Safaricom Ethiopia nails IFC loan deal

Tuesday, August 8th, 2023 07:15 | By
Safaricom chairperson Michael Joseph
Outgoing Safaricom chairperson Michael Joseph. PHOTO/Print

Safaricom Telecommunications Ethiopia (STE), a subsidiary of Safaricom PLC, is set to receive $257.4 million (Sh36.8 billion) from the International Finance Corporation (IFC) to fund its greenfield telecommunications projects.

This follows the closure of transactions that involved IFC and the Multilateral Investment Guarantee Agency (MIGA) in Addis Ababa yesterday. The deal was first announced in June this year.

IFC’s vice president for industries Mohamed Gouled said the company will receive support in the form of full equity investment, a loan and guarantees to support the ongoing construction and operation of their greenfield telecommunications network to drive digital connectivity across Ethiopia.

Greenfield projects

As part of the funding agreement, IFC will make a $157.4 million (Sh22.5 billion) equity investment in Global Partnership for Ethiopia BV (GPE) and loan the consortium $100 million (Sh14.3 billion) to support the greenfield projects. These deals are expected to accelerate STE’s ambitious plans to provide affordable internet and reliable connectivity across Ethiopia.

“The progress Safaricom Ethiopia has achieved in such a short period is nothing short of remarkable. With the highly anticipated launch of M-Pesa, we are excited to witness the profound impact it will have not only on the telecommunications landscape, but also on improving financial inclusion for all people across Ethiopia.” Gouled said.

MIGA will provide 10-year guarantees worth $1 billion (Sh143.1 billion) to cover the equity investments of STE’s shareholders including Vodafone Group, Vodacom, Safaricom, and British International Investment.

Majority shareholder

A portion of the MIGA guarantees, $76 million (Sh10.9 billion), will come from the MIGA Guarantee Facility. With closure of the transaction, IFC will hold a minority equity stake in GPE BV, while Safaricom PLC remains the majority shareholder.

“With IFC coming on board as an equity partner, their experience in global operations and the stature of their investment brings a lot of praise and respect to the board.” Michael Joseph, the STE chairman.

The firm’s much anticipated launch of M-Pesa will be in the third quarter of the Financial Year 2023/24.

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