this transaction in the region, will lead to a critical and much needed infrastructure improvement.”
Guy Martial Awona, CEO of Orabank Togo, said:
“Orabank Togo welcomes GuarantCo’s support for the portfolio guarantee which strengthens its capacity to finance the development of companies in the telecommunications, energy and infrastructure sector. Once again, the bank is proud to contribute to the efforts of the government in the implementation of the National Development Plan (PND) launched in 2018.”