Investing in Africa’s local prosperity 2 18 About this Report This report is compiled annually and contains data on Arise for the 2018 financial year, which runs from 1 January 2018 to 31 December 2018. Corporate Information Arise B.V. Company Registration Number: Chamber of Commerce No 64756394 Physical Address: Amstelplein 40B, 1096 BC, Amsterdam, The Netherlands Contact Details: +31 20 205 2300 [email protected] Arise South Africa (Pty) Ltd Company Registration Number: 2016/224610/07 Physical Address: 7th Floor, Apex Building, 1 Energy Lane, Bridgeways Precinct, Century City, 7441, Cape Town, South Africa Contact Details: +27 21 300 2222 [email protected] For questions regarding this report, contact Zeenat Parker on +27 21 300 2222 or via email at [email protected] www.ariseinvest.com Operations Report 2018 Investing in Africa’s local prosperity Table of Contents 4. Organisational Overview 8 4. 1 About Arise 8 4.2 Shareholder structure and governance 10 4.3 Investment portfolio in Africa 13 5. Organisational Highlights 14 5. 1 Investing in people 14 5.2 Stakeholder engagement and brand-building across the continent 15 5.3 Risk management 16 5.4 Environmental, Social and Governance goals – strengthening sustainable and responsible banking 16 6. Development Impact Report 18 6. 1 Promoting financial inclusion – building Africa’s local prosperity 19 6.2 Making the most of Africa’s agricultural potential 19 6.3 Embracing fintech – preparing for the future of banking 20 6.4 Creating jobs and empowering women in Africa 20 6.5 Developing skills – contributing to a knowledge economy 21 6.6 Making fiscal contributions – building strong economies 21 7. Our Work – Investing in Africa 22 7. 1 Investment performance overview 22 7.2 Arise portfolio value progression 23 7.3 Partner Bank highlights 26 8. Case Studies – Adding Sustainable Value 44 8. 1 Moza Banco – The power of collaboration in creating a sustainable systemic financial institution 44 8.2 Equity Bank – Partnering for growth in agricultural banking 46 9. Financial Statements 48 9. 1 Consolidated Statement of Financial Position 48 9.2 Consolidated Statement of Profit and Loss 49 9.3 Consolidated Statement of Changes in Equity 50 9.4 Consolidated Statement of Other Comprehensive Income 52 Operations Report 2018 1 Investing in Africa’s local prosperity In a short space of two years, Arise has cemented its position as a leading local investment and development partner. 2. Foreword from the Supervisory Board Acknowledging a successful second year of operations Arise’s second year of operations has seen it deepen its economic growth, strengthen rural development and impact on the African financial sector, by adding value to alleviate poverty. its partner banks and the African continent. As Arise writes Arise was created by its shareholders – Norfund, the next chapter in its story, the Supervisory Board would NorFinance, FMO and Rabobank – with the primary like to congratulate the organisation on its achievements intention of contributing to the economic growth of in the year under review. The board is pleased with the Sub-Saharan Africa through increasing financial inclusion 2018 performance of Arise and how the business has and employment off the platform of a sustainable African sustained and built on the momentum of last year’s financial services sector. Since its February 2017 launch, investment foundations. Arise has proven that the confidence placed in it by its In the short space of two years, Arise has cemented its shareholders has been well invested. position as a leading local investment and development The board would like to commend the Arise team on their partner and a trusted ally for independent Financial achievements in 2018. We have every confidence that Service Providers (FSPs) in Sub-Saharan Africa. Despite Arise will continue to grow in strength and influence in the unique challenges Africa poses and tough economic 2019 and the coming years, making good on its promise conditions across the continent, Arise has managed to to build Africa’s local prosperity. grow its investment portfolio for its shareholders through carefully considered mergers and acquisitions, as well Arise Supervisory Board as meticulously planned and executed collaborations – including the increasingly important area of Environmental, Social and Governance (ESG). Arise’s ability to realise its business objectives has, in turn, delivered satisfactory impact on its partner banks, enhancing their socio-economic impact in Africa by putting in place inclusive financial systems which contribute to Operations Report 2018 Investing in Africa’s local prosperity 2 Arise Supervisory Board from left to right: Erik Sandersen, Linda Broekhuizen, Katrine Trovik and Berry Marttin Operations Report 2018 3 Investing in Africa’s local prosperity Despite a challenging economic backdrop, Arise has credibly delivered on its core mandate of contributing to economic growth, job creation and poverty reduction. 3. Review by the Chief Executive Officer Building on solid foundations to add management and IT teams to streamline and enhance significant value to our partnerships the retail customer experience. Our second operational year has seen Arise build on the Corporate governance and risk management systems strong forward momentum created in 2017. Internally, are also important areas on which the board places a Arise consolidated its investment systems and processes strong emphasis. Arise is committed to ensuring that while filling key positions to ensure that a skilled team the organisation’s affairs are managed in an ethical, is in place to deliver on our mission to invest in Africa’s transparent and responsible manner, while also taking local prosperity. Externally, this enabled us to deliver into consideration appropriate risk parameters. To this substantial added value to our partner banks during end, we are pleased to report that Arise enhanced its risk the year, which in turn ensured we strengthened our management framework. In addition, Arise also provided core business mandate to promote financial inclusion, corporate governance support to its partner banks strengthen rural development, alleviate poverty and through assisting them to recruit suitable candidates for advance socio-economic empowerment and growth on their respective boards. the African continent. Expanding our dynamic team to support our From a partner bank perspective 2018 was the year that investment in African prosperity we made significant inroads in terms of delivering value During the period under review, we appointed experts and ensuring that our partner banks evolve into strong to key strategic posts focused on investment, banking sustainable entities. A key focus for Arise was on forging development and ESG. With these appointments, Arise deeper relationships with our respective partner banks was able to further enhance the value of its service and adding value across every facet of their business offerings to its partner banks. Working with Arise’s to enhance efficiencies and advance their business investment portfolio monitoring system also enables the objectives. Arise added value by providing assistance with Arise team to proactively monitor its investment portfolio. banking development, ESG, corporate governance, risk management, investment and communications. Highlights Arise is committed to partnering with local Financial included the banking development and innovation support Service Providers (FSPs) to help them become industry that Arise delivered across its investment portfolio. The leaders in their respective markets, while at the same time banking development team also worked closely with contributing to the economic growth potential of Africa. Operations Report 2018 Investing in Africa’s local prosperity 4 In 2018 Arise made great strides in terms of fulfilling its business mandate of promoting financial inclusion through partnering with sustainable financial service providers in Africa. A key investment highlight in 2018 was the acquisition of a Another service Arise offers is access to international minority stake in Moza Banco, a local bank in Mozambique, shareholder networks and expertise. A key highlight for which allowed Arise to expand its investment footprint on 2018 was the 2nd Annual Arise Conference, which was the continent. hosted in Cape Town in February last year. This two-day event, themed Banking in 2030, explored the future of Aligned to our mandate of promoting financial inclusion banks and attracted a diverse local and international and stimulating economic development, we took a audience. Delegates gained valuable insight into decision to consolidate BTM, one of our existing partner how financial institutions will need to future-fit their banks in Mozambique, with Moza Banco to create a organisations to remain relevant in the future. The second larger combined entity with the potential to become one of the leading banks in the country. This new entity will day of the conference was dedicated to our partner banks be favourably positioned to serve Mozambicans and and several CEOs presented their long-term digitisation increase access to finance, thereby advancing financial plans for 2030. The Arise conference, which is an annual inclusion. A strategic priority for Arise in 2019 will be to event, provides an ideal platform for knowledge exchange ensure a seamless integration of these two banks into a and information sharing amongst our partner banks, consolidated entity. shareholders