Securitization, a financial technique that is gaining ground in West Africa

By Pascal Agboyibor – Managing Partner Asafo & Co and Aristide Ouattara – Partner Deloitte Africa.

While the securitization market has been slow to develop in Africa, the increase in the number of transactions in the West African Economic and Monetary Union (WAEMU) zone highlights its growth potential.

Securitization is a financial technique that consists of transferring financial assets such as receivables to investors by transforming them into financial securities issued on the capital market via a dedicated financial vehicle (called a common securitization fund in the WAEMU zone). This allows the ceding company to generate liquidity or to optimize the size and structure of its balance sheet. Appeared about 60 years ago in the United States, securitization gradually spread throughout the world as a genuine financing or financial investment tool before experiencing a slowdown during the subprime crisis, a crisis during which this instrument was in First line. Today, the securitization market has regained its global dynamism thanks to better supervision of this technique.

With regard to the UMEOA zone, since 2014, a total of 12 securitization transactions have been carried out for an amount of 1,065.8 billion CFA francs, six of which have taken place in the last two years alone, according to the Authority. financial markets of the West African Monetary Union (AMF-UMOA), formerly CREPMF. This not only confirms that the market has adopted this financing technique, but that securitization also has significant potential in the WAEMU zone and in Africa. However, this potential is far from being fully exploited, in particular due to a regulatory framework that needs to be improved and (ii) a lack of knowledge of this technique by economic players in the area.

Based on these findings, Deloitte and Asafo & Co. are co-organizing in partnership with the 4 securitization mutual fund management companies approved in the WAMU zone (Africa Link Capital Titrisation, BOAD Titrisation, Joseph Titrisation and KF Titrisation) the first African Forum on securitization to be held on November 30 in Lomé the day after the Africa Financial Industry Summit (AFIS). This first edition, sponsored by the World Bank Group (IFC), BOAD, BRVM and GCR Ratings will be mainly devoted to the specific securitization market of the countries of the UEMOA zone whose regulatory framework is celebrating its 12th anniversary this year.

A unique platform for exchanges, the forum aims to bring together all the players in the ecosystem and to create a real permanent framework in order to promote securitization as an alternative and complementary financing instrument for the economy, while taking advantage of technical innovations and financial. The gathering of specialists in this segment will also create a collective force in order to anticipate and influence future regulatory orientations and make them converge towards international standards.

The forum is aimed at all players in the securitization segment, namely debt securitization mutual fund management companies (FCTC), regulators, brokerage firms, and development finance institutions (DFIs) , as well as all initiators, beneficiaries and operational intermediaries, banks, companies and insurance companies.

We invite all players in the securitization segment to come and discuss with us at the African Forum on Securitization on November 30 in Lomé (Togo) (https://africansecuritisationforum.org/). This will be an opportunity to take stock of securitization and to plan collectively for the future.

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