Bank of Sierra Leone Issues First Local Currency Corporate Bond


Sierra Leone’s financial sector witnessed a historic moment with the Bank of Sierra Leone approving the country’s first-ever local currency corporate bond on June 12, 2024, as reported by Invest Salone. This milestone paves the way for a more developed capital market in the nation.

United Capital Plc, a prominent pan-African investment banking firm, and Pennarth Greene, a Sierra Leonean corporate finance advisory firm, played a pivotal role in arranging the bond issuance. Support also came from Invest Salone’s PROSPER Salone grant scheme.

The bond, valued at SLE32 million (approximately US$1.4 million), was secured by LAPO Microfinance Company. LAPO, focusing on providing financial services to micro, small, and medium enterprises in Sierra Leone, has a unique characteristic – 99% of its clients are women. The proceeds from the bond will fuel LAPO’s expansion plans, allowing them to strengthen their loan portfolio and establish new branches.

Eshiague Gabriel, LAPO SL’s Managing Director/CEO, hailed the bond issuance, highlighting its significance as a new, cost-effective funding source, free from foreign exchange risks often associated with foreign debt.

Claudius Bart-Williams, CEO of Pennarth Greene, emphasized the creation of a novel long-term funding channel in Sierra Leone. He commended the transparent process, adhering to international standards, that included a prospectus, credit rating assessment, and a trust deed. He noted the strong interest from both local and international investors, recognizing the LAPO bond as a new asset class and a benchmark for corporate bond yields in the country. Bart-Williams also expressed his appreciation for the Bank of Sierra Leone’s guidance in achieving this milestone.

The Africa Local Currency Bond Fund (ALCB Fund), aiming to develop thematic bond markets in Africa, served as the anchor investor. Brock Hoback, Fund Lead at ALCB Fund, expressed his enthusiasm in supporting this historic transaction. He anticipates the bond to stimulate Sierra Leone’s bond market, ultimately providing women from low-income households with access to affordable loans, promoting financial independence and empowerment.

Invest Salone’s Investment Lead, Christina Clark-Lowes, pointed out the bond’s potential to diversify the domestic capital market, attracting a wider range of investors. She addressed the current challenge of limited access to finance for Sierra Leone’s private sector, with many institutions relying heavily on bank overdrafts due to undercapitalization. Corporate bonds, according to Clark-Lowes, offer an attractive alternative, especially for companies seeking long-term financing. The local currency aspect eliminates the risks associated with foreign exchange fluctuations.

Dr. Gbadebo Adenrele, Managing Director of Investment Banking at United Capital Plc, highlighted the significance of this transaction in establishing a strong corporate bond framework and fostering the growth of Sierra Leone’s capital market. He reaffirmed United Capital’s commitment to strengthening capital markets across Africa by actively participating in such groundbreaking initiatives.

The approval of this landmark bond issuance is anticipated to attract new international investors to Sierra Leone and provide existing investors with new diversification opportunities. This milestone signifies a positive outlook for the country’s economic future.




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SLCB Director of Corporate Affairs Clarifies Concerns Over Unjustified Loans in 2022 Audit Report


In recent times, the Public Account Committee has raised concerns regarding the Sierra Leone Commercial Bank lack of specific loan policy for Political Exposed  Persons.

The concerns came following an Audit  revealing  that by December 31 2022,  the SLCB had issued  loans reportedly  totaling  SLE 41,448,000 to Politically exposed People  without clearer policies  or Procedures.

However, The Director of Corporate Affairs of the Sierra Leone Commercial Bank (SLCB), Victor Thomas Biandoma, Esq., addressed concerns over unjustified loan issuance.

The Director clarified that the loans in question raised in the Auditor General’s Report underwent a thorough vetting process in line with the bank’s stringent credit policies.

Emphasizing the institution’s commitment to transparency and due diligence, the Victor detailed the criteria met by the borrower, which included a strong credit history, a viable business plan, and other supporting documents.

He further assured customers and stakeholders that loans’ approval was based on sound financial judgement and aimed at fostering economic growth.

“The SLCB, recognised for its robust governance framework, remains dedicated to maintaining its reputation for financial integrity,” he averred.

The Director also mentioned that any allegations of impropriety are being taken seriously and investigated to uphold the bank’s standards and customer trust.

 




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