Category: Press release

FSD Africa Investments welcomes a new £90m commitment from UK aid

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Commitment expected to unlock over £500m in additional private sector finance

Nairobi, Friday 27thSeptember 2019: FSD Africa today welcomes an additional commitment of £90m from UK aid to scale-up its development capital arm, FSD Africa Investments. The new commitment will enable FSD Africa Investments to invest in high-potential financial sector businesses across sub-Saharan Africa, unlocking over £500m in critical private sector finance for SMEs, businesses and entrepreneurs.

The new UK aid package, announced this evening by Secretary of State Alok Sharma at the UN General Assembly in New York, will channel much-needed patient capital into financial sector businesses operating in Africa – from financial technology firms to private funds in emerging asset classes and alternative finance companies.

With this new commitment, FSD Africa Investments aims to catalyse £500m of long-term finance for SMEs, entrepreneurs and businesses, and through co-investing, unlock Lf private sector investment and institutional capital into intermediaries investing in real economy sectors (including housing, health and education) and enabling improved access to financial services for 12.5 million people, 50% of whom will be women.

FSD Africa Investments invests in financial sector firms and funds that address some of the biggest challenges facing Africa’s financial markets. This week, FSD Africa finalised a £350,000 commitment to the People’s Pension Trust Ghana, a subsidiary of the pension fund administrator Peoples’ Pension Trust, to help design and scale innovative tailor-made pension products for underserved and low-income people across Ghana. Today, only 10% of people in Ghana have access to a pension scheme – when over 80% of the workforce is employed in the informal sector with no access to this vital safety net for later life. This initial investment will serve 500,000 Ghanaians with affordable pension services; if successful the products will be scaled to Rwanda and otries in the region.

FSD Africa Investments is designed to invest in high-potential financial sector firms that would otherwise be deemed too high-risk for commercial investment. Instead, FSD Africa Investments can take early stage risk and flexibly invest in financial sector businesses and funds. This investment provides innovative businesses with the capital they need to test and scale high-potential ideas. FSD Africa Investments uses a mix of tools to disburse capital – including loans, guarantees, and equity or quasi-equity.

FSD Africa Investments also helps unlock capital and finance from other players. An earlier £15.3m investment in the African Local Currency Bond Facility has unlocked £137m in finance from the private sector. This funding has helped local banks and financial institutions use local capital to fund small businesses on the continent.

International Development Secretary, Alok Sharma, said: “I am committed to mobilising the private sector to help African nations ma most of their enormous potential. This new UK aid package will reduce poverty by mobilising private sector investment in infrastructure, creating jobs and boosting access to finance. I have recently announced an Infrastructure Commission whose aim will be to boost investment in green, sustainable infrastructure.”

Mark Napier, Chief Executive Officer, FSD Africa, said:“Innovation in financial services is vital for the next generation of African entrepreneurs to get the capital they need to grow their businesses and for people to get access to the basic services we take for granted, like housing and healthcare. But innovation requires investment that is flexible and patient. This commitment to FSD Africa Investments is both generous and smart.  It directly addresses the unmet demand that financial innovators have for capital. But it also allows them to use that capital to unlock much larger amounts of long-term finance from their local markets.”

Anne-Marie Chidzero, Chief Investment Officer, FSD Africa Investments, said: “FSD Africa Investments builds on FSD Africa’s on-the-ground network and insights to invest in a way that directly addresses the most pressing challenges facing Africa’s financial markets. We have a unique investment mandate to take the early stage risk g in African financial intermediaries that could yield high economic and social impact but require patient capital to demonstrate commercial returns.”

FSD Africa Investments received an initial capital allocation of £30m from UK aid in 2017. To date, it has completed five transactions valued at £21.25m, with the last investment heading to financial close. Over £10m in transactions are at the advanced stages of due diligence.

 

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Ghana’s people’s pension trust part of high-level meeting during leading Africa investor event

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Accra, May 10th 2019

The People’s Pension Trust Ghana, a company that aims to provide 500,000 Ghanaians with a tailor-made pension product by 2023, was one of seven companies which met the UK’s Secretary of State, Rory Stewart, on the sidelines of the Africa Financial Services Investment Conference (AFSIC) underway in London.

CISI market certification program and strengthen Rwanda’s capital mark

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Kigali, 25th April 2019

The Capital Market Authority, Rwanda (CMA Rwanda) announced that it has formed a partnership with the Financial Sector Deepening Africa (FSD Africa) and Chartered Institute for Securities & Investment (CISI) to launch a qualifications-led licensing programme in the Rwandan capital market industry, to enhance and promote professional standards in the securities and investment industry in Rwanda. CMA Rwanda partnered also with the UKAID funded Financial SectorDeepening Africa (FSD Africa) to strengthen Rwanda’s Capital Markets through the Africa Regulator Support Programme; a continent-wide initiative designed to strengthen the continent’s capital marketregulators to reach international standards.

Competition launched to develop innovative solutions for payment and financial services in the DRC

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Kinshasa, 20 February 2019

Today, Financial Sector Deepening Africa (FSD Africa), the Banque Centrale du Congo and Elan RDC launch DRC – Innovation for Financial Services 2019. This is a competition for local businesses and entrepreneurs that aims to encourage the development of innovative, relevant and value- adding financial services and payment solutions in the Democratic Republic of the Congo (DRC).

FSD Africa invests £1.6 million in African housing finance

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NAIROBI, 22nd June 2018

Financial Sector Deepening Africa (FSD Africa) is pleased to announce that it is to acquire a 25% shareholding in Sofala Capital Pty Limited (Sofala), a housing finance catalyst based in Cape Town, South Africa. The £1.6 million investment will help Sofala scale up its provision of construction mortgages in both Zambia and South Africa.

IDRC and FSD Africa enter into a partnership to deepen financial inclusion using big data analytics

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Nairobi, Monday 17th July 2017 – Financial Sector Deepening Africa (FSD Africa) and Canada’s International Development Research Centre (IDRC) have entered into a partnership to implement the ‘Deepening Financial Inclusion Using Evidence Based Decision Making’ project.

Digital finance services are increasingly becoming a critical asset for financial service providers (FSPs) within sub-Saharan Africa (SSA). Digital finance adoption is enabling these providers to improve their operating effectiveness and their service delivery to customers. Digital delivery channels are increasingly becoming a cost-effective method of enabling FSPs to reach a broader clientele. Further, there is a growing realisation within the financial sector that insights derived from analysis of FSPs internal data and big data leads to improved customer value propositions. Hence, it enables FSPs to provide relevant financial services to financially excluded market segments whi low-income women.

The project seeks to demonstrate to FSPs the benefits of using data to make evidence based decisions.  This will involve: i) building the capacity of FSP staff to use data to make evidence based decisions; ii) demonstrating the business case for FSPs to utilise internal data and big data to develop financial products that address the financial needs of different customer segments within their operating environments; iii) building the capacity of local research and data analytics communities to provide data handling support to FSPs; and iv) developing a toolkit that will provide guidance to FSPs seeking to use internal and external data to make evidence based decisions.

Paul Musoke, the Director Competitive Strategies at FSD Africa said: “We are pleased to be partnering with IDRC in this exciting journey. The most significant trend affecting the financial sector today is digital finance services, changing the way products are delivered at scale. With growing digital footprints driven bye mobile phone and internet, poor and excluded people are becoming less anonymous. Coupled with the exponential increase in data that provides deeper insights into how people manage their financial lives, data management and analytics capabilities are going to be imperative for the sustainability of FSPs going forward. The opportunities it offers to profitably reach excluded segments previously regarded as un-bankable, with relevant products at scale are truly exciting.’’

“This pioneering work with FSD Africa will make the business case for investing in data use and analysis, which will hopefully lead to the development of innovative financial products and services better suited for women. By helping service providers better understand women’s needs and the key barriers they are facing, we believe the gender gap in access to finance can be reduced. We know that when women have control over their finances, they are empowered to make better decisions for themselves and their families. We are confident s partnership will contribute to maximising the impact of financial inclusion in a way that fosters opportunities for women and the poor,’’ said Martha Melesse, Senior Program Specialist in charge of the project at IDRC.

The project will cover at least three (3) countries; Tanzania, Sierra Leone and Zambia and will run for a duration of 30 months.

It is our conviction that using data analytics to develop insights into customer preferences will be a powerful spur to game changing product innovation that will have a big impact on people’s lives within SSA.

Notes to Editors

About IDRC

As part of Canada’s foreign affairs and development effort, IDRC invests in knowledge, innovation, and solutions to improve lives and livelihoods in the developing world. Bringing together the right partners around opportunities for impact, IDRC builds leaders for today and tomorrow and helps drive large-scale positive change.

For more information about IDRC’s recent activite subscribe to IDRC’s bulletin and visit:

Twitter: @IDRC_CRDI

LinkedIn: International Development Research Centre (IDRC)

Youtube: https://www.youtube.com/user/IDRCCRDI

Website: www.idrc.ca

 

About FSD Africa

FSD Africa is a non-profit company which aims to increase prosperity, create jobs and reduce poverty by bringing about a transformation in financial markets in SSA and in the economies, they serve. It provides know-how and capital to champions of change whose ideas, influence and actions will make finance more useful to African businesses and households. It is funded by the UK aid from the UK Government

For more information about FSD Africa’s activities and current updates follow our social media platforms:

Twitter: @FSDAfrica

Linkedin:  Financial Sector Deepening Africa (FSD Africa)

Website: www.fsdafrica.org

Email: shakila@fsdafrica.org

FSD Africa invests £15.3 million in the African local currency bond fun

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PRESS RELEASE – FOR IMMEDIATE PUBLICATION

Nairobi, 9th May 2017 – Financial Sector Deepening Africa (FSD Africa) and KfW Development Bank announce that they have agreed terms under which FSD Africa will invest £15.3 million in the African Local Currency Bond Fund (ALCBF). When fully subscribed, this fresh injection of capital will take ALCBF’s total equity to £53m, substantially increasing the fund’s investment firepower and thus enabling it to step up its engagement with developmentally important industry sectors such as green energy and housing and take on investments in fragile and conflict affected states.

ALCBF was established by KfW on behalf of the German Ministry for Economic Cooperation and Development (BMZ) in 2012 to support the development of African bond markets and improve private sector access to long-term and local currency financing.

Alongside this investment in the equity of the fund, FSD Africa has also agreed to contribute £500,000 towards ALCBF’s Technical Assistance Facility. FSD Africa’s investment is part of a comprehensive and continuing strategy by ALCBF to increase significantly its capital base through equity and debt, and diversify its funding sources.

Mark Napier, Director of FSD Africa, said: “We are proud to become the African Local Currency Bond Fund’s second shareholder. The lack of long term, local currency funding is one of the most serious problems in Africa’s financial markets.  It means that good projects don’t get funded and much-needed jobs don’t get created.  We were attracted by the African Local Currency Bond Fund because of its pan-African reach, its ability to generate solid financial returns from good quality investments, and because of its energetic commitment to supporting the development of capital markets by providing technical assistance alongside investment capital.”

Capital markets are an important medium for channelling savings into investment in local economies, but in most African countries they are not yet playing a significant role. Where domestic capital markets do not work and long-term local currency finance is not available, companies are forced to rely on hard currency loans. Foreign currency loans expose borrowers and sometimes an entire financial system to exchange rate risk: when local currencies weaken, foreign currency loans can quickly become very expensive to repay and when the borrower is a financial institution, that can create risks for the financial system as a whole. Low income households and small businesses are often among those most affected by systemic financial crises.

Bond issuance not only means that companies gain access to investment capital. It also means that local investors – typically, pension funds and insurance companies – get the opportunity to invest for the long term in their own currency, thus ensuring that their long-term liabilities, such as pension pay-outs, can be matched.

ALCBF has been investing in Africa for four years, during which it has played a key role in bringing 19 issuances to market for 13 companies in 7 countries, investing a total of £33m. The current outstanding portfolio is £24m.  All investments to date have been in the financial sector, including micro-lenders, Micro, Small and Medium Enterprises (MSME) lenders, leasing companies and lenders into the health, education and housing finance sectors.

ALCBF is managed by Lion’s Head Global Partners (LHGP) Asset Management LLP (LHGP AM), an investment and advisory firm regulated by the UK Financial Conduct Authority with offices in London and Nairobi.  LHGP AM was appointed as Fund Manager to ALCBF in May 2015.  Bim Hundal, Chairman of LHGP AM, says: “We are pleased and excited to work with KfW and FSD Africa on this ground-breaking initiative. Providing local currency financing to African companies and institutions puts ALCBF at the forefront of capital markets innovation.”

FSD Africa’s investment is expected to increase the number and size of bond issuances in SSA and reduce the cost of capital for borrowers. Because the fund never buys more than 50% of a bond, the investment should mobilise (or crowd in) significant amounts of domestic capital from local institutions: in 2016, for every £1 invested by the fund in local currency bonds, £10.6 was invested by third parties.

FSD Africa’s investment will also help ALCBF to continue its work of strengthening technical capacity in the market, supporting local issuers with advice and building the skill set, standards and practices of market intermediaries such as placement agents and investment banks.

This marks FSD Africa’s largest deployment of investment capital to date and is consistent with its objective of driving financial market transformation through capital investment as well as through grant funding.

Johannes Feist, Head of Division – Financial Systems Development, Southern Africa and Regional Funds for KfW, said: “We are delighted to welcome FSD Africa’s participation in the African Local Currency Bond Fund.  FSD Africa’s equity investment, alongside KfW’s, can be leveraged with senior debt which means the fund can deliver capital market development impact more quickly and in more markets across Africa.”

Ends.

Note to editors

About KfW

KfW Development Bank has been helping the German Federal Government to achieve its goals in development policy and international development cooperation for more than 50 years. In this regard, KfW Development Bank is both an experienced bank and a development institution with financing expertise, an expert knowledge of development policy and many years of national and international experience. On behalf of the German Federal Government, and primarily the Federal Ministry for Economic Cooperation and Development (BMZ), KfW Development Bank finance and support programmes and projects that mainly involve public sector players in developing countries and emerging economies – from their conception and execution to monitoring their success.

Contact: Johannes Feist, KfW, +49-69-7431-3519 or Johannes.Feist@kfw.de.

For more information about KfW Development Bank’s activities and current updates follow:

Twitter: @KfW

Website: www.kfw-entwicklungsbank.de.

About FSD Africa

FSD Africa is a non-profit company which aims to increase prosperity, create jobs and reduce poverty by bringing about a transformation in financial markets in SSA and in the economies, they serve. It provides know-how and capital to champions of change whose ideas, influence and actions will make finance more useful to African businesses and households. It is funded by the UK aid from the UK Government.

Contact: Mark Napier, FSD Africa, +245 701 773 028 or mark@fsdafrica.org.

For more information about FSD Africa’s activities and current updates follow our social media platforms:

Twitter: @FSDAfrica

Linkedin: Financial Sector Deepening Africa (FSD Africa)

Website: www.fsdafrica.org