Financial services group Standard Bank has successfully arranged and structured $50-million in financing facilities for beverages company Coca-Cola Beverages Africa (CCBA) to support its expansion strategy in Ethiopia over the next five years.
The Coca-Cola Company holds a majority stake in CCBA, which is the largest bottler of Coca-Cola beverages in Africa – serving 13 countries on the continent – and is the eighth-largest company globally by revenue.
Standard Bank started its journey with CCBA a few years back and has established itself as a primary banker to CCBA across key African countries in which it operates.
“We have demonstrated the importance of our partnership with CCBA by offering unique solutions to key concerns, of which this transaction is a prime example,” says Standard Bank relationship manager for CCBA Simon Reeves.
Standard Bank corporate financing solutions head for African regions Stephen Lovell adds that, this closely aligns with the company’s key business imperative of driving sustainable growth across Africa.
“Standard Bank’s position as sole funder to the deal demonstrates the bank’s ability to provide innovative financing solutions, leverage the strength of its balance sheet and Africa expertise to bring deals like this to life,” says Lovell.
He adds that, owing to the presence in markets matching CCBA’s operations in Africa, this led to the company having to establish a representative office in Addis Ababa in 2015.
Standard Bank was able to provide insight into the local market that best supported CCBA’s growth ambitions in Ethiopia – a high growth region for Coca-Cola.
Ethiopia boasts the second-largest population in Africa. While consumption of soft drinks is low compared with major markets, demand is expected to swell as the middle class rises and consumers are empowered with spend.Largest in Ethiopia
The bottling company East Africa Bottling S.C has already invested $70-million in a new plant that is set to become its largest in Ethiopia with a manufacturing capability of 70 000 cases a day.
Research by credit and macro intelligence solutions provider Fitch Solutions shows that the global soft drinks industry is worth $295-billion and is expected to grow to $377-billion by 2023.
Africa only accounts for 3% of this total value, despite representing 16% of the global population, which is expected to rise 25% by 2050.
Lovell adds that, Standard Bank has invested heavily in the consumer sector with a specialised team that is capable of supporting multinationals like Coca-Cola to capitalise on the consumer opportunity.
The 2018 United Nations Conference on Trade and Development World Investment Report states that, Ethiopia was the second-largest recipient of foreign direct investment (FDI).
Standard Bank’s report on soft drinks in East Africa for 2019 shows that Ethiopia became the fastest-growing economy in 2017 with consumer-packaged goods and retail making up a quarter of FDI projects.
“The CCBA deal holds significance as new FDI will be realised for Ethiopia, set to positively influence the country’s economic trajectory,” says Standard Bank Group Ethiopia head Taitu Wondwosen.
While Ethiopia’s economy continues to record strong economic growth, job creation through private-sector reform remains a key imperative.
“CCBA’s expansion in the country complements government’s plans. “The new bottling capacity that is earmarked for the country will continue to add jobs to those that have already been created by CCBA in Ethiopia and are a vital part of our overall investment ambitions in Ethiopia.
“This is a first for CCBA and Standard Bank, who understood our need and were able to find an innovative solution to solve it. The funding from Standard Bank is key to our growth ambitions in Ethiopia,” says CCBA Ethiopia MD Daryl Wilson.
Coca-Cola entered Ethiopia six decades ago and has since created about 2 100 direct and more than 50 000 indirect jobs in the country.
“Standard Bank is committed to supporting our clients in accessing opportunities in Ethiopia, and more broadly across the continent.
“Our support for CCBA’s vision of growing its bottling business responsibly across the continent demonstrates what we are doing to uphold this commitment and support our clients in Ethiopia,” Wondwosen concludes.