Securitisation in Africa: a market becoming more diverse and sophisticated
What is driving the development of securitisation in Africa?
Securitisation is becoming an increasingly relevant financing tool across Africa. While the market was initially focused on a limited number of banking transactions, recent activity shows that it is being used to address a broader range of funding needs and to mobilise long-term capital for financial institutions, corporates and public-sector entities.
The strongest recent development has been observed in the WAEMU region, where transactions have involved the securitisation of bank loan receivables, trade receivables, SME loans, mortgage loans and electricity receivables. Other structures have focused on receivables owed by public or quasi-public entities. This expansion reflects the growing demand for alternative refinancing solutions, particularly in markets where access to long-term funding remains limited.
Which assets and structures are involved?
Loan receivables remain at the centre of the market, but the range of assets is gradually expanding. Recent transactions and mandates have also involved non-performing loans, commercial receivables, real estate assets and leases, as well as receivables generated through mobile money activities across several African jurisdictions. Trade receivables are particularly well suited to securitisation, as their recurring cash flows can support regular funding programmes while allowing originators to diversify their sources of liquidity.
In the WAEMU region, transactions are generally structured through a fonds commun de titrisation de créances (FCTC) governed by the regional securitisation framework. Receivables are transferred to the FCTC, which finances their acquisition through the issuance of bonds, including bonds placed on the regional financial market. The structure is supported by detailed arrangements governing the transfer and servicing of receivables, the custody of assets, liquidity and the allocation of available funds among investors.
Structures are also becoming more sophisticated. Depending on the nature of the assets and the risk profile of the transaction, they may include senior, mezzanine and junior tranches, liquidity facilities, financial guarantees, credit insurance and direct agreements with public entities. In the case of trade receivables, these features can be combined with revolving purchase mechanisms and servicing arrangements designed to preserve the continuity of the underlying cash flows. For cross-border transactions involving new asset classes, an offshore special purpose vehicle may be used to aggregate receivables originated in several countries.
What is the outlook for the market?
The regulatory environment is an important factor in the development of the market. In the WAEMU region, the regional securitisation framework provides a common basis for transactions involving several member states, while the parties must still address local-law issues relating to the underlying receivables, servicing, enforcement, foreign exchange and public-sector obligations.
The market appears to be moving from isolated transactions towards a broader and more sophisticated financing ecosystem. The diversification of asset classes, the development of regional capital markets and the involvement of development finance institutions, guarantors and specialist arrangers should support further growth. The next phase will nevertheless depend on the ability of market participants to standardise documentation, develop reliable performance data and allocate credit, liquidity, operational and currency risks effectively.
If these conditions are met, securitisation could become an increasingly important bridge between African originators seeking long-term funding and investors looking for diversified exposure to African assets.
