Author: 5iveafrica

FSD Africa invests in Holocene, a Climate Tech Start-up Venture Capital Provider

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FSD Africa’s Early-Stage Finance Pillar is investing US$150,000 in Holocene Ventures Fund (HVF), a climate tech start-up venture capital provider that seeks to raise an initial US$2 million to invest in 12 high impact climate businesses. HVF I will provide the track record and pipeline to raise a $30M pre-seed to series A climate tech fund in 2025.  The investment by FSD Africa comes alongside investments from other angel investors across Europe, USA and Africa.

Mary Kashangaki, Assistant Manager, Digital Innovations, FSD Africa said:

We need to think differently about how we finance Africa’s green transition. FSD Africa’s investment in Holocene offers an exciting opportunity to work with experts to build a new kind of venture capital fund that is flexible enough to meet the unique financing needs of early-stage climate ventures.

Holocene, based out of South Africa, has created an investment platform for climate conscious individual and institutional investors seeking climate positivity and venture capital returns. Holocene Venture Fund (HVF) will provide innovative pre-seed financing, combining both cash and venture building services, to climate tech start-ups, recognizing the need for diverse financial solutions to scale climate businesses. 

Josh Romisher, CEO, Holocene commented:

“Africa is incredibly important in the global climate conversation. Holocene is very eager to partner with innovative investors such as FSD to prove African climate tech can deliver measurable climate impact and VC returns.”

To date, Holocene has made 6 investments from its permanent capital vehicle as well as another 4 investments from HVF I. It aims to make 5 investments per year infusing them with a catalytic blend of financial & human capital with a focus on commercial outcomes. With concerted effort by diverse players to accelerate green growth in Africa, specialist climate focused investment funds like Holocene are expected to enhance capital flows and innovation in new climate technology led solutions across Africa.

 

Geothermal Exploration Risk Underwriting Facility

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The Insurance Regulatory Authority of Kenya, Ministry of Energy and Petroleum, State Department of Industrialisation and East African Insurance Sector (ICEA Lion, Kenya Re, Old Mutual, GA and Mayfair) have today announced a geothermal risk underwriting facility, the first of its kind in Africa.

The facility will underwrite up to US$ 2 million in early project development with amounts exceeding the amount being externalized i.e. covered by external re-insurance. The product is anticipated to accelerate and attract greater investments in green energy projects in Kenya and the region by mitigating the financial risk associated with geothermal projects. The development of the facility was supported by FSD Africa in collaboration with partners Parhelion Underwriting, and Kenbright.

Speaking regarding the announcement, IRA Commissioner of Insurance Godfrey Kiptum lauded the facility as one that will deepen Kenya’s green energy credentials by spurring investments in the geothermal subsector, a form of energy in which the region holds great potential. “The insurance sector plays a critical role in the social-economic development of any nation. I am proud that insurance sector has kept innovation alive with products such as the geothermal risk underwriting facility, that enable greater private sector investment in the geothermal energy. It is also gratifying to note that this product will enhance green energy and sustainability of our economy” said Kiptum.

On his part Principal Secretary, State Department of Energy Alex Wachira noted that insurance cover for the risky upstream geothermal exploration work is a great enabler for the country to exploit her vast geothermal potential estimated at 10,000MW “The huge potential of geothermal energy makes it not only an energy source but also a driver of economic growth and sustainable development. Our country is endowed with vast geothermal resources, and great progress has been made in tapping into this clean power. However, for us to fill the energy gaps, we need collaboration and investment between the public and private sectors” explained the PS.

The de-risking facility announced will cover early-stage development drilling risks for investors in geothermal projects. This facility represents a critical step in creating a more favourable investment environment by mitigating the financial risks associated with these high-potential but high-risk projects. FSD Africa Risk& Resilience Director Kelvin Massingham has hailed the insurance sector for innovation and leading the way in supporting green energy transition in Africa. “At FSD Africa we are committed to make finance work for Africa and have finance flow into green investments for a sustainable future. We are proud to have worked with the State Departments of Energy and Industrialization as well as the insurance regulator and the private sector in developing this facility that will de-risk upstream geotherm resource prospecting, enabling greater investments in green energy” noted Massignham.

This underwriting facility not only marks a significant milestone in Africa’s journey towards sustainable energy but also sets a precedent for future initiatives aimed at de-risking and supporting other high-impact sectors across the continent. The prospect for the continent to leapfrog the energy transition is possible especially with solid backing from key stakeholders and a clear path forward. The promise of a greener,more sustainable Africa is within reach.

To drill a geothermal well requires on average US$ 5 million, with significant risk of missing geothermal resource after drilling. Most commercial debt is shy to cover this phase, yet its critical and quite upfront in development of geothermal energy. Kenya is already a leader in geothermal electricity, with a total installed capacity of 988.7 MW contributing 47% of the power on the grid. This places the country at rank sixth globally and first in Africa in terms of geothermal power development. However, the country still holds massive geothermal potential, estimated at 10,000 MW.

FSD Africa’s support of the geothermal underwriting facility is part of a wider geothermal energy programme that includes, among other things, technical capacity development and facilitation, advocacy and technical assistance, fundraising, and inclusive economic growth.

FSDAi Nyala Facility invests US$ 1 million in First Circle Capital Africa Fund

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FSDAi Nyala Facility invests US$ 1 million in First Circle Capital Africa Fund I FSDAi Nyala Facility BV, a facility set up by FSD Africa Investments to invest in emerging local capital providers is injecting US$1 million into Africa-based specialist VC fund First Circle Capital. Run by former entrepreneurs and fintech executives Selma Ribica and Agnes Aistleitner Kisuule, First Circle invests in the continent’s most promising early-stage financial technology companies, leveraging the partners’ industry network and expertise with an angel investment track record at 33x MOIC.

First Circle focuses on insurtechs, financial infrastructure and climate fintechs. Other areas the fund
invests in is fintech Software as a Service (SAAS), Reg Tech and Alternative Lending Model firms. The team has built a portfolio of 13 investments so far in these areas, across 7 African markets.

Announcing FSDAi Nyala Facility’s investment, FSDAi’s Chief Investment Officer, Anne-Marie Chidzero said: “We are thrilled to back this promising GP team of remarkable female investors. First Circle stands out in the market as a thesis-led specialized fund with great depth of expertise and strategy in the fintech sector. We believe that FSDAi Nyala Facility’s backing will catalyse more institutional LPs into First Circle Capital Africa Fund I”.

According to BCG and the recent QED report, Africa is the fastest growing fintech region in the world, expected to grow its revenues by a staggering 13x by 2030. In Africa, fintech is well posed to resolve financial services access issues for the continent’s excluded and underserved population and SMEs, and to address its young population’s needs. Most Africans’ first interaction with the financial services sector may be through their smartphones, and BCG projects a fintech revenue CAGR of 32% until 2030, with South Africa, Nigeria, Egypt, and Kenya being the key markets.

Selma Ribica and Agnes Kisuule, Co-Founding partners of First Circle Capital commented:

“Expanding access, availability and stability of financial services for African consumers as well as SMEs is critical for economic development and social resilience. The majority of fintech funding to date has gone into payments, hence investing in the next layer of financial services poses a significant opportunity. We are investing in Africa’s most innovative entrepreneurs building the next layer of financial products, that enable and expand access to financial services for individuals and SMEs across Africa. We are excited to have FSDAi Nyala Facility as our first institutional partner, especially given FSD Africa’s track record in deepening access to financial services on the continent.”

Co-founders and managing partners are former M-Pesa executive and FinTech investor Selma Ribica based in Morocco and former emerging markets entrepreneur Agnes Aistleitner Kisuule based in Kampala. Selma’s angel portfolio is at 33x MOIC in early stage fintech and includes companies such as Qonto, Tabeo, Expensya and Agnes has previously built businesses in Jordan, Ukraine and Uganda.

The fund has offices in Kampala and Casablanca. With their team, the managers are leveraging their operational know-how as successful operators, previous track record, and strong network across Africa and internationally to support portfolio companies with fundraising and growth.

First Circle Africa Fund I is backed by FSDAi Nyala Facility, Axian Group, and several serial entrepreneurs and investors.

 

The Untold story of women and sovereign debt in Africa

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In January 2024, Kenya found itself in the grip of an economic crisis. The government’s high debt levels, coupled with a heightened risk of default, triggered an economic downturn. The ripple effects were felt across the economy: the Kenyan shilling depreciated at an unprecedented rate, fuel prices soared and the cost of living skyrocketed, leaving many struggling to make ends meet. This situation was not unique to Kenya. Similar debt crises in Ghana and Zambia had already plunged those nations into economic distress, illustrating how unsustainable sovereign debt can devastate economies and, by extension, the lives of ordinary citizens. But there’s a side to this story that is often overlooked: the disproportionate impact of these economic downturns on women. While sovereign debt crises affect entire populations, women often bear the brunt of the consequences due to their unique socio-economic vulnerabilities.

The hidden burden on women

Women in Africa, especially in rural areas, already face significant challenges. They are more likely to be employed in low-paying jobs, have fewer savings and possess less wealth compared to men. Many women and girls work in the informal sector, where job security is negligible, and incomes are unstable. Additionally, women are often responsible for unpaid care and domestic work, which limits their time and opportunities to engage in income-generating activities.
A study by Action Aid revealed that rural women in Africa typically work up to 16 hours a day, balancing multiple tasks often simultaneously. Women typically work 12 hours more per week than men. In countries like Ghana and Rwanda, rural women spend at least six hours daily on unpaid care work alone. This heavy burden leaves them with little time for paid work, further constraining their financial independence. When a country faces a debt crisis, the government is often forced to implement austerity measures, such as cutting public spending and increasing taxes. Women are affected most by cuts in public spending particularly in sectors like education, health and agriculture where women are disproportionately represented. For example, when subsidies for fertilisers and agricultural extension services are slashed, it is often women who must find an alternative means to support their families, further diminishing their economic prospects.

The intersection of debt, gender and climate change

Climate change and related challenges add another layer of complexity to the issue of gender and sovereign debt. Women, particularly those in agriculture, are already vulnerable to the effects of climate change. Unsustainable debt exacerbates these challenges by reducing government spending on essential services that could help women adapt to changing environmental conditions. For instance, cuts in agricultural support services make it harder for women to sustain their livelihoods, perpetuating the cycle of poverty and gender inequality.

A gender-sensitive approach to sovereign debt management

Given the significant impact of sovereign debt on women, it is crucial for African countries to adopt a gender-sensitive approach to debt management. This approach should include gender-responsive budgeting (GRB), which ensures that the needs and priorities of all segments of the population, particularly women, are considered in the budget-making process. There is also an opportunity for countries to leverage innovative financial instruments like gender bonds to mobilise and channel funds to close the gender finance gap. FSD Africa has been a forerunner in supporting the issuance of gender bonds in Tanzania and Morrocco and we have also supported the development of a toolkit for Africa-focused gender bonds. Such initiatives can stimulate economic growth by empowering women financially, boosting domestic resource mobilisation, and ultimately leading to more sustainable debt management strategies in the region.

Empowering women through strategic resource management

By embedding gender-inclusive strategies in initiatives like the African Continental Free Trade Area (AfCFTA), countries can create more opportunities for women to participate in the formal economy. AfCFTA, the world’s largest free trade area by population, holds significant potential to address the gender dynamics of sovereign debt. By promoting intra-African trade, AfCFTA can stimulate economic growth and diversification, creating employment opportunities for women, many of whom are engaged in informal and small- scale trading. Gender inclusive strategies under AfCFTA can enable women entrepreneurs to expand their businesses and access new markets, contributing to national revenue and reducing deficits that necessitate significant borrowing . Africa has a rich natural resource base, strategic and inclusive management of these resources can help address the gender dynamics of sovereign debt in the region. By ensuring that women have economically meaningful participation in sectors like manufacturing and agriculture especially in value addition, African countries can generate additional revenue streams while promoting gender equity. Policies that support women’s access to trade capital, training and technology can further strengthen their economic resilience, and increase their contribution to national resources. This will enhance domestic resource mobilisation and reduce the need for external borrowing.

The path forward

As African nations navigate the complexities of sovereign debt, it is imperative that they adopt policies that recognise and address the unique challenges faced by women. Governments should integrate gender-sensitive approaches into their debt management strategies and leverage broader synergies to empower women through strategic resource management. This will enable them to not only mitigate the adverse effects of debt on women but also harness their potential as key drivers of economic growth. In doing so, Africa can move towards a more equitable and sustainable future, where the burden of debt is shared more fairly and where women have the opportunity to thrive and actively contribute to economic growth.

New research suggests Africa’s Green Economy could create more than 3 million direct jobs by 2030

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Nairobi, 24th July 2024 – Shortlist and FSD Africa, with analysis from the Boston Consulting Group, today published “Forecasting Green Jobs in Africa,” a first of its kind report that forecasts the new direct job creation potential of 12 “green” sub-sectors by 2030. The report predicts the creation of up to 3.3 million new direct green jobs across the continent by 2030, with the majority in the renewable energy sector, particularly solar. The study, the first in-depth analysis of workforce needs within major green value chains over the next five years, provides detailed forecasts for five focus countries, Democratic Republic of Congo (DRC), Ethiopia, Kenya, Nigeria and South Africa, which together account for more than a fifth (22%) of new jobs, and in key sectors such as renewable energy, e-mobility, agriculture, construction and manufacturing.

“Forecasting Green Jobs in Africa” underscores the critical importance of a skilled workforce as an input accelerating African green industries, emphasizing the need for substantial investment in skills development and workforce mobilization. Moreover, the millions of jobs created in the green revolution will also contribute to the formalization of African economies, and the inclusion of whole populations in stable systems of remuneration, social security and taxation for the first time.

Based on the findings, the report also outlines key strategies required to cultivate Africa’s green jobs ecosystem: from targeted investments in high-potential sectors and value chains, the fostering of cross-sector collaboration among governments, private sector, educational institutions and investors, to the development of comprehensive support policies for green sectors. The report also calls for further analysis and granularity to labour demand key value chains to identify Africa’s current skilled labour supply and any potential gaps.

While some experts have suggested that up to 100 million green jobs may be created by 2050, this report takes a more near-term, sober, and realistic look at the job creation potential of just 12 specific sub-sectors or value chains and only until 2030. This more conservative analysis is intended to guide near-term investments and policy decisions among universities, workforce development actors, and government as we ensure the mobilization of the right skills and workforce to meet demand.

Significantly it predicts that 60% of the employment generated by the green economy over the coming six years will be skilled or white collar in nature. Within this, 10% constitute “advanced jobs” (highly skilled, requiring university degrees to fulfil), whilst a further 30% are projected to be “specialized” (requiring certification or vocational training) and 20% will be administrative in emphasis. Crucially, these job types tend to attract higher salaries and will, therefore, play a central role in spurring the growth of the middle class in countries hosting these high-growth sectors. Important also is the stability of the unskilled jobs created – which will offer ladders up the employment scale for candidates, whose employability will be enhanced by access to training and experience.

“There is a cross-sector effort across Africa to spur employment and sustainable development,” said Mark Napier, CEO of FSD Africa, “but stakeholders lack a shared, granular understanding of where the green jobs are going to come from. This report offers a methodology for forecasting green jobs which allows us to get practical about where we need to invest to make these jobs happen.”

“This is the first public report that takes seriously the notion that human capital and talent is important as both an input to green economic growth, and as a positive outcome – in the form of millions of new, direct jobs.” says Paul Breloff, CEO of Shortlist. “Now policymakers, and funders, and workforce developers need to step up to meet this near-term demand with effective training, apprenticeships, and job/skill matching, in hopes of achieving Africa’s green promise.”

Other key findings include:

  • South Africa, Kenya and Nigeria represent the highest job creation potential (16%) due to population, gross domestic product (GDP) and industry maturity
  • The renewable energy sector alone is expected to generate up to 2m jobs (70% of the total) of which 1.7m will be in solar
  • Solar is the most important contributor to green jobs in South Africa (140,000 jobs) and Kenya (111,000 jobs)
  • Hydroelectric is forecast to be the leading employer in both DRC (16,000 jobs) and Ethiopia (33,000)
  • Agriculture and nature are forecast to produce up to 700,000 jobs (25% of total), of which more than half (377,000) will come from climate smart agriculture technology

Jobs created by country

South Africa

  • South Africa: between 85,000 to 275,000 new green jobs are forecast by 2030 – mainly in energy and power production, and agriculture and nature
  • The solar sector leads job creation in South Africa with 140,000 jobs projected

Nigeria

  • Nigeria predicted to put on between 60,000 and 240,000 new green jobs by 2030
  • Aquaculture and poultry lead job creation, with 69,000 jobs projected

Kenya

  • Kenya predicted to put on between 40,000 to 240,000 green jobs by 2030
  • The solar sector leads this job creation, with estimates that it will generate 111,000 jobs in the country by the decade’s end

Ethiopia

  • Ethiopia will see between 30,000 and 130,000 new green jobs by 2030, mainly in energy and power production
  • Hydropower generation leads as a job-creating sector, with 33,000 jobs projected

Democratic Republic of Congo (DRC)

  • The DRC is predicted to put on between 15,000 to 45,000 new green jobs by 2030; mainly in energy and power production and distribution
  • Again, hydropower is expected to lead job creation as a sector with 16,000 jobs expected

Click here to download a copy of the report

How capital markets can enable gendered socio-economic progress

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Imagine a world where millions of ingenious women in Africa have the resources to turn their ideas into thriving businesses. That is the future FSD Africa is working towards, and capital markets are the key. This isn’t boring financial jargon. We are talking about unlocking the potential of entire communities.

Before the Covid-19 pandemic, women-owned businesses in sub-Saharan Africa faced a staggering funding gap of $42 billion while the total financing needs for 128 developing countries was a staggering $5.2 trillion[1]. Though these numbers might have shifted slightly in the past four years, the challenges posed by post-pandemic economic recovery likely have not made things easier. Women are disproportionately affected by issues like lack of clean water and access to clean cooking solutions. Hours spent fetching water or gathering fuel are hours lost for education, work and family. Women make up nearly 70% of the workforce in agriculture yet receive only 7% of investments.

But here’s the good news: things are changing. On the 19th of February 2024, FSD Africa launched a game-changer – the Africa Gender Bonds toolkit – which is not just a resource, but a cheat sheet for unlocking the power of capital markets to support women in Africa. This is just one way that FSD Africa is playing its part in strengthening sustainable financial markets as a key tool to reduce barriers facing women in Africa, particularly women in business.

We have seen many efforts in trying to solve for gender inclusion, particularly inclusion of women in the finance sector. While much is being done as to how to tailor financial products to attract women more as a customer segment; there is less effort when it comes to thinking about investor incentives. How do we unlock more financing from investors to flow to women businesses? Which incentives need to be in place to mobilise and catalyse more gender responsive financing from capital markets in Africa? This is a key piece of the puzzle that we are committed to helping solve. We believe that leveraging capital markets in capital mobilisation for gender offers us a blank slate where creativity and innovation can flourish in integrating gender metrics and considerations into the design of capital mobilisation vehicles.

Real stories, real impact

In the past half a decade, like-minded institutions, have significantly increased their efforts to anchor investments in gender-intentional capital mobilisation vehicles such as gender bond issuances that tap into investor incentives. These partnerships have sparked remarkable catalytic and demonstrative change. Take, for instance, our support to NMB Bank Plc in issuing the Jasiri Bond, Sub-Saharan Africa’s first publicly listed gender bond. According to the first Jasiri Bond impact report, the response was overwhelming—it was oversubscribed by a staggering 197%, drawing in 1,630 investors, 99% of whom were individuals. Here’s the best part: 97% of the loans went to women! That’s thousands of women empowered to chase their dreams and build a brighter future for themselves and their families. Such partnerships exemplify the power of collaboration in driving tangible impact and advancing gender equality in finance.

And it’s not just about businesses. Bonds issued in sectors with high female participation can also strengthen capital mobilisation for gender benefits. For example, UNICEF estimates that women and girls globally spend 200 million hours per day fetching water for household consumption. In Sub-Saharan Africa, a single trip to collect water takes an average of 33 minutes in rural areas and 25 minutes in urban areas. This takes time away from productive economic activities, education, and leisure, and increases exposure to gender-based violence. In the energy sector, the Clean Cooking Alliance estimates that women and girls spend up to 5 hours per day gathering fuel or spend a significant portion of household income to buy it. Imagine if we used capital markets to issue water bonds to improve water infrastructure, or clean cooking bonds to finance cleaner energy solutions. The impact of women’s lives would be transformative.

Building the bridge together

In this regard, we have continued to support our partners in bringing innovative financial tools to market to mobilise gender-responsive finance. For instance, in 2021, we supported Banque Central Populaire in Morocco issue the first gender bond in Morocco, raising about US$ 20.4 million to provide 17,080 microcredit loans to economically disadvantaged urban and rural women.  We also provided technical assistance for a US$ 10million green bond issuance by Burn Manufacturing to support clean cooking in Sub-Saharan Africa. Most recently in 2024, we supported the Tanga Urban Water Supply and Sanitation Authority in Tanzania in the first ever water green bond in Africa, aimed at improving sustainable water supply and environmental conservation within Tanga city and nearby townships. To support more of these issuances FSD Africa in collaboration with UN Women, BII, and FSD Network designed the gender bonds toolkit to equip both issuers and investors with the tools they need to make gender-responsive finance a reality.

As we champion for more incentives and instruments to mobilise gender-responsive finance through capital markets, we recognise that proper impact measurement and management are crucial for understanding the outcomes and impact of gender-responsive finance through capital markets, requiring accurate data collection and performance insights. Globally, we see that gender-disaggregated data is sparse and weak; thus, these issuances present an opportunity to strengthen the collection and management of gender-disaggregated data. As a guide, issuers and investors can look to the gender bonds toolkit outlines considerations and use-case examples to demystify the post-issuance reporting stage.

At FSD Africa, we are championing for capital markets as an enabler of gender-responsive finance. By sharing our experiences, insights and best practices with issuers and investors, we can significantly boost gender-focused capital for African businesses.

[1] https://www.ifc.org/content/dam/ifc/doc/mgrt/2020-12-call-for-insights-e-publication.pdf

[2] Gender refers to the socially constructed roles, behaviours, and expectations that societies assign to individuals based on their perceived sex.  Gender disaggregated data separates information based on these societal roles and expectations. It goes a step further to explore the ‘why’.

 

Empowering the next wave of climate entrepreneurs

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Harnessing the immense power of Africa’s innovative young talent is critical for a successful green transition on the continent. Triggering Exponential Climate Action (TECA) hinges on directing this talent intentionally toward our generation’s most pressing challenges – climate change and biodiversity loss. Last year’s inaugural “TECA wave”, implemented by BFA Global and funded by FSD Africa, saw 30 Fellows supported to launch seven new ventures solving for challenges in the blue economy (used here to mean sustainable use of natural water resources for economic growth, improved livelihoods, and jobs while preserving the health of the environment).

This year, we and BFA Global have been joined by a powerhouse team of organisations resulting in the new Africa Blue Wave Coalition. IUCN, through a partnership with the Canadian Government, is co-financing the Africa Blue Wave alongside us, and Ocean Hub Africa (OHA) has come on board as blue economy venture building experts. Through this collaboration, TECA has recruited 44 new talented and energetic Fellows from 12 different African countries to take on the challenge of building climate solutions.

As has become the tradition, the new wave kicked off with the “huddle”, a 4-day in-person convening of TECA Fellows and venture builders, that took place in Watamu, Kenya, in March 2024. I had the pleasure of joining the Fellows for this unique opportunity to immerse ourselves into blue and green economy challenges as well as engage with and learn from one another at the very start of the TECA journey. Green economy, in this case, refers to the sustainable use of terrestrial landscapes for economic growth, improved livelihoods, and jobs while preserving the health of the environment and boosting biodiversity.

Watamu, a small coastal town in Kilifi County, Kenya, not only boasts a stunning coastline, but it is also home to Mida creek, one of the most productive mangrove ecosystems in the world, supporting livelihoods, marine-life and an impressive diversity of bird and animal species. This served as a perfect location for the TECA Fellows to gain a deeper understanding of the challenges faced by fisher folk, farmers, conservationists, and others whose livelihoods depend on this protected ecosystem.

Through the support of Kenya Marine & Fisheries Research Institute (KMFRI), we had the pleasure of visiting both green and blue economy players in the region. These included an aquaculture and conservation self-help group (Umoja) practicing sustainable marine fish farming and mangrove nursery establishment and rehabilitation; and beach management units (BMU) at landing sites in Takaungu as well as Kuruwitu, where we met with BMU officials and groups undertaking fishing, extraction of coconut oil, mangrove restoration, plastic recycling, and coral restoration, among other activities.

The decision to focus this second TECA wave on both green and blue economy solutions was validated by the clear complementarity in the spectrum of opportunities for innovation identified by the fellows. This was further highlighted when we had the opportunity to visit a Fellow from the first TECA wave. Fardosa Mustafa launched Registree in 2023 with a goal to empower mangrove conservation communities in the coastal region through digital tracking of mangroves and carbon accounting. So passionate about this work, Fardosa moved from her home in Nairobi to Watamu after her time in the TECA programme to focus on better understanding the needs of the communities she was supporting. In doing so, she has gained a deeper understanding of their needs and pivoted her business model to supporting sustainable agricultural practices in the coast; an exciting shift from blue to green within the same region.

Despite having completed the TECA process, the team at BFA keep a close eye on Registree and others who have launched their start-ups through the programme, providing input and support where needed. Dr. Mathew Egessa, another TECA graduate, joined the team in Watamu to speak with the current cohort of fellows about his journey building Vua Solutions. He also had to opportunity to check in with venture builders and gain input into challenges he faced in the business highlighting the importance of ongoing relationships and expertise that the TECA process provides.

Fardosa and Mathew’s stories exemplified for me the importance of the kind of high touch support provided by the TECA team. To adequately support these entrepreneurs requires time, patience, adaptability, and inevitably capital investment. It requires for all players within the climate space – educators, entrepreneurs, regulators, venture builders, experts, and investors – to think differently about how we support innovation.

The huddle left me with the feeling that, although there is still a lot of work to be done in building solutions that address the needs of communities in Africa at the same time as mitigating the impact of climate change, there is hope. The 44 TECA Fellows I met in Watamu were passionate about building these solutions and incredibly energised about the opportunity to work with experts who were ready to provide the support needed.

As FSD Africa, we are excited to be joined on this journey by IUCN and OHA, recognising the importance of partnership and collaboration towards Africa’s green transition.

Bridging the gap of financial inclusion in DRC

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In the heart of sub-Saharan Africa lies the Democratic Republic of Congo (DRC) – the largest country in the continent, full of potential, but plagued with high poverty levels with an estimated 62% of the population living on less than $2 a day. This reality of financial exclusion where only about 30% of adults have access to formal financial services, not only perpetuates cycles of poverty but also hinders progress towards achieving several of the UN Sustainable Development Goals (SDGs), including eradicating poverty, promoting economic growth and ensuring inclusive societies.

Hindered by factors like underdeveloped infrastructure, lack of identification documentation and low levels of trust in the financial system, millions of Congolese struggle to access basic financial services essential for economic empowerment and social development. In 2019, FSD Africa joined forces with Equity BCDC, to roll out a programme that leverages an innovative agency banking model to reshape the financial landscape for improved access to financial services in rural and peri-urban communities and households across 18 out of DRC’s 26 provinces.

 How it started

Progress was slow in the beginning with consideration being made for which internal systems would best serve the needs of DRC’s unique infrastructure, as well as developing the right internal capacity necessary to onboard agents and clients alike. Equity BCDC developed a unique ‘Master Agency’ strategy, branded Equity BCDC Express, which allowed them to successfully address the KYC issues caused by lack of identification and supporting documentation. Through the establishment of a network of over 5,000 agents spread across the country, they were able to open over 650,000 new accounts in rural and peri-urban areas, enabling savings for these new clients.

By partnering with private sector players, Equity BCDC provided internet connectivity and renewable power sources to agents in the rural areas to facilitate account opening via their web-based internet solution. The bank also developed a micro-loan scoring tool and are piloting group lending for their clients to allow them to access crucial capital.

 

The journey

On a recent trip to DRC, we witnessed the tangible and transformative impact of this initiative firsthand. We interacted with the agents who were once struggling, found renewed hope as their livelihoods improved; and clients who were long excluded from formal financial systems, experience a overpowering shift in self-worth and social standing, as they embrace the opportunity to save and transact securely.

What began as a dream evolved into an evident reality—a reality where farmers in Nsele can send money to their children in Kinshasa with a simple USSD code effortlessly without enduring long commutes. Where garbage collectors in Masina can reinvest their earnings to build a better future and inspire their community. Where women in Bunkeya  foster empowerment and begin to see beyond traditional barriers, recognising the opportunities that access to finance affords.

Transactions to transformation

In collaboration with EBCDC, at the recent project closeout event held in April 2024, we brought together government officials, private sector leaders and stakeholders to celebrate milestones, share insights and mark a shared commitment to continue the drive for a more inclusive future.

It was demonstrable that for those once marginalised, a bank account is not just a means to save money; it’s a symbol of hope and belonging. With each success story, the case for financial inclusion in DRC grows stronger, igniting a ripple effect of change across the region. As the project comes to a close after 4 years, we reflect on the lessons learned that resonate deeply.

Such initiatives will help address the financial needs of 73% of the financially excluded population in DRC and are crucial in building resilience for themselves and their households, enabling them to tackle the challenges of survival with renewed tenacity. While challenges still exist, Equity BCDC’s experience shows that they are not insurmountable, and we will continue to support the bank’s journey in doing so.

Find out more about our work with Equity BCDC here.

 

Watch the feature story below.

Mobilising Domestic Capital to Drive Climate-positive Growth

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TOP LINES: WHY IT MATTERS

Action Plan To Unlock $17 Trillion In Emerging Markets For Climate-Positive Growth

Only 5% Of Development Finance Is In Local Currency; Scaling Targeted Solutions To Mobilise Domestic Capital Could Halve Annual Climate Finance Gap

President Biden and Kenya’s President William Ruto met in the lead-up to the AfDB Annual Meetings – announcing the “Nairobi-Washington Vision” as a call to action to the international community to provide coordinated packages of financing support on better terms, to provide forms of debt relief and to crowd in private investment to address global challenges like climate action. The Vision describes expanded support to developing countries through efforts to reform the MDBs and unlock new lending and IDA funding. The Vision’s support packages will miss a major opportunity if they don’t put mobilising domestic capital at their heart – including the $2.3 trillion in private AUM on the African continent.

THE ANALYSIS: WHAT DOES THE REPORT SAY?

Some of the best climate investment opportunities are in emerging markets and developing economies (EMDEs) – especially in clean energy, low carbon transport, regenerative agriculture and green manufacturing.

Most of these opportunities can be financed by the private sector – yet there is still a $1.8 trillion financing gap each year for climate in EMDEs.

Most of the capital currently financing climate activities in EMDEs comes from international sources, with real barriers to scale. Meanwhile, less than 1% comes from the domestic private sector

A new report from Systemiq’s Blended Finance Taskforce and FSD Africa shows that scaling domestic investment for climate will be critical to tackle the financing gap. It estimates that there is around $17 trillion of domestic private capital under management in EMDEs, which could triple to $45 trillion by 2040.

At this growth rate, mobilising just 20% of this domestic capital could halve the annual $1.8 trillion climate finance gap in EMDEs. This could create a virtuous cycle of growth, helping create jobs, build economic resilience, deepen local financial markets and tackle debt burdens. But this will not be easy. Today, only a fraction of this $17 trillion goes into climate action: 80% of clean energy is financed by the private sector in developed countries; in Africa it is less than 12% and the proportion of domestic private capital is even lower.

The report lays out a plan for coordinated action to help mobilise domestic capital for climate action in EMDEs. It calls on multilateral development banks, regulators, governments and the private sector to do three things: First, grow the pipeline of climate-positive assets – by laying out national investment plans for climate positive growth (as has been done by Brazil with its Ecological Transformation Plan, in Namibia with its green hydrogen

economy strategy and in Bangladesh with its Climate Prosperity Plan) and building capacity with domestic investors around climate-relevant asset classes, especially infrastructure.

Second, deepen financial markets – focusing on increasing size and liquidity and ensuring the enabling environment is supportive is key. Often, geography, liquidity or asset class mandates prevent regional investment by domestic investors.

Third, design and deploy catalytic capital more effectively – including from multilateral development banks and donors. Less than 5% of development finance is in local currency and blended finance offerings which are designed to unlock private capital by tackling challenges like technology or counterparty risk are mostly focused on international investors. Scaling local currency offerings, replicating what is already working (e.g. local currency guarantee products offered by GuarantCo companies) and ensuring international investors are more actively targeting solutions for domestic pension funds can immediately make an outsized difference. African financial institutions are preparing to drive this change. Within Kenya, President Ruto’s focus on climate-positive growth and the mobilisation of institutional capital for infrastructure through the Kenya Pension Fund Investment Consortium (KEPFIC) are bright examples. Across the continent, the African Development Bank is driving progress in this area through initiatives such as the Climate Action Window and the Climate for Development Special Fund. Other stakeholders, such as FSD Africa, the PIDG Group, and Africa50, are making strides in unlocking domestic capital through targeted de-risking and technical assistance instruments. However, the researchers heard that many African pension funds that want to invest more locally find their options limited.

Scaling these efforts will be essential to capture Africa’s climate investment opportunities – and address the continent’s need for climate adaptation and mitigation. Mobilising domestic capital for climate-positive growth will give Africa’s economies greater autonomy over their sustainable future.

THE CONTEXT: THE REPORT AND THE AFDB MEETINGS

International financial system reform will be a priority in Nairobi, with debt sustainability, access to concessional financing, and improving risk ratings of countries all on the table. The report demonstrates how national action plans can remove systemic barriers within national financial systems and reduce reliance on external debt through increased domestic capital mobilisation. And it shows how international catalytic finance stakeholders can act now to alleviate these barriers by scaling local currency financing, which was a mere 5% of official development financing in 2022.

QUOTES Katherine Stodulka, Chair of the Blended Finance Taskforce, said:

“Mobilising 20% of the growing pools of domestic capital can create a ‘positive tipping point’ for long-lasting sustainable development and growth in emerging markets”. “This is a win-win – and the international community must prioritise domestic capital mobilisation in all its discussions around scaling blended finance, debt sustainability and MDB reform”

Evans Osano, Director of Capital Markets at FSD Africa, said:

“Change is already happening – we now need to move fast to replicate what is working to accelerate domestic investment in domestic climate assets. This report explains what different actors can do to make it happen.”

Pan African Fund Managers Association (PAFMA) Welcomes New Members in Ongoing Drive to Bolster Climate Finance in Africa

Posted on by 5iveafrica

Nairobi, 30th May 2024 – The Pan African Fund Managers Association (PAFMA), an esteemed trade association dedicated to enhancing climate finance across the African continent, proudly announces the addition of new members to its esteemed roster. Since its landmark introduction at the Africa Climate Summit in 2023, PAFMA has rapidly grown, now boasting nine members representing 16 African countries and 231 fund managers, collectively overseeing assets under management (AUM) exceeding US$120 billion.

The new members are the Association of Moroccan Companies and Investment Funds (ASFIM), the Namibia Savings and Investment Association (NaSIA), the Association of Investment Managers of Zimbabwe (AIMZ) and the Association des Societes de Gestion et de Patrimoine (ASGOP) de l’UEMOA.

Africa stands at a critical juncture, facing monumental financing gaps to achieve its Sustainable Development Goals (SDGs) by 2030. With a staggering requirement of US$1.2 trillion, alongside an annual climate financing need nearing USD 300 billion, the imperative for mobilising significant capital for development priorities has never been more pressing.

PAFMA emerges as a beacon of hope in this landscape, spearheading efforts to bridge the chasm in climate finance through private sector initiatives. Central to its mission is the promotion of alternative investments, with a strategic emphasis on green finance, heralded as a catalyst for propelling diverse sectors of the economy forward. By championing these alternative avenues, PAFMA envisages stimulating job creation and bolstering income generation across the continent.

In its endeavor to realise these ambitions, PAFMA is committed to pioneering localised research initiatives and fostering a knowledge-sharing culture and capacity-building among fund managers. This initiative aims to empower fund managers to assess and engage in investment opportunities within regions and countries where their presence was previously limited.

Furthermore, PAFMA assumes the mantle of a proactive advocate, offering invaluable policy insights and championing the interests of its members in both regional and international forums. The association fosters a conducive environment for collaboration and networking among fund managers from diverse African landscapes, facilitating the exchange of ideas and best practices.

Simultaneously, as Africa witnesses a surge in domestic institutional capital, estimated between USD 1-1.4 trillion, PAFMA recognises the untapped potential of harnessing local institutional capital to bolster the continent’s development agenda. Unlocking this reservoir of private sector finance will complement constrained public finance, amplifying local currency financing and fortifying Africa’s journey towards sustainable development.