Category: News

Catalyst Fund invests $1.8 million in nine African climate startups

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Catalyst Fund, a pre-seed VC and accelerator, backs nine African early-stage climate tech startups with a $1.8 million investment to bolster their impact and growth trajectory.

The nine startups benefiting from the investment include Mazao Hub and Medikea from Tanzania, Earthbond, Zebra Cropbank, and Scrapays from Nigeria, Keep It Cool from Kenya, NoorNation from Egypt, Thola from South Africa, and Tolbi from Senegal.

In September 2023, Catalyst Fund achieved its first close, securing $8.6 million out of its $40 million target for investments in African climate startups. Notable investors include FSD Africa, FSDAi, Cisco Foundation, USAID Prosper Africa, and Andrew Bredenkamp.

The Catalyst Fund, established in 2016 and overseen by BFA Global, supports startups in accessing capital, talent, and market opportunities. This marks the fund’s second round of investments in African startups addressing climate change challenges.

In January 2023, Catalyst Fund allocated $2 million to ten startups focused on developing solutions for Africa’s climate-vulnerable communities.

As a result, this latest investment broadens Catalyst Fund’s portfolio to encompass 19 companies operating in eight diverse markets: Kenya, Egypt, Morocco, Nigeria, Senegal, South Africa, Tanzania, and Uganda. The Catalyst Fund team will offer comprehensive venture building support to these startups, effectively integrating them as extensions of their own teams.

These startups are actively addressing climate-related challenges within various sectors, including agriculture, healthcare, energy access, and waste management.

In 2023, a survey revealed that over 110 million Africans faced direct consequences from weather, climate, and water-related hazards in 2022, resulting in economic damages surpassing $8.5 billion.

In discussing the investment, Maelis Carraro, Managing Partner at Catalyst Fund, highlighted that the models utilized by the startups “empower farmers, healthcare providers, waste workers, and small and medium businesses to effectively adapt to the impacts of climate change, thus fostering economic growth with a positive climate impact.

Additionally, Maxime Bayen, Operating Partner at Catalyst Fund, emphasized that “with these latest investments, [Catalyst Fund] is committed to further diversifying its portfolio across various models, climate adaptation sectors, and geographic regions.

In 2022, Catalyst Fund secured a $3.5 million investment from FSD Africa to enhance its footprint and scalability across Africa. With this funding, its objective is to bolster 40 pre-seed impact ventures focused on developing solutions for marginalized climate-vulnerable communities in Africa, while also offering comprehensive venture-building assistance.

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Develop innovative solutions to help address challenges hampering insurance services delivery

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Insurance Technology companies must develop innovative solutions to help address the challenges hampering insurance services delivery to expand insurance penetration and coverage, Acting Commissioner of Insurance, Mr Michael K. Andoh has stated.

According to him, the difficulty in acquiring Police and Doctor’s report to claim insurance, accessing some remote parts of the country, affected insurance services delivery.

Mr Andoh who stated this in an interview after the opening of a one-day forum on the new Insurance Act ad Innovations in the sector in Accra on Tuesday said the aforementioned challenges if addressed would help prompt claim payment and cost of insurance.

It was on the theme “The New Insurance Act:  Unlocking the Insurance Industry Potential via Innovative Technology.”

It was organised by the National Insurance Commission (NIC) in partnership with Financial Sector Deepening Africa and Myfig.

He said the deployment of technology could reduce the cost of accessing insurance and expanding insurance penetration and coverage.

Mr Andoh said the technology could be a lever to reach a lot of the citizens with insurance.

According to him insurance through digital technology could be sold to people where insurance companies could not go.

He said the objective of the forum was to expose the insurance technology companies to the operations and solutions which would be be needed to boost the industry.

Mr Andoh said the NIC had introduced a sandbox to help insurance technology companies to text their ideas.

Under the sandbox, the NIC had offered two temporal license such as Insurers Innovative License for a period of two years to help insurance technology companies to test their insurance technology products.

The Head of Financial Market and Innovation Unit of the Ministry of Finance, Benjamin Torsah-Klu commended NIC for organising the forum, saying the  Ministry of Finance saw the forum as cutting-edge, as it intends to create a platform for the industry to leverage technology and innovation across the insurance ecosystem for the transformation of the market.

“Government would continue to provide the enabling environment for digitalisation and innovation in order to reduce financial vulnerability. Income inequality and the huge risk protection gap,” he stated.

Mr Torsah-Klu said that the Ministry.of Finance saw the forum as a pragmatic step by the NIC to enhance insurance market development, through innovation and technology.

That, he said, would help accelerate growth and deepen insurance access and penetration, and most importantly, improve livelihood and financial stability of the country.

The Principal in charge of Innovation and Resilience of FSD Africa,  Elias Omondi, said the objective of the FSD Africa was to deepen insurance penetration  in in Africa particularly Ghana. “Our role is how to create the large-scale change within the financial market in Africa and Ghana holds a special dispensation in insurance in Africa,” he stated.

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Ethiopian Securities Exchange Attracts Foreign Investors

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Ethiopian Securities Exchange (ESX) is attracting both domestic and foreign investors in line with its capital-raising objectives. Siinqee Bank recently became the second equity acquirer after Zemen Bank, with other investors also showing interest.

ESX, established as a share company by the government and private sector, aims to limit government ownership to twenty-five percent but may increase it if private sector interest is insufficient. Key players such as Ethiopian Shipping and Logistics, Ethio Telecom, and others have committed as initial investors. ESX has actively engaged in roadshows and aims to launch the secondary market by year-end. Foreign investors, including FSD Africa, are also involved. Individual investors are welcome, with minimum investment set at Birr 10 million. ESX forecasts substantial revenue growth, aiming to turn a profit by 2028. Anticipated members include financial institutions, brokers, and investors, with EIH overseeing major public firms, including Ethiopian Airlines Group and Commercial Bank of Ethiopia.

Zemen Bank became the first private entity to secure an agreement with ESX by investing Birr 47.5 million to acquire a 5% ownership share. This fulfills the minimum requirement set by ESX for investors as of January 11, 2024. The move is part of ESX’s goal to raise a total of Birr 625 million, with recent support from state-owned enterprises and FSD Africa. More banks and private investors in Ethiopia are expected to follow suit in the coming months.

Foreign and domestic investors can purchase 75% of the shares of ESX while the rest of the ownership goes to the Ethiopian Government through Ethiopian Investment Holdings.

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Gender Bonds Toolkit Unveiled In Nairobi To Centralize Capital For Women

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NAIROBI, Kenya, Feb 19 – A new gender bonds toolkit has been introduced in Nairobi to centralize capital for women in the African capital markets.

FSD Network’s gender collaborative program, British International Investment (BII), and the United Nations Entity for Gender Equality and the Empowerment of Women (UN Women) are the proponents of the program.

The toolkit seeks to equip stakeholders with the necessary insights and strategies to foster inclusive and impactful investments, bridging gender gaps in the investment landscape.

Generally, gender-focused bond issuances have been viewed as complex due to the lack of a ‘go to’ reference on the process and procedure.

However, the toolkit will champion the centralization of efforts to mobilize gender smart capital, strategically addressing technical capacity gaps on both the demand and supply sides.

“With the launch of the gender bonds toolkit, FSD Africa together with our partners are catalysing a seismic shift in African capital markets,” Mark Napier, Chief Executive Officer of FSD Africa, said during the launch.

“This initiative not only signifies our commitment to gender equality but serves as a powerful tool to mobilize capital, foster sustainable growth, and empower women across the continent,’’ Napier added.

According to a report by UN Women and UNDP in 2022, sustainable bonds aligned with SDG 5, achieving gender equality and empowering all women and girls, were still 1 percent of the $900 billion issued through green, social, sustainability, and sustainability-linked bonds.

The financing gap was even more evident when gender finance was considered as a proportion of total global assets under management (AUM), making up not even 0.01 percent.

However, as of June 2023, global Assets Under Management for Use of Proceeds bonds dedicated to gender equality and women’s empowerment reached $13.5 billion, underscoring the increasing significance of gender-focused investments.

“As a founding member of the 2X Challenge and a leader in providing gender finance, BII is committed to empowering women’s economic development,” Jo Fry, Investment Director, and Head of Intermediated Financial Services at BII, said.

“This means that we’re constantly looking for new ways in which we can mobilise more capital and better support women,” Fry stated.

“Our goal in producing this guide is to demonstrate and create better understanding of how effective gender impact bonds can be as an investment tool to advance gender equality in Africa.”

Parallelle Finance, an investment research and consulting firm, served as the author of the toolkit.

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Catalyst Fund has backed 6 African climate-tech startups in last 4 months

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Pre-seed venture capital (VC) fund and accelerator Catalyst Fund has made investments in six African climate-tech startups in the last four months, having announced a first close of its US$40 million fund in September.

Catalyst Fund is a pre-seed VC fund and accelerator backing high-impact tech startups that seek to improve the resilience of underserved, climate-vulnerable communities. It partners with mission-driven founders that share our vision of a world where every individual has the tools and opportunities they need to thrive.

Until a year ago, the organisation offered grant capital to selected startups, but in January 2023 it announced a US$2 million investment into 10 startups funded by a US$30 million fund anchored by financial sector development agency FSD Africa.

Focused on startups building solutions to improve the resilience of climate-vulnerable communities in Africa, Catalyst Fund in September of last year announced the successful first close of its targeted US$40 million fund, with over 20 per cent committed.

The fund, which offers US$100,000 of equity investments as well as US$100,000 of hands-on venture-building support, has since then announced six investments. In November, it announced investments in Tolbi, a pan-African climate-agtech startup using satellite imagery and AI to enable climate-smart agriculture practices on the continent with data; and NoorNation, an Egyptian startup providing decentralised solar energy and water solutions tailored for farming businesses and underserved communities.

In December, it backed South Africa’s Thola, which democratises access to certifications to liberate SMEs to catalyse climate resilience and food safety – transforming compliance from an obstacle into an opportunity.

Then, in January, it funded Nigeria’s Zebra CropBank, which provides climate-smart solutions tailored to overcome the interlinked challenges holding smallholder farmers back; and Nigeria’s Scrapays, a waste management startup that enables individuals and small businesses to launch mini-waste enterprises.

And just last week it announced an investment in Tanzania’s Medikea, which makes affordable preventative and primary care, diagnostics, and compliance support more accessible to overlooked Tanzanians, directly empowering vulnerable groups to safeguard their well-being in the face of growing threats.

Catalyst Fund’s climate-focused fund has garnered significant backing from investors including FSD Africa, FSDAi, Cisco Foundation, USAID Prosper Africa, and seasoned tech investor Andrew Bredenkamp.

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ESX equity proves lucrative as authorities prepare for late 2024 launch

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Authorities working to establish the country’s maiden stock exchange inch closer to raising one billion birr in initial capital as domestic firms rush to acquire stakes in the Ethiopian Securities Exchange (ESX).

The management of ESX has managed to raise 90 percent of the targeted capital from banks, state-owned enterprises (SOEs), and other businesses operating in Ethiopia.

This week saw Siinqee Bank, one of the industry’s newer entrants, announce a 50-million-birr equity investment in ESX, granting the former microfinance institution a five percent stake in the Exchange.

It is the second financial institution to make the leap, following Zemen Bank’s announcement of a 47.5-million-birr investment in ESX last month.

In October 2023, the Ethiopian Investment Holdings (EIH) and four SOEs under its wing made public the acquisition of a 25 percent stake in ESX. The SOEs include Ethio telecom, the Ethiopian Shipping and Logistics Services Enterprise (ESLSE), the Ethiopian Insurance Corporation (EIC), and Berhanena Selam Printing Enterprise.

YoditKassa, chief business development officer at ESX, says raising the targeted 75 percent of capital from the private sector has been relatively straightforward.

“I think we’ll be oversubscribed,” Yodit told The Reporter.

Her team wants to see the remaining 10 percent of initial capital raised before the deadline on March 29, 2024.

No foreign businesses or entities have thus far invested in ESX equity, barring Financial Sector Deepening (FSD) Africa, which has been playing a leading role in the formation of the stock exchange. FSD’s support will be repaid with a stake in ESX.

“FSD Africa’s stake is yet to be converted,” she said.

Yodit disclosed there has been increased interest from foreign companies eyeing a piece of the Exchange. However, there are questions that will have to be addressed, according to her.

“They are typical questions that any foreign investor would ask: like foreign currency repatriation. We are working with EIH on that,” Yodit told The Reporter.

The Exchange has yet to disclose a full list of its equity holders. The names on the list so far are the two commercial banks, five government-owned entities, and FSD Africa.

“We have a non-disclosure agreement when we sign contracts with the companies, so we can’t identify them. But we’ve finalized subscriptions of about 90 percent,” said Yodit. “We will disclose who all of our shareholders are after the allotment.”

Shareholders have to pay at least half the subscribed equity up front.

Heads of the Exchange are eyeing October 2024 for the ESX debut. This leaves a little over seven months to finalize procedures such as license acquisition, gathering public consensus on ESX rules, and the establishment of the Central Securities Depository (CSD) by the central bank, as well as the launch of the trading platform.

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New Kenya Bond Exchange Sees Opportunity in Budding Debt Market

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  • Exchange to complete its capital raising in the first quarter
  • EABX will compete with existing Nairobi Securities Exchange

The new East African Bond Exchange, a would-be competitor for the Nairobi Securities Exchange, sees the prospect for exponential growth in Kenya’s bond market as it prepares to start operating in the first half of this year.

While Kenya has the third-biggest economy in sub-Saharan Africa, the value of corporate debt issued is barely 0.2% of its gross domestic product, compared with an average of 20% to 30% Of GDP in Asian nations, according to Terrence Adembesa, chief executive officer of EABX.

Meanwhile, he said the potential for trading the government’s domestic debt is three to four times the 5 trillion shillings ($31 billion) of outstanding liabilities, instead of just the 600 billion shillings traded in 2023.

“For an economy of our size, the debt market should be much deeper than it is and much more developed,” Adembesa said in an interview. “What you expect to see is enhanced liquidity, enhanced transparency and the provision of transparent pricing.”

Kenya sold $14.9 billion worth of bonds in 2023, compared with $14.6 billion a year earlier, according to Bloomberg calculations using official data. There were eight outstanding corporate bond issuers at the end of September, with a total outstanding amount of 28.4 billion shillings, according to data from the markets regulator.

EABX intends to enable issuers to better price their securities, while investors are expected “to have much more visibility around pricing,” Adembesa said. “You also expect to see a cost saving in terms of trading fees and issuing costs.”

Capital Raise

The exchange, which received its operating license earlier this month, also plans to complete its capital raising in the first quarter of this year. The company received bids totaling about 2.6 billion shillings, above its target of 2 billion shillings, Adembesa said.

About 52% of exchange is owned by the Kenya Bankers Association an UK-backed development agency FSD Africa, he said.

“From a system perspective, we are now doing the testing,” Adembesa said. “We are able to see some trades occurring.”

EABX traces its roots back to 2009, when the Bond Market Association, a lobby group for fund managers, stockbrokers, investment bankers and lenders, decided to establish a self-regulatory organization for the fixed-income market.

EABX will ultimately enable trading of fixed-income securities in almost all of the East African Community member nations. Apart from Kenya, these comprise Tanzania, Uganda, Rwanda, Burundi, Democratic Republic of Congo, South Sudan and Somalia.

— With assistance from Bella Genga

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Capital markets: Absa teams up with professional bodies to boost staff capacity

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Tier one lender Absa Kenya has teamed up with the Nairobi Securities Exchange (NSE) and the Chartered Institute for Securities and Investment (CISI) to enhance knowledge and expertise of the Capital markets amongst its staff.

The initiative aims to improve the value provided to their customer base by actively engaging in various Capital Markets offerings and achieving the best possible outcomes for their corporate and retail clients’ financial objectives, said Absa.

The capacity building programme dubbed Securities Industry Certification programme was designed by the CISI in conjunction with the Capital Markets Authority (CMA) and Financial Sector Deepening Africa (FSD Africa).

The organisers said it offers a broad introduction to the financial services professional sector, with a specific focus on investments from a global perspective.

It for instance focuses on local and international markets and covers key financial principles and products including assets and markets, equities, bonds, derivatives and investment funds.

The programme enables candidates to better engage with their clientele in determining their objectives, risk profile and constraints towards ensuring advice that is suitable and appropriate to each individual client, a key pillar towards ensuring that a practitioner acts as a fiduciary to their clientele.

The NSE, a CISI Accredited Training Partner, has been working with the Absa team to ensure appropriate delivery of the programme and attaining of the learning objectives.

Outgoing Nairobi bourse chief executive Geoffrey Odundo said the the NSE is committed to building and strengthening the capacity of capital market players through partnering with organizations such as the Chartered Institute for Securities and Investments.

“Capacity of market participants is at the heart of robust market infrastructures and we will continue to pursue strategic initiatives to accelerate this agenda,” he said.

Absa Bank said it will continue to beef up the skills of its workers.

“Absa is committed to continue being a market leader in providing differentiated financial services that are tailored to the unique needs of our client base,” said Absa Bank Kenya Director of People and Culture Mumbi Kahindo.

“Capacity building is key towards achieving this commitment, by ensuring that our people are armed with the right knowledge and skills to deliver the best experiences to our customers and stakeholders.”

CMA director of Policy and Market Development, CMA noted that appropriate capacity building will play a critical role towards positioning Kenya as a premier investment destination and an International Financial Center.

“Adoption of international certification standards will enable more diversified products and services in the market, thus ensuring that we remain competitive and attract international flow of funds,” he said.

His comments were echoed CISI EA Regional Representative Kimacia Gitau.

“We are proud to be associated with Absa and the NSE towards building appropriate Knowledge and expertise among the Absa Premier staff and the sector as a whole,” he said.

“We are fully committed to the advancement and dissemination of knowledge in the field of securities and investments within the region.”

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Kenya Green Building Society Hands Over Certificate To Governor Sakaja

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Kenya Green Building Society (KGBS) in collaboration with the Financial Deepening Sector (FSD Africa) and the International Finance Corporation (IFC), handed over the IFC EDGE plaque and certificate to Nairobi Governor Johnson Sakaja in a colourful ceremony in Nairobi today.

The event meant to celebrate the Nairobi City County Governor’s office meeting the IFC EDGE Green Building standard, marking it as the first EDGE certified green government office building in Africa.

The certification follows the conclusion of the United Nations climate conference in Dubai in 2023, which emphasized the pivotal role of cities, local governments, and mayors in combating climate change.

While attending the ceremony, Governor Johnson Sakaja expressed his delight, highlighting two key points.

The Governor emphasized that Africa has the potential to lead the way in designing sustainable spaces to tackle future challenges, given the existing skills, incentives, and capabilities.

Governor Sakaja further expressed the importance of cities and local governments in driving the conversation on climate change and shaping cities that reflect dignity and progress, aligning with the vision of the Africa We Want, with Nairobi as its green capital.

This certification signifies leadership in climate action at the local government level and marks the initial step in Nairobi’s implementation of its Climate Action plan, solidifying its status as the green capital of the world.

Governor Sakaja emphasized that climate change, adaptation, and

environmental management are critical global challenges, but Nairobi stands out for its innovation,

resilience, and leadership.

Nasra Nanda, Chairperson of the Africa Regional Network at World GBC and CEO of KGBS, noted that the certification is not only a victory for Nairobi and other local governments but

also for Kenya and Africa as a whole.

Nasra expressed KGBS’s commitment to leveraging this milestone to advocate for green legislation and to make Nairobi truly the green and resilient capital of Africa, while also unlocking green finance for the city.

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Licensed East African Bond Exchange to take on NSE

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Competition in Kenya’s bond market is set to heat up following the Capital Markets Authority’s (CMA) approval of an application for a license for Over-the-Counter (OTC) trading by the East African Bond Exchange (EABX).

The Business Daily has learnt that the market regulator granted EABX the license on Tuesday, setting the stage for competition between the Nairobi Securities Exchange (NSE) and EABX for bond market activity whose annual turnover has averaged Sh734.0 billion between 2020 and 2023.

An OTC market is an infrastructure that allows traders to interact without having to go through a formal securities exchange. The framework works purely through bilateral negotiations between traders without the intervention of the established securities exchange since all trades are captured electronically and directly between the engaging parties.

This comes just a fortnight after the International Monetary (IMF) Staff Report following the January 17, 2024, sixth review of Kenya’s $4.43 billion, Sh717.3 billion, programme indicated that the government had committed the fund to take steps towards an OTC automated exchange to complement the operations of the NSE.

“We will further enhance the market infrastructure through policy support to market participants to operationalise an over-the-counter automated exchange to complement the broker intermediated Nairobi Securities Exchange,” the government committed to the IMF in the just concluded reviews.

“The aim of the exchange will be to promote trading transparency and settlement efficiency and attract more capital in the economy eventually leading to reduction of yields and cost of new public debt.”

This marks the third milestone for EABX with the first having been the no objection for set up acquired in 2020 and the second being the approval for capital raising secured in 2023.

The rollout of an OTC market for bond trading in the country now means fixed income activity in Kenya’s capital markets will be operating much like Nigeria, which has the Nigeria Stock Exchange and the OT bond trading targeted FMDQ Group operating side by side with FMDQ Group having been set up in 2012.

The top leadership of CMA has decried that whereas Kenya was ahead of Nigeria in bond market reforms a decade ago, Nigeria’s set up of an OTC bond trading market has seen the West African economy leapfrog ahead of Kenya in bond trading activity.

“When you look across the globe, the biggest OTC market is foreign currency. You can also find trading in OTC in equities, debt securities, derivatives and many others. Bonds, despite being not very small issuances, are finding their way in most jurisdictions in trading via OTC. Contrary to what you expect in a centralised exchange, the requirements for trading in an OTC market are far less onerous. The annual market turnover for Nigeria’s FMDQ comes to about Sh90 trillion annually and you can see the potential given that we were slightly way ahead of Nigeria in terms of bond market reforms,” CMA’s Director for Policy and Market Development, Luke Ombara, told journalists recently.

The NSE raked in an average of Sh73.2 million per annum in bond levies over the last two years and stands to lose a revenue line should activity gravitate towards EABX. Bond dealers in brokerage entities are also set to take a hit should the OTC market take off and cement direct engagement between traders.

Further, this move comes at a time when the NSE is struggling with depressed activity within the equities market.

The licensing of an OTC market player marks the second major change in under six months in Kenya’s bond market with President William Ruto having launched the new online bond trading platform, DhowCSD, on September 11, 2023.

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