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Low Capital, Loose Regulation Create African Hybrid Finance Opportunities

Hybrid finance has risen in popularity throughout the African continent. While the instrument has been around for the past decade, the Covid-19 pandemic has accelerated its use due in part to the stress put onto the capital markets.

Commenting in the IFLR article, White & Case partner Deji Adegoke identifies another key reason for hybrid finance's growth is the push towards ESG, which is particularly important for Africa. With eager global investors keen to pursue green projects, more funding is readily available in jurisdictions it may previously not have been. "Traditional lenders are not deploying as much of their balance sheet to certain sectors as they used to," said Adegoke. "That has created opportunities for other financiers, such as traders, private equity, investments funds and international finance institutions, to further engage with the market."

Adegoke concludes: "In Africa you've got to be flexible and you've got to be adaptable, but that is one of the advantages we have because we have such strong global capabilities. We see the different structures being
utilised in Africa, the Middle East and Asia and we are able to adapt and apply that experience. Hybrid finance can blend different structures from different products and markets and enables sponsors and financiers alike to create a unique product tailored to the requirements of that jurisdiction and the specific lending syndicate. There are just so many opportunities in Africa because of its growth profile."

To read the article in full, click here, to go through to IFLR (paywall).

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