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Country: Senegal

Feasibility study on the deployment of financial instruments to address environmental and climate change challenges in Saint-Louis, Senegal

Executive Summary

FSD Africa and UMOA-Titres (UT) commissioned Genesis Analytics as a consulting partner to develop a study that determines the feasibility of deploying a financial instrument to address climate change, environmental and/or waste management challenges in the city of Saint-Louis, Senegal.1 The study departs from a comprehensive assessment of the environmental challenges facing the city, and of its enabling environment through a SWOT analysis. A UNESCO World Heritage, where coastal erosion has become an existential threat, Saint-Louis main environmental challenges include exposure to climatic hazards (particularly severe coastal erosion and floods); land and ecosystem degradation; fishery decline and rarity of fish species; and poor waste management and other urban challenges.

After the initial diagnostic phase, the study maps the remedial initiatives that are best placed to tackle the identified challenges and lists the financial instruments that could be deployed to implement such solutions. An initial group of eighteen financial instruments were considered so long as they could be deployed to execute some of the potential remedies explored: The disaster risk finance toolkit; Nature-based Solutions (e.g., sustainable aquaculture, ecotourism, green roofs); Climate-Smart Agriculture (e.g., capture fisheries and aquaculture, energy Management); carbon markets (biodiversity protection); waste management initiatives and green urban initiatives. The instruments comprise typical funding tools (funds, bonds, securitization structures, etc), results-based finance mechanisms, and insurance.

The study concludes by pointing out that Saint-Louis Senegal, has the opportunity to capture a greater portion of the international climate finance flows available globally, through the deployment of Impact Bonds. This report provides an in-depth analysis explaining why this tool was chosen for the particular context of the city. Its flexibility in regards to scale and sector, its capacity to generate positive impact by fostering valuable partnerships, its great potential to be scalable and replicated once the first case is implemented, and its capacity to crowd in private capital, are some of the reasons that explain the choice.

Local currency solution for Multilateral Development Bank Portfolio Transfer: Feasibility Study

In June 2023, FSD Africa was awarded funding from the MDB Challenge Fund to develop a project focused on a ‘Local Currency Solution for Multilateral Development Bank (MDB) Portfolio Transfer’ (the project). FSD Africa’s proposed solution aims to empower MDBs and Development Finance Institutions (DFIs) to provide more financing to developing and emerging economies. This is aligned with the recommendations of the G20 Independent Review of MDBs’ Capital Adequacy Framework (CAF) report. The focus area is on promoting financial innovation and development of new instruments to catalyse private investment.

The purpose of this study is to explore the potential for transferring asset portfolios funded by multilateral development banks (MDBs) to domestic institutional investors in Africa through a local currency solution.

The primary aim is to expand the scope of MDBs’ investments by freeing up capital while benefiting local institutional investors and capital market development and reducing the foreign exchange risk of those benefiting from the investments funded by MDBs.

The study focuses on markets in East and West Africa with relatively deep institutional investor bases, including Kenya, Tanzania, Uganda, Ghana, Nigeria, Cote d’Ivoire, and Senegal.

SWISS RE Foundation extends funding support to BimaLab Africa Insurtech accelerator I

Posted on by Kihingu Inc

The acclaimed and innovative Bimalab Africa Insurtech accelerator program by FSD Africa is now set to expand to cover a total of fifteen countries across the African continent from the initial ten countries covered in the 2023 program, following a US$ 600,000 support by Swiss Re Foundation.

Launched in Kenya by FSD Africa in 2020 and supported by the Swiss Re Foundation since 2023, the BimaLab Africa Insurtech Accelerator Program offers hands-on venture-building support to high-impact insurtech start-ups that improve the resilience of underserved and climate-vulnerable communities.

In this extension of the Foundation’s support through 2025, BimaLab will expand its footprint to accelerate 55 insurtechs in a total of 15 African countries. It will build strong innovation ecosystem by activating investors, capacity-building networks, and corporate institutions to unlock capital, attract talent and share knowledge about insurance solutions tailored to those communities’ needs.

BimaLab Africa addresses problems faced by vulnerable communities and businesses, it gives priority to enterprises that address challenges on climate change, health and gender as well as obstacles faced by micro, small and medium enterprises. Africa’s protection gap, or uninsured losses, for natural catastrophes was around 80% of the total economic losses they caused in 2022, up from 58% one year earlier. These figures highlight the severity and volatility of the region’s natural disasters as well as its lack of financial protection against them. BimaLab Africa will create an insurtech innovation ecosystem that supports the growth of insurtechs; reach underserved markets, communities and households.

“Insurance provides a crucial safety net when people experience threats like natural disasters, ill health or economic disruption.  We are proud to scale our partnership with BimaLab Africa, an initiative we strongly believe in. Bimalab Africa supports the growth of insurtechs, their reach to underserved markets, communities and households. It creates an insurtech innovation ecosystem in Africa. ” said Stefan Huber Fux, Director of the Swiss Re Foundation.

Bimalab Africa program is a unique programme bringing together insurance innovators, technology partners, insurance firms, investors, and regulators to work in concert in unlocking industry bottlenecks in modernising insurance services. Previously Bimalab Africa has had chapters supporting insurtechs in Egypt, Ethiopia, Ghana, Kenya, Morocco, Nigeria, Rwanda, South Africa, Uganda, and Zimbabwe. Among the new countries where the programme seeks to spread wings to are Tanzania, Tunisia, Senegal, Zambia, Malawi, and Somalia.

FSD Africa Principal Innovation and Resilience and Bimalab Africa Programme Lead Elias Omondi says the impact of the programme has been phenomenal over the last four years in expanding the reach of the program and playing a catalytic role in innovation by developing products for vulnerable customers and attracting investors to insurtech startups.

“BimaLab Africa enables startups enjoy access to a structured learning environment, mentorship, funding connections and a network of like-minded entrepreneurs, financiers, tech companies and regulators that can help them grow their businesses.  We have supported 63 startups since 2020 and facilitated development of 3 regulatory sandboxes. Furthermore, investors have supported ten ventures providing over US$10 million in funding and over 40 products developed have reached more than 3 million new customers reached” said Elias Omondi, Principal from FSD Africa.

Insurance penetration in Africa has been lagging compared to other parts of the globe at only 3% compared to the world average of 7%. Innovation and technology are expected to play a key role in addressing the challenge.

FSDAi Nyala Facility extends USD 1 million to WIC Capital to boost gender lens investing and increase financing to Small and Growing Businesses

Posted on by TIMOTHYRADIER

Senegal, 5th December 2023 – FSDAi Nyala Facility BV has extended a USD 1 million loan to WIC Capital, a local capital provider investing in Senegal and Côte D’Ivoire that focuses on financing women-owned and managed Small and Growing Businesses (SGBs).

WIC Capital is led by Ms. Evelyne Dioh Simpa, a Fund Manager with a wealth of finance experience and supported by a robust team and board. WIC Capital has a strong alignment with FSDAi Nyala Facility due to its unwavering commitment to promoting access to finance for female owned SGBs needed to expand their businesses.

For example, in Senegal, a mere 3.5% of women entrepreneurs access credit from financial institutions. WIC Capital focuses exclusively on investing in businesses owned and/ or led by women, demonstrating that the financing gap for female-owned enterprises in West Africa can be addressed. Furthermore, WIC Capital stands out for its innovative product structures tailored to local SGBs. Notably, its origins in an exclusive women’s angel network, adds to its uniqueness within the FSDAi Nyala Facility portfolio, making it an invaluable learning opportunity for all investors in the small and growing businesses investing ecosystem.

Women entrepreneurs in Africa not only encounter challenges when it comes to access to finance but also grapple with the scarcity of platforms offering the essential knowledge and assistance required for the expansion of their businesses.

WIC Capital works with early-stage, women-owned/ led enterprises to provide first-time external capital as well as business training and mentorship. Also, WIC Capital leverages a large network of successful women entrepreneurs and civic leaders to co-fund and support these emerging businesses. The business training and mentorship is provided by the WIC Académie through a technical assistance program. Alongside the women’s angel network, other funders of WIC Capital include foundations, multilateral donor agencies, and development financial institutions.

“Through its investment in WIC, FSDAi is backing an African women-led capital allocator with deep local angel networks, a creative funding structure and financing solution for small and growing businesses in West Africa. With our investment, WIC can position itself to attract bigger pools of capital to expand its strategy in Senegal and Cote d’Ivoire,” noted Anne-Marie Chidzero, Chief Investment Officer at FSD Africa Investments.

“I am proud that the UK is investing US$1 million in WIC Capital through Financial Sector Deepening Africa Investments. I have seen first-hand WIC Capital’s inspiring work and know that they are a deeply impact-focused organisation. They support young female entrepreneurs in a market where access to funding is a huge barrier for their growth. At the heart of building sustainable and inclusive businesses lies the need to advance gender equality through women’s economic empowerment. I look forward to continuing our collaboration to create jobs and empower Senegal’s talented women,” noted Juliette John, UK Ambassador to Senegal.

“FSDAi is playing a critical role in the development of an emerging asset class of small business growth funds Africa, particularly women-led funds. The funding of WIC Capital represents an important confirmation of WIC’s innovative approach to financing early-stage women businesses in West Africa.  By melding their business development services, women investment club mentoring with investment capital, WIC provides a comprehensive approach to the challenges that to date have constrained Africa’s women-led businesses to growth and thrive.  We believe this commitment will be the foundation upon which other DFIs and local institutional capital holders can also provide funding to WIC Capital and other innovative local capital managers seeking to invest in Africa’s women businesses,” noted Drew von Glahn, Executive Director of the Collaborative for Frontier Finance.

“WIC Capital’s mission aligns with FSDAi’s desire to address the disfunctions of African capital markets, which include the structural barriers that small businesses face in accessing financing, specifically when they are women led. This partnership will be catalytic in the development of a local capital provider that has the potential to profoundly change the local ecosystem, by providing risk capital and business support to women led small and growing businesses (SGBs), with the ultimate goal of increasing women’s agency and economic benefit. With this investment, we are closing our first fund, and we believe this partnership will help accelerate the mobilization of our second fund to serve SMEs generating a strong impact in Senegal and Côte d’Ivoire,” concluded Evelyne Dioh, Managing Director of WIC Capital.

Climate finance innovation for Africa

The African continent presents a massive investment opportunity for investors to advance climate solutions in the coming decade, however, a set of barriers to finance have stifled requisite investment to date. In this new report, in collaboration with Climate Finance Innovation for Africa and Climate Policy Initiative, we provide a framework for how innovation in financing structures can leverage strategic deployment of public capital to ‘crowd-in’ private investment at levels not yet seen.

This paper focuses primarily on climate mitigation, which represents the largest investment opportunity for private investors. We refer audiences focused specifically on adaptation to the work done by the Global Center on Adaptation and Climate Policy Initiative on Financial Innovation for Climate Adaptation in Africa.

A review of some of Africa’s housing finance markets

Posted on by Kihingu Inc
Overview

Across Africa, the residential investment opportunity is increasingly driving conversations about economic growth. While the definition of who is middle class and how many such households there are continue, the fact of Africa’s rising population and rapid urbanisation is palpable in its cities where the inadequate housing conditions of the majority are obvious.

For every problem, there is an opportunity for a solution, and in increasingly creative ways, this is what Africa’s housing investors are finding.

Most investment funds currently active were initiated when the African growth trajectory was on an upward curve. The past year has been challenging, however. Still among the fastest growing continents, Africa has seen its growth and development prospects seriously challenged by global economic pressures, the commodities downturn and the slowing Chinese economy. Where the prospects of oil and gas discoveries dominated the news five years ago, in 2016 it is their loss in value ng governments reconsider their economic development strategies. The key challenge in this environment, is economic diversification. Can housing contribute towards that opportunity?

Governments can contribute significantly to a developer’s ability to deliver affordable housing at scale, by paying attention to the rough spots along the housing value chain: the availability of land, its servicing (especially water and electricity), and its registration;
the availability of domestic building materials and a functioning construction sector; the time it takes to get administrative approvals for the building process, and the cost of such approvals; the taxation, finance and macro-economic framework; and the functioning of the labour market, among so many other factors.

Read full report from”http://housingfinanceafrica.org”>CAHF here.,