Shareholders appoint new president

#themes: leadership change, credit rating, asset quality

Event: Afreximbank shareholders in the 32^nd AGM on 28^th June 2025 voted unanimously for Dr. George Elombi to be the new bank president and chair of the board of directors effective from September 2025. Dr. Elombi will be the bank’s fourth president replacing Prof. Benedict Oramah who has led the bank since 2015. Under the Afreximbank Charter, a president is appointed by the general meeting of shareholders upon the recommendation of the Board of Directors for a term of five years, renewable once. 

Dr. Elombi is the current Executive Vice President, Governance, Legal and Corporate Services – having risen through the ranks from a legal officer when he joined the bank in 1996.

Growth ambition: The bank wants to grow its size to USD 250bn in ten years – from the current KES 42.7bn as of 1Q25 (total assets and contingent liabilities), implying a 20% CAGR. This is similar to its CAGR over the last twenty years.

The AGM also approved the proposed dividend for FY24 – that is USD 300mn to be paid out to shareholders (c. USD 0.30 per Class D share, 10.7% div. yield) and an additional USD 50mn to be allocated towards the Concessional Financing Window (CFW).

Consistent growth: Afreximbank has recorded incredible consistency throughout the last 20 years of operation sustaining a cost to income ratio of around 20%, a 3%+ NIM, double-digit ROE, a loan to assets ratio of about or above 80% and an NPL ratio of c.2%-4%. More of the same from the incoming president will be welcome by the shareholders, member states and good for dividend investors. There are however some challenges, such as the push against the bank’s preferred creditor status recently by member states (and indirectly, other commercial creditors).

Credit rating downgrade and asset quality: In June, Fitch downgraded Afreximbank’s rating to BBB- with a negative outlook from BBB with a stable outlook. The downgrade was primarily driven by Ghana and Zambia’s stated intentions to restructure their Afreximbank loans as part of overall sovereign debt restructuring process the two countries are undergoing after defaults in 2022 and 2020 respectively. The amounts in considerations are c.USD 768mn for Ghana and c.USD 45mn for Zambia – totalling 2.6% of gross loans as of FY24. Fitch, in its own forward-looking criteria, considers these two loans as non-performing (together with a South Sudan exposure of USD 657 that Afreximbank recently successfully litigated) while the bank stated that international accounting standards allow for loans to be due for over 90days but be unimpaired due to other reasonable and supportable factors. Further, Afreximbank has a high level of collateral and credit risk mitigants for its loans – NPL coverage ratio stood at 201% as of FY24 including collaterals (net).

The two member states of Afreximbank are subject to the bank’s establishment agreement which confers upon it a preferred creditor status (PCS). Afreximbank maintains that it is not participating in restructuring negotiations related to any of its member states and that the preferred creditor status cannot be breached without consequences. The South Sudan exposure litigation implies that Afreximbank may be willing to pursue legal solutions should Ghana and Zambia insist on restructuring their outstanding dues. It is worrying that some member states are pushing back on the PCS status – a core tenet of Afreximbank’s business model and crucial to it lending to high risk countries, accessing funding from outside the continent and containing funding costs.

We have included the bank’s financial performance under each president and historical credit ratings in the next page

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