Norsad boosts finance for Southern African growth companies

Norsad Finance Ltd is a Nordic-African development finance company operating in Southern Africa. It provides growth companies with long-term finance directly or through intermediaries.

Last year four Nordic development finance institutions – Finnfund, IFU of Denmark, Norfund of Norway and Swedfund of Sweden – made a USD 34 million equity investment in Norsad Finance. This increased its capital base to over USD 100 million.

Norsad Finance was established in 2011 when “NORSAD Fund and Agency”, created in 1990 by four Nordic and eleven Southern Africa countries, was incorporated. The DFIs of the four Nordic countries and eleven Southern African countries became its shareholders.

New investment possibilities

Alongside traditional development financing, Norsad Finance is creating a new model for international financing which, with the extra equity from the Nordic shareholders, it hopes will attract more African equity and lending from local and international sources.

Norsad Finance has traditionally concentrated on SMEs. With greater equity it will be able to serve new customers and larger projects in future.

As of January 2013, Norsad Finance’s investment portfolio was about USD 54 million. Undisbursed commitments totalled USD 22 million dollars.

More dircect investments

About 60 percent of its investments have been made to small and medium-sized companies via banks but in future the proportion of direct investments in various sectors is expected to grow. Norsad Finance believes that new markets and opportunities will be opened by its recent decision to offer equity and mezzanine instruments in addition to loans. Traditionally the most active sectors have been agriculture and food processing. Most of Norsad’s investments are in Zambia, Malawi and Zimbabwe.

Its office, which used to operate in Lusaka, Zambia, moved at the beginning of the year to Gaborone in Botswana.