Forms a key pillar of CDC’s response to COVID-19
• Brings total trade finance commitments with Absa to US$ 250 million
• Financial backing to support supply chains in vital food and agriculture and healthcare sectors

CDC Group, the UK’s development finance institution and impact investor, has today announced an additional US$75 million commitment to its existing trade finance facility with Absa Bank. The investment will provide systemic liquidity across CDC’s African markets and enable local banks to sustain the availability of trade finance, supporting supply chains during the COVID-19 crisis.

The pandemic has put significant pressure on African banks as international banks continue to “de-risk”, withdraw from the continent and reduce their correspondent banking relationships in developing economies. In the context of broad outflows of capital from Africa, counter-cyclical commitments from development finance institutions are critical to mitigating these pressures and maintaining trade flows.

CDC’s partnership with Absa includes an innovative mechanism to boost trade finance funding to some of Africa’s most vulnerable countries. Trade finance transactions in sectors that are critical to serving people’s basic needs during the crisis – food and agriculture and health – will also benefit from preferential terms. The commitment will help maintain consumer access to a wide range of goods and services and allow businesses to continue operating by enabling them to import vital equipment and goods.

Today’s announcement strengthens CDC’s relationship with Absa and builds on two existing trade finance facility announced in October 2019. Admir Imami, Director, Head of Trade & Supply Chain Finance, CDC: “CDC remains committed to closing Africa’s trade finance gap of US$110 billion to US$120 billion. By scaling up our trade finance agreements in Africa, we can protect vital supply chains that make a tangible impact on everyday lives. Our commitment will also provide a lifeline to many businesses dependent on imports. By investing in them today, we can ensure they are well positioned to weather the crisis and contribute to the continent’s economic recovery.”

George Wilson, Head of Institutional Trade, Absa: “Absa has made a commitment to supporting entrepreneurs and business owners on the continent. With traditional global supply chains being disrupted, this transaction allows us to re-imagine the continent as a trade destination and capacitate businesses to allow them to create jobs and drive economic activity.”

Africa’s trade finance deficit is estimated by the International Chamber of Commerce to represent about 25 per cent of the demand for trade finance in Africa. CDC and Absa are playing a key role in bridging this gap by supporting local financial institutions to expand financing to businesses and sustain supply chains across the continent. Since 2015, CDC has guaranteed US $3.3 billion, resulting in US $12.5 billion of trade across its markets of Africa and South Asia.

Following discussions with the Central Bank of Kenya, we have worked through their concerns and are pleased to inform our customers and stakeholders that, effective Thursday, 16 April 2020, Absa Bank Kenya PLC (Absa Kenya) resumed its foreign exchange operations as an authorized dealer. 
Absa Kenya remains committed to being a constructive participant in Kenya’s financial markets for the benefit of all our customers and stakeholders. We thank the Central Bank of Kenya for supporting us to resolve this matter promptly. For further details, please reach out to Charles Wokabi on Charles.wokabi@absa.africa 

Financial services group, Absa and its staff, have stepped up contributions towards fighting COVID-19, by committing an additional R18.8 million to South African relief efforts. This includes the expansion of testing, provision of secure personal protective equipment (PPE) for medical personnel, remote learning support for university students and the distribution of food and other vital resources to vulnerable communities.

• R13.8 million for protective gear, testing and humanitarian assistance
• R5 million for 1 000 learning devices and mobile data for university online learning
• R7.1 million in donations from senior management and staff
• 2 million meals to be delivered over the next 6 months
• R19 million to date in 8 countries where Absa has operations across the region.

“In these challenging times, our focus is to ensure the safety and wellbeing of colleagues, customers and communities. With nearly a quarter of all cases on the continent, South Africa is currently the worst hit in sub-Saharan Africa, and where we are currently focusing our support initiatives,” says Absa Group Chief Executive, Daniel Mminele.

Leave Donations

Mminele says he has been inspired by the way people have come together, inside and outside Absa. R7.1 million of the additional R13.8 million (for protective gear, testing and humanitarian assistance in South Africa) was voluntarily donated by Absa senior management and staff in the form of accumulated leave and cash donations.

“Our colleagues have strong roots in their communities and a desire to make personal contributions within their means. There is a long road ahead and human solidarity, which is what our colleagues have demonstrated here, is what will get all of us through this crisis,” he adds.

Education contribution

Absa has also concluded an agreement with Universities South Africa (USAf) to contribute R5 million to provide 1000 learning devices and mobile data to university students to assist with their online or remote learning. The contribution will benefit students from six, mostly historically disadvantaged universities, across five provinces, namely the Vaal University of Technology (200 devices); the Universities of Kwa-Zulu Natal (200 devices); Western Cape (200 devices); Limpopo (100 devices); Venda (100 devices); as well as the University of the Free State (200 devices). These universities will identify recipients and distribute accordingly. 

Payment Relief Programme

Since the launch of Absa’s payment relief programme, 719 119 South African accountholders (across business and retail banking) have benefitted, amounting to R8.85 billion cash-flow relief over the last three months.  Within the Corporate and Investment Banking (CIB) division, in excess of R28.7 billion of COVID-19 related financing has been approved, with more applications pending. This is over and above the moratoriums and covenant requests granted to 238 corporate clients.

Other contributions

Additional SA contributions include:

• A R1.5m donation to Pink Drive for hotspot testing in KwaZulu-Natal, Gauteng and the Western Cape
• 3 mobile testing units to support the efforts of the National Health Laboratory Services (NHLS)
• 25 000 face shields, and 360 000 surgical masks donated through Gift of the Givers, for frontline medical staff
• 597 200 meals distributed to date, with a target of 2 million countrywide
• 14, 580 “thank you” blankets distributed to nurses across 10 hospitals
• R1m in trading commissions towards the Solidarity Fund as part of the JSE #Trade4Solidarity initiative

“To date, R19 million has also been donated across eight African markets, towards health and community support programmes. We will continue to monitor our operating countries across the continent, to assess where humanitarian assistance and other needs are most pressing, as this crisis evolves.” This brings Absa’s total contribution to R55 million since COVID-19 was declared a pandemic in March, says Mminele.

“We expect the situation to remain challenging for some time, even as some economies begin a slow reopening. At Absa, we remain committed to the implementation of strict hygiene and health protocols in the workplace and undertake to walk the road ahead together with our customers, clients and communities. It is through vigilance and collaboration that we will overcome the many facets of this crisis,” concludes Mminele.

Absa Capital Markets Nigeria Limited (“Absa”), acting as joint lead issuing house, has successfully completed Dangote Cement PLC’s (“Dangote Cement”) debut Series 1 bond offering, allocating NGN 100 billion in 5-year fixed-rate senior unsecured bonds under its NGN 300 billion issuance programme.

Dangote Cement will use the proceeds of this term bond offering to refinance existing short-term debt as well as for working capital and general corporate purposes. Absa acted as a lead issuing house for the registration of the programme as well as joint lead issuing house for the arrangement of the bond. The issuance is the largest corporate bond ever priced in the history of the Nigerian debt capital market.

Commenting on the bond issuance, Michel Puchercos, Chief Executive Officer of Dangote Cement, said: “This landmark transaction is the largest ever bond issuance by a corporate issuer in Nigeria. It allows us to further broaden our sources of funding by accessing long-term debt at competitive costs from the capital market and builds further on the success of our domestic commercial paper programme. The success of this transaction, in the current challenging environment, illustrates investors’ continuous confidence in Dangote Cement’s strategy, strong cash generation and solid credit profile.”

“Again, the bond issuance was a landmark deal given the turbulent market caused by the sharp fall in oil prices and the impact of the novel coronavirus which resulted in lockdowns being imposed in the states of Lagos, Abuja and Ogun which lasted the duration of the book-build period,” says Feyi Olusanya, Managing Director, Absa Capital Markets Nigeria Limited.

Despite the lockdown, investors held virtual credit committee meetings and bidding in the book was done while navigating working from home during the lockdown period.

“These challenges were also overcome by holding the bidding period open for longer than average, active investor engagement, a well-informed arranging consortium and the positive perception of Dangote Cement in the capital markets. Notwithstanding a tumultuous market backdrop, a milestone deal was achieved. The deal ultimately priced within guidance at 12.50% with the final book garnering just over NGN 155 billion and was 1.5 times over-subscribed,” Olusanya says.

“The success of the bond issuance demonstrates Absa’s expertise in providing tailor-made debt and capital raising solutions for its corporate clients in Nigeria and across the African continent,” says Kumeshen Naidoo, Head of Debt Capital Markets at Absa Corporate and Investment Banking.

Absa in Nigeria has in the past few years recorded many landmark transactions: several large upstream oil and gas syndications; international bond offerings for Nigerian issuers; the largest ever IPO on the NSE and advising on some of the most noteworthy M&A transactions in the market.

Absa established a representative office in Nigeria with the aim of gradually building a corporate and investment banking business to serve its growing Nigerian client base as well as Pan-African and global clients looking to do business in Nigeria. Absa’s presence in the market has now expanded to include investment banking and markets businesses.

“Absa is optimistic about the long term economic prospects of Nigeria, and is committed to expanding our business and supporting the needs of our clients. Across the last few years in Nigeria we have had the privilege to advise on several noteworthy advisory, capital markets and financings,” says Hasnen Varawalla, Managing Director, Investment Banking at Absa Group.

WorkInProgress (WIP), an Absa innovation lab, will be hosting a webinar series called ‘Wise-Up Wednesday’ sessions, featuring the real-life successes and lockdown challenges of South African small and medium enterprises.  

Charmaine Lambert, head of WIP, says that, while there have been many casualties of the COVID-19 lockdown, there have also been inspiring stories of hope, persistence and innovation.

“It’s been a dark time for many small business owners. Our intention with this webinar series is to provide inspiration and guidance by providing a platform for SMEs to share their stories.”

The webinar series launches on Wednesday, 1 July with Abe Cambridge, CEO of The Sun Exchange, a South African-based renewable energy startup that recently closed a successful funding round, totaling $4 million. In the session, WIP general manager Freya Bell-Dreyer will talk to Abe about running a peer-to-peer, crypto-enabled business and the opportunities that come with solar infrastructure in Africa.

Wise-Up Wednesday sessions will run weekly on the WorkInProgress Facebook page: @WIPCapeTown.

Upcoming Wise-Up Wednesday Sessions:

Wednesday 1 July 13:00

WIP Wise-Up Wednesday Sessions with The Sun Exchange
WorkInProgress member and The Sun Exchange CEO Abe Cambridge, talks about his recent $4 million funding round, lockdown wins and more.

Wednesday 8 July 13:00

WIP Wise-Up Wednesday Sessions with Pragmattica
WorkInProgress member and Pragmattica founder Amanda Bester, shares her lockdown tales, views on office sharing and coming runner-up in the Accenture Rising Star awards 2020.

Wednesday 15 July 13:00

WIP Wise-Up Wednesday Sessions with DORP
DORP CEO Nick Dreyer shares his lockdown pivot tales of VELDSKOENÔ and the creation of the DORP agency to assist start-ups getting online.

Wednesday 22 July 13:00

WIP Wise-Up Wednesday Sessions with HYBR
Serial entrepreneur and Partner at HYBR, Vuyisa Qabaka shares his journey through turbulent 2020.

Wednesday 29 July 13:00

WIP Wise-Up Wednesday Sessions with GovChat
WorkInProgress member and GovChat CEO Eldrid Jordaan talks about identifying opportunity amidst uncertainty.

About WorkInProgress
WorkInProgress (WIP) is an Absa innovation lab, located in Cape Town, South Africa. WIP is a co-working space that provides top facilities, including an event space, to facilitate and nurture collaboration, co-creation and ideation among entrepreneurs, start-ups (at various stages), innovators, companies, investors and thought leaders.

Absa Group, one of Africa’s largest financial services providers, is celebrating substantial completion of its separation programme from Barclays PLC, three years after the start.

The separation, one of the largest and most complex corporate programmes of its kind, followed Barclays PLC’s 2016 decision to reduce its shareholding in the African group to a minority position. Barclays became the majority shareholder in Absa in 2005 and the two groups subsequently integrated systems, processes and policies over time.

“We are closing an important chapter in the more-than-100-year history of the Absa Group as we wind up the last few elements of separation,” said Absa Group Chief Executive Daniel Mminele. “We emerge from this chapter as a proudly independent African bank, strengthened and enriched by our experience as part of the UK group. We have a great foundation to build on and full control to make the decisions that are in the best interest of our customers and other stakeholders across all the African markets we operate in.”

Barclays PLC contributed R12.6 billion (approximately $1 billion at the time) in 2017 towards the three-year separation programme, which comprised mainly IT and brand projects, and which commenced on 6 June 2017.

A total of 270 projects have been delivered as part of the separation programme, and all technical solutions have been built. Six projects will be concluded in the next few months, including three minor ‘mop-up’ activity projects.

The separation required the replacement or rebranding of millions of assets in 12 countries, including technology solutions. The programme involved, among others, the largest single data and system migration in Africa as customers in nine countries were switched to a new online banking platform, improving customer experience through greater stability and upgraded user interfaces in several countries.

More than 1,000 branches, 10,000 ATMs, close to 16,000 email addresses, several million customer cards, as well as thousands of uniforms, signage, forms, buildings and stationery were rebranded. At its peak, nearly 1,300 employees and contractors were dedicated to the separation programme.

“The initiatives undertaken have fundamentally improved Absa’s resilience, systems and capabilities, benefitting both employees and customers alike,” said Mminele. “I have been extremely impressed with how diligently and disciplined the colleagues have carried out this mammoth of a project, unparalleled on the continent in terms of size and complexity. We take great pride in having substantially completed the separation from Barclays PLC within budget and inside agreed time lines. ”

“The programme carried material risks, including potential large-scale banking system failures and customer attrition,” said Absa Engineering Services CE Paul O’Flaherty, who leads the separation programme “We worked closely with stakeholders including regulators across our presence markets to mitigate risk. We are proud to say that separation has been substantially completed in a safe and successful way.”

History of Absa Group’s association with Barclays PLC since 2005

2005	Barclays PLC acquires 55.5% of Absa Group Ltd.
2013	Most Barclays PLC businesses in Africa are combined with Absa Group Ltd to create Barclays Africa Group Ltd. The transaction increases Barclays PLC’s stake in Barclays Africa Group to 62.3%.
2016	Barclays PLC starts reducing its shareholding in Barclays Africa Group after changes in international regulations – subsequent to the 2008 global financial crisis – made it less attractive to own stakes in large banks abroad.
2017	Barclays PLC reduces its shareholding in Barclays Africa Group to a minority stake of 14.9% and separation commences.
2018	Barclays Africa Group is renamed Absa Group on 11 July 2018 and a refreshed brand is rolled out across South Africa.
Feb 2020	The rebranding of Barclays-branded banks as ‘Absa’ in Africa is completed.
June 2020	Absa achieves substantial separation from Barclays.

Absa and the Premier Soccer League (PSL) will be ending their sponsorship relationship of the Absa Premiership when the sponsorship contract expires at the end of the current season. 

Absa has had a 16-year relationship with football in South Africa, 13 of which have been as sponsor of the Absa Premiership since 2007.

“We have enjoyed a long, fruitful relationship with the PSL and have supported the PSL’s work in South African football and sports development. While we will no longer be the anchor sponsor for the PSL, soccer will always remain close to our hearts. We are therefore exploring alternative options to continue our relationship with the PSL, said Daniel Mminele, Chief Executive of Absa Group.

“We would like to thank the PSL and the football community for the excellent partnership and support over the years,” said Mminele.

“The Absa Premiership era will forever be a reference point for football glory, both in terms of club development and player performance in our sports history. The PSL is grateful to Absa for strengthening the league to true professionalism,” said PSL Chairman, Dr Irvin Khoza.

The Absa Premiership captured the imagination of football-loving people in South Africa and across the African Continent. Fans of the game accumulated memorabilia such as photos; soccer jerseys; digital images and videos, spawning a thriving merchandise industry for small businesses as well.

“Memory is a prized component for football followers around the world. The period of 2007 to 2020 will be etched in the memories of football fans as a highpoint in the PSL,” said Dr Khoza.

After plunging to an all-time low of a mere 5.1 index points in April, the business activity index of the Absa PMI survey rose sharply to 43.2 index points in May. “The increase was driven by most factories returning to production, albeit at reduced capacity, during May, after the Level 5 nationwide lockdown brought manufacturing output to a near standstill in April,” said Miyelani Maluleke. Economist at Absa Corporate and Investment Banking.

Many respondents reported that production was still well below normal capacity in May but, nevertheless, higher than that (in some case zero production) recorded in the previous month. “The sharp rise in the business activity index in May is relative to virtually nothing in April and still suggests very subdued overall activity levels,” explained Maluleke. Worryingly, some respondents indicated that whereas the lockdown regulations in May would have allowed for a further ramp-up of production, there was not sufficient demand to warrant this. Indeed, the new sales orders index did not rebound to the same extent as the output index. Furthermore, the employment index remained stuck at an all-time low, rising by a marginal 0.2 points to 26.8 in May. 

The sharp month-on-month movement in the output index in May should be visible in the official manufacturing production data as well. April is likely to see an unprecedented drop, with a solid month-on-month rebound expected in May. Assuming Level 3 (or lower) is maintained for the entire country during the full month, output should recover further during June. Indeed, the PMI’s expected business conditions index rebounded in May from an all-time low reached in April, rising to the best level since mid-2019. However, this does not mean that the level of factory output will return to where it was before the lockdown. It will likely take some time before the supply-chain disruptions are filtered out of the system and for global as well as local demand to return to normal. The risk that load shedding could reappear as the economy gets going could further hamper the recovery. It is also important to note that the South African economy was already struggling before the COVID-19 pandemic reached our shores. In early 2020, the business activity and new sales orders indices of the Absa PMI already fell to levels last seen during the recovery of the 2008/09 recession.

The increase in the output and new sales orders indices supported an increase in the headline manufacturing PMI which rose to 50.2 index points in May. However, as stressed last month, in these unique circumstances, it is better to look at the subcomponents than the headline PMI. This is not only the case in South Africa, but also globally where the supplier deliveries index inadvertently lifts the headline PMI. This subcomponent is inverted which means that when goods are less readily available than before and delivery performance worsens, this actually lifts the index. This is because in normal times, an order that takes longer to be delivered is indicative of increased demand by the manufacturing sector for inputs in the production process. “Last month, and to a lesser extent in May, COVID-19-related production stoppages disrupted the supply chain to such an extent that deliveries were slower even without increased demand,” said Maluleke.

• PMI Infographic May 2020
• Absa PMI May 2020

Absa Group has joined forces with Universities South Africa (USAf) and contributed R5 million to provide appropriate learning devices and mobile data to university students to assist with their online or remote learning.

This contribution will benefit students from six, mostly historically disadvantaged universities, across five provinces. The benefitting universities are: the Vaal University of Technology (200 devices); the University of KwaZulu-Natal (200 devices); the University of the Western Cape (200 devices); the University of Limpopo (100 devices); the University of Venda (100 devices) as well as the University of the Free State (200 devices). The receiving institutions, which by now have identified the deserving students and the extent of need, will devise their own distribution strategies.

The outbreak of COVID-19 has brought life around the world to a near standstill, with nationwide closures currently in force in 150 countries.  In a matter of weeks, the pandemic has changed education, forcing millions of learners into home-schooling and online learning. Recent data released by UNESCO Institute for Statistics shows that 68% of the world’s enrolled student population is presently staying away from schools and universities.

In South Africa, schools, vocational training colleges and universities have similarly been forced to either suspend academic activity or resort to emergency teaching via online platforms. The scale and speed of the closures represent an unprecedented challenge for the education sector, and the full impact is yet to be fully understood.

Given that the Ministry of Education, Science and Innovation has undertaken to meet the laptop needs of the NSFAS-funded students across institutions, Absa’s contribution will be channelled to assist students in the missing-middle category.

“Absa’s contribution undoubtedly eliminates a major challenge for at least 1000 vulnerable students at our universities,” Professor Ahmed Bawa, USAf’s Chief Executive Officer says. “If we are to succeed in our resolve to enable every single student to complete the 2020 academic year, then providing them with these devices and data is inevitable.” 

“We have a well-established commitment to provide access to higher learning across the continent. Remote learning is now a necessity, and there are many students who do not have the means to access their education in this way. We decided to provide this additional support to students who otherwise would be severely disadvantaged during this academic year and in the future,” says Daniel Mminele, Absa Group Chief Executive.

Absa’s contribution is a response to USAf’s ongoing fundraising to assist students in distress with tuition fees, on the one hand, and with appropriate devices to help them navigate the remote teaching/ learning terrain, on the other. Additional fundraising is seeking to support much-needed capacity building in academics.

https://en.unesco.org/covid19/educationresponse