Borrower Overview
TriLinc has provided financing to a mobile telecommunications company, established in 2001, that has been an important driver of growth and development in Africa through providing quality, affordable communications access to over 11 million active subscribers in urban and rural areas in Uganda, Sierra Leone, The Gambia, and the Democratic Republic of Congo where fixed-line communications have been prohibitive. Strong cost controls allow the company to offer lower than historical market prices for its services, stimulating additional subscriber growth in the markets that previously could not afford mobile and internet services. The company aims to increase competition to grow mobile penetration, decrease telephone tariffs, inspire product and service innovation, improve the availability and access to quality, reliable mobile and data services, and create employment and sales training opportunities throughout the continent. The company promotes job creation, skills development, and entrepreneurship within the communities in which it operates through its ground up employment approach where the company supplies sales materials and training to equip people outside of its official employee network to be able to generate personal income through sales commissions.
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Market Overview
The company brings high impact to various countries in Africa, including Uganda, Sierra Leone, The Gambia, and the Democratic Republic of Congo. It is widely recognized that information and communications technology can play a transformational role in low-income countries, as these are generally “leapfrog” technologies that allow countries to close technology gaps.1 Mobile telephony in particular offers unique opportunities for economic growth, particularly in developing economies. Overall, greater penetration of mobile phones has improved communication, social inclusion, literacy rates, access to information, trade/e-commerce, and economic activity and productivity in sectors such as agriculture, health, education, and finance.2
As an important driver of Africa’s economic growth in the last decade, the telecommunications market is increasingly competitive, and world-class local enterprises are emerging in voice and data services. In 2015, Africa’s mobile technologies and services generated 6.7% of GDP, supporting 3.8 million jobs, with the expectation that this share of GDP will increase to 7.6% by 2020.3 According to McKinsey, faster penetration of mobile phones and the internet offers Africa a huge opportunity to enhance growth and productivity. Africa’s smartphone penetration is expected to reach 50% by 2020, from only 18% in 2015, and it is estimated that the internet could drive as much as 10% of Africa’s GDP by 2025.4 Various studies conducted for developing economies suggest that a 10% increase in broadband penetration rate translates into additional GDP growth of some 0.5% to 1.5%.5
Additional Sustainability & Impact Highlights
- The company offers its employees extensive allowances, including rent, transport, and meals, in addition to medical insurance and loan facilities/salary advancements for emergency situations.
- 15 different capacity-building programs are offered to employees, including training courses on Animation & Visual Graphics, Master Card Youth Project, Financial Inclusion in Sub-Saharan Africa, and Digital Financial Services. 214 employees have participated in these initiatives during the last reporting year.
- To generate energy and cost savings, the company implemented a Solar Solution Trial project and the use of hybrid generators on multiple pilot sites during Q4 of 2017. To date, the company’s Gambia operations have seven solar solution sites and the Sierra Leone operations have eight.
- The company is very active in its respective communities via both charitable donations and community service. Specifically, the company focuses on youth and women’s empowerment programs, local sporting event support, and health awareness campaigns, among others.
- The company has effectively responded to multiple crises, including the flood in Sierra Leone and the Ebola outbreak, and local NGOs and aid agencies continue to use the company’s in-country distribution networks to quickly and effectively reach people in need.
1Broadband Commission Report, Technology, Broadband, and Education, 2013. 2Deloitte, What is the Impact of Mobile Telephony on Economic Growth, November 2012. 3GSMA, The Mobile Economy Africa, 2016. 4McKinsey & Company, Lion on the Move II: Realizing the Potential of Africa’s Economies, September 2016. 5McKinsey Global Institute, Lions on the Move II: Realizing the Potential of Africa’s Economies, September 2016.
The above information is as of the initial date of investment: March 26, 2018.
RISK FACTORS
There is no guarantee that TriLinc’s investment strategy will be successful. Investment in a non-listed LLC involves significant risks including but not limited to: ownership is restricted; no secondary market; limitation on liquidity, transfer and redemption of ownership interest; distributions made may not come from income and, if so, will reduce the returns, are not guaranteed and are subject to management discretion. TriLinc selects investments and conducts operations on behalf of its clients, and will face conflicts of interest. Investment with TriLinc is not suitable for all investors. Securities Offered through CommonGood Securities, LLC, a member of FINRA and SIPC.
An investment with TriLinc carries significant fees and charges that will have an impact on investment returns. Information regarding the terms of the investment is available by contacting TriLinc. This is a speculative security and, as such, involves a high degree of risk. Investments are not bank guaranteed, not FDIC insured and may lose value or total value. Some investments may have been made in an investment vehicle that is no longer open for investment. The highlighted investment may or may not have been profitable. There is no guarantee that future investments will be similar.
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