Nimble officially partnered with the International Finance Corporation (“IFC”) in December 2019 to focus on the acquisition and resolution of distressed assets in South Africa and across sub-Saharan Africa. The IFC has taken an equity stake in our business and has provided significant capital with which to acquire distressed assets and we expect this relationship to be transformative for Nimble.
The IFC supports the development of strong distressed asset markets in emerging economies to ensure economic development and financial stability through its Distressed Asset Recovery Program (“DARP”), which has been successfully implemented in South America, Eastern Europe, Asia and the Middle East. Non-performing loan (“NPL”) transactions are globally accepted as an integral part of any well-functioning financial market as they resolve challenges faced by both credit grantors and over-indebted customers.
The DARP unit gives credit grantors the ability to sell their NPL’s while at the same time freeing up capital to invest back into their businesses. Credit rehabilitation and repair of individuals and small and medium-sized enterprises (“SME’s”) takes place where outstanding debt obligations can be resolved in a sensible and pragmatic way with the goal of preserving assets and enabling customers to ultimately be credit active and re-enter the financial system.
Customer centricity and credit rehabilitation and repair form the foundation of our approach to resolving debt obligations. Debt forgiveness is one of the key tools to practically achieve this. It seeks to resolve the outstanding credit obligations of over-indebted customers while, at the same time, achieving meaningful socio-economic benefits. In an article written on our website in May 2019, we discussed debt forgiveness under a legislated framework as well as the large scale debt relief that is achieved through natural free market forces in the secondary market for the sale of NPL’s.
The economic crisis unfolding in South Africa and across sub-Saharan Africa as a result of the Covid-19 pandemic will undoubtedly result in increasing levels of customer indebtedness as the economy slows, new credit extension ceases, business liquidity and profitability is adversely impacted and unemployment levels rise. At the same time, credit grantors will be under pressure as rising NPL levels will negatively impact earnings as well as capital adequacy requirements.
Our partnership with the IFC provides Nimble Group with significant organised capital to provide meaningful solutions to credit grantors to resolve income statement, balance sheet and other special situational challenges, such as the Covid-19 crisis. At the forefront of our investing philosophy is our commitment to treating customers fairly, while achieving credit rehabilitation and repair, in a manner that ensures the development of sustainable credit markets in sub-Saharan Africa.
Written by: Peter Watson, Nimble Group Head of Investing