News Type: News

Insurance experts meet in Nairobi to address low product uptake

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In Summary

  • Despite Africa having one of the lowest insurance penetration rates in the world, the regions’ appetite for insurance is growing.
  • Key topics to be discussed include climate risk and agricultural insurance, MSME Insurance, Inclusive digital insurance models, and enabling inclusive insurance market.

Kenya is set to host the 2023 Eastern and Southern Africa Regional Conference on Inclusive Insurance amidst low insurance penetration in the continent.

The conference in its 8th edition themed ‘Driving Inclusive Insurance Agenda: Closing the Protection Gap’, will be hosted by the Insurance Regulatory Authority of Kenya (IRA) and Munich Re Foundation in Nairobi, starting today to April 26.

IRA commissioner of insurance and CEO Godfrey Kiptum said despite Africa having one of the lowest insurance penetration rates in the world, the regions’ appetite for insurance is growing.

“To cater to growing demand, Africa’s insurance market will need a makeover. The conference is aimed at sharing insights on inclusive insurance business models that are making access to low-income market segments in Africa possible,”explained Kiptum.

The conference is a combination of high-quality training and plenary sessions and is supported by the FSD Africa, Association of Kenya Insurers, APA insurance, AB Consultants, FinProbity Solutions, Africa – Re and The Microinsurance Network.

“The organisation and implementation of this conference is based on the strong belief of the power of learning and sharing; the conference therefore brings international, regional and local professionals who will exchange experiences and discuss a number of key themes and topics on inclusive insurance business,” he said.

Representatives from insurance and reinsurance companies, brokers, distribution channels, international organisations, NGOs, development-aid agencies, policymakers, regulators and supervisors in Africa will attend the conference.

Some of the Key topics to be discussed include climate risk and agricultural insurance,  MSME Insurance,  Inclusive digital insurance models, and how to enable inclusive insurance market, among others.

The IRA 2021 Annual report indicates that Africa reported premiums of $74.2 billion  (Sh9.9 trillion) accounting for 1.1 per cent of the world insurance premiums.

This was an increase of 6.2 percent in premium compared to a decline of 1.9 percent in 2020.

Africa’s long-term insurance premium grew by 7.1 percent in real terms to USD 51.32 billion (2020: USD 41.83 billion) whereas, the general insurance premium recorded a growth of 4.4 percent to USD 22.88 billion (2020: USD 20.05 billion) due to economic rebound from pandemic-induced recession in 2020.

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FSD Africa Marks 10 Years Of Greening Financial Markets

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“In a short space of time, we have strengthened and developed financial markets and tapped into capital by using new instruments such as green and gender bonds,” says Mr Mark Napier, CEO of FSD Africa.

FSD Africa, a UK Aid funded specialist development agency, on 27th March celebrated a decade of strengthening financial markets across Africa, growing economies, increasing incomes for vulnerable populations and combatting poverty.

FSD Africa has made significant strides over the past decade by advancing policy and regulatory reforms, enhancing financial infrastructure and increasing capacity, all while tackling systemic issues in Africa’s financial markets. These efforts have led to large-scale and long-term change, providing access to financial services to over 10.2 million people and addressing issues related to financial exclusion.

During the Covid-19 pandemíc, FSD Africa observed a remarkable 87% increase in the demand for and use of remittance services, which played a crucial role in protecting families from Covid-19’s financial impacts.

FSD Africa’s market-building initiatives have resulted directly or indirectly in £1.9 billion of long-term capital made available for SMEs, affordable housing and sustainable energy projects, among others. Its support for financial sector innovation has increased access to financial services for close to 12 million Africans, while its support for business growth has improved access to finance for more than 3 million African businesses and led directly or indirectly to the creation of over 35,000 new jobs.

“Celebrating over ten years of our trailblazing work across Africa is special,” said Mr Mark Napier, CEO of FSD Africa. “In a short space of time, we have strengthened and developed financial markets and tapped into capital by using new instruments such as green and gender bonds.”

FSD Africa’s strategy has evolved to address the continent’s expanding needs, with a greater emphasis on identifying innovative methods to mobilise resources for sustainable economic development. The organisation has recently boosted investment into projects that enable an equitable transition to a green future for Africa after several successful initiatives, including developing regulations and assisting green bond issuance programmes in Kenya and Nigeria.

The organisation’s green portfolio and pipeline have expanded because of continuous investments in programmes that provide environmental and social consequences, with close to £50 million being invested in green initiatives.

Ms Jane Marriott, OBE, British High Commissioner to Kenya said the UK is continually working with Kenya to promote green finance and economic growth as part of its strategic partnership with Kenya. FSD Africa is delivering on these priorities in Kenya and across the continent, creating over 35,000 jobs and leveraging more than Ksh300 billion into sectors like renewable energy.

Kenya’s National Treasury Cabinet Secretary Prof Njuguna Ndung’u, said Kenya’s partnership with FSD Africa has created a favourable environment for the growth of local capital markets, resulting in increased interest from both domestic and foreign investors.

“FSD Africa also played a crucial role in establishing the Nairobi International Financial Centre (NIFC), positioning Kenya to receive more financial flows,” Prof Ndung’u said. “We look forward to collaborating more closely with FSD Africa on green finance initiatives to promote sustainable development while addressing climate change challenges.”

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FSD Africa marks 10 years of strengthening, greening financial markets across Africa

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FSD Africa, a UK aid funded specialist development agency, today celebrated a decade of strengthening financial markets across Africa, growing economies, increasing incomes for vulnerable populations, and combatting poverty.

FSD Africa has made significant strides over the past decade by advancing policy and regulatory reforms, enhancing financial infrastructure and increasing capacity, all while tackling systemic issues in Africa’s financial markets. These efforts have led to large-scale and long-term change, providing access to financial services to over 10.2 million people and addressing issues related to financial exclusion. During the Covid-19 pandemic, FSD Africa observed a remarkable 87% increase in the demand for and use of remittance services, which played a crucial role in protecting families from the pandemic’s financial impacts.

FSD Africa’s market-building initiatives have resulted directly or indirectly in £1.9 billion of long-term capital made available for SMEs, affordable housing and sustainable energy projects, among others. Its support for financial sector innovation has increased access to financial services for close to 12 million Africans, while its support for business growth has improved access to finance for more than 3 million African businesses and led directly or indirectly to the creation of over 35,000 new jobs.

Speaking during the event, Mark Napier, CEO at FSD Africa said: “Celebrating over ten years of our trailblazing work across Africa is special: in a short space of time, we have strengthened and developed financial markets, and tapped into capital by using new instruments such as green and gender bonds. The future is key, and I look forward to continuing our hard work with our collaborative and innovative team. I have no doubt that we will continue to support and address Africa’s expanding needs as we move towards sustainable economic development.’’

Future-focused, FSD Africa’s strategy has evolved to address Africa’s expanding needs, with a greater emphasis on identifying innovative methods to mobilise resources for sustainable economic development. The organisation has recently boosted their investment into projects that enable an equitable transition to a green future for Africa after several successful initiatives, including developing regulations and assisting green bond issuance programmes in Kenya and Nigeria. The organisation’s green portfolio and pipeline have expanded because of continuous investments in programmes that provide environmental and social consequences, with close to £50 million being invested in green initiatives.

Jane Marriott, OBE, British High Commissioner to Kenya said: ‘”The UK is continually working with Kenya to promote green finance and economic growth as part of the UK-Kenya Strategic Partnership. FSD Africa is delivering on these priorities in Kenya and across the continent, creating over 35,000 jobs and leveraging more than KES 300 billion into sectors like renewable energy. I look forward to FSD Africa’s continued work in the years ahead.”

Prof. Njuguna Ndung’u, Cabinet Secretary, Kenya National Treasury said: ‘’Kenya’s partnership with FSD Africa has created a favourable environment for the growth of our local capital markets, resulting in increased interest from both domestic and foreign investors. FSD Africa also played a crucial role in establishing the Nairobi International Financial Centre (NIFC), positioning Kenya to receive more financial flows. We look forward to collaborating more closely with FSD Africa on green finance initiatives to promote sustainable development while addressing climate change challenges.’’

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FSD Africa Marks 10 Years Of Greening Financial Markets Across Africa

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Key points

  • These efforts have led to large-scale and long-term change, providing access to financial services to over 10.2 million people and addressing issues related to financial exclusion.

FSD Africa, a UK aid-funded specialist development agency, today celebrated a decade of strengthening financial markets across Africa, growing economies, increasing incomes for vulnerable populations, and combatting poverty.

FSD Africa has made significant strides over the past decade by advancing policy and regulatory reforms, enhancing financial infrastructure, and increasing capacity, all while tackling systemic issues in Africa’s financial markets.

These efforts have led to large-scale and long-term change, providing access to financial services to over 10.2 million people and addressing issues related to financial exclusion. During the Covid-19 pandemic, FSD Africa observed a remarkable 87% increase in the demand for and use of remittance services, which played a crucial role in protecting families from the pandemic’s financial impacts.

FSD Africa’s market-building initiatives have resulted directly or indirectly in £1.9 billion of long-term capital made available for SMEs, affordable housing, and sustainable energy projects, among others. Its support for financial sector innovation has increased access to financial services for close to 12 million Africans, while its support for business growth has improved access to finance for more than 3 million African businesses and led directly or indirectly to the creation of over 35,000 new jobs.

Speaking during the event, Mark Napier, CEO at FSD Africa said: “Celebrating over ten years of our trailblazing work across Africa is special: in a short space of time, we have strengthened and developed financial markets and tapped into capital by using new instruments such as green and gender bonds. The future is key, and I look forward to continuing our hard work with our collaborative and innovative team. I have no doubt that we will continue to support and address Africa’s expanding needs as we move towards sustainable economic development.’’

Future-focused, FSD Africa’s strategy has evolved to address Africa’s expanding needs, with a greater emphasis on identifying innovative methods to mobilize resources for sustainable economic development. The organization has recently boosted its investment into projects that enable an equitable transition to a green future for Africa after several successful initiatives, including developing regulations and assisting green bond issuance programs in Kenya and Nigeria. The organization’s green portfolio and pipeline have expanded because of continuous investments in programs that provide environmental and social consequences, with close to £50 million being invested in green initiatives.

Jane Marriott, OBE, British High Commissioner to Kenya said: ‘”The UK is continually working with Kenya to promote green finance and economic growth as part of the UK-Kenya Strategic Partnership. FSD Africa is delivering on these priorities in Kenya and across the continent, creating over 35,000 jobs and leveraging more than KES 300 billion into sectors like renewable energy. I look forward to FSD Africa’s continued work in the years ahead.”

Prof. Njuguna Ndung’u, Cabinet Secretary, Kenya National Treasury said: ‘’Kenya’s partnership with FSD Africa has created a favorable environment for the growth of our local capital markets, resulting in increased interest from both domestic and foreign investors. FSD Africa also played a crucial role in establishing the Nairobi International Financial Centre (NIFC), positioning Kenya to receive more financial flows. We look forward to collaborating more closely with FSD Africa on green finance initiatives to promote sustainable development while addressing climate change challenges.’’

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FSD Inject Sh268bn in affordable housing, energy project

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In Summary

  • FSD Africa is delivering on these priorities in Kenya and across the continent, creating over 35,000 jobs and leveraging more than Sh300 billion into sectors like energy.
  • The agency has contributed to 10.2 million people accessing financial services.

FSD has injected £1.9 billion (Sh268 billion) of long-term capital to SMEs, in the last 10 years towards affordable housing and sustainable energy projects.

The UK aid-funded specialist development agency, says it has made significant strides by advancing policy and regulatory reforms, enhancing financial infrastructure and increasing capacity in Africa’s financial markets.

FSD Africa CEO Mark Napier says these efforts have led to large-scale and long-term change, providing access to financial services to over 10.2 million people and addressing issues related to financial exclusion.

“In a short space of time, we have strengthened and developed financial markets, and tapped into capital by using new instruments such as green and gender bonds,” said Napier.

Speaking during the firm’s 10-year anniversary he noted that while its support for business growth has improved access to finance for more than 3 million African businesses has led directly or indirectly to the creation of over 35,000 new jobs.

“Kenya’s partnership with FSD Africa has created a favorable environment for the growth of our local capital markets, resulting in increased interest from both domestic and foreign investors,” said National Treasury Cabinet Secretary Njuguna Ndung’u.

During this period, the agency has contributed to 10.2 million people accessing financial services, invested over £50 million (Sh7.1 billion) towards green initiatives and created 35,700 Full-Time Equivalent Jobs in support of sustainable economic development.

The organisation has recently boosted its investment into projects that enable an equitable transition to a green future for Africa after several successful initiatives, including developing regulations and assisting green bond issuance programmes in Kenya and Nigeria.

The agency added that its green portfolio and pipeline have expanded because of continuous investments in programmes that provide environmental and social consequences, with close to £50 million being invested in green initiatives.

“FSD Africa is delivering on these priorities in Kenya and across the continent, creating over 35,000 jobs and leveraging more than Sh300 billion into sectors like renewable energy,” said British High Commissioner to Kenya Jane Marriott.

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Rethinking African debt and exploitation of natural resources

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Africa is endowed with abundant and diverse natural resources and natural capital wealth. Close to 8% of the Earth’s natural gas reserves, a third of global mineral reserves, and a 10th of the global oil reserves reside in Africa. Also, over two-thirds of the world’s arable land and a third of the world’s CO2-storing tropical rainforests are domiciled in Africa. Africa’s mineral wealth makes it potentially one of the richest continents, yet Africa is home to the poorest countries in the world.

Despite having historically low emissions levels compared with other regions, Africa’s CO2 emissions are fast growing due to increased emissions from its tropical lands. This recent growth is driven by increased natural resource extraction and consumption linked to increasing material use on the continent and abroad in recent decades.

As indicated in Sustainable Development Goals 8.4.11 & 12.2.12, it is important for Africa to focus on sustainable exploitation management and consumption of natural resources. But while the literature is replete with studies on the material footprints of nations and the world at large, there is a lack of studies focused on tracing the trends and understanding the determinants of Africa’s raw material extraction and footprint.

Africa’s extraction and export of raw materials is rising

The findings of a new study that calculates sub-Saharan Africa’s raw material footprint over the past two decades, shows that production and consumption levels nearly doubled between 1995 and 2015. Africa is a net exporter of raw material footprints across all material categories – biomass, construction materials, fossil fuels, and ores. Raw material equivalents of exports referred to as raw material footprints embodied in Africa’s exports of goods and services to the rest of world increased by 53%, from 1.95 gigatonnes in 1995 to 2.98 gigtonnes in 2015.

The raw material footprint in African exports increased for almost all African countries. Countries such as South Africa, Egypt, Nigeria, Algeria, Angola, and Ethiopia saw the highest growth in raw material equivalents of exports over the period. Meanwhile, the biomass footprint in African exports increased by 43% over the same period, reflecting Africa’s increasing agricultural commodities exports, such as cocoa, palm oil, coffee, tea, and cotton, among other cash crops, and horticultural products, particularly to Europe and Asia.

The fossil fuel footprint in African exports was highest in South Africa, Algeria, and Nigeria, while Western Africa (Mauritania, Guinea, and Ghana) and Central Africa (Democratic Republic of Congo) made up more than a third of the ore footprint.

These soaring levels of raw material equivalent of exports reveal the strong connection between raw material extraction and growth strategies of African countries. Is this rewarding and sustainable?

The cutting down of major carbon sinks and digging up of mineral resources for export and the associated detrimental impact on the environment and climate change has not resulted in resilient growth, economic transformation and prosperity on the continent.

There has been a lack of structural transformation whilst informal employment has increased over the years. A study due to be published in 2023 shows that informal workers in Africa are mostly at the lower tier segment of the labour market, a dead-end with little chance of moving up the job ladder.

There are bigger questions as to how African countries can create opportunities to allow these low-tier informal workers to move up the job ladder. Can African countries create better jobs opportunities using their natural resources?

The distressing correlation between debt and raw material footprints

The findings of this study reveal a strong and positive correlation between national debt and raw material footprints embodied in African exports.

This is distressing. Given the sky-rocketing debt levels of many African countries, exploitation of natural resources is one of the key avenues available to combat their debt crisis, although it comes with a heavy environmental cost.

With the current growth and development paradigm, raw material equivalents for exports are set to increase substantially in a bid to service their debts using mineral and oil revenues, but this has disastrous consequences for the environment.

As much of the world focuses on the next steps in addressing the climate crisis, the funding squeeze and rising debt levels means that climate action will take a back seat in African countries. Increasing debt and intensification of extraction of raw material for export will leave Africans in extreme poverty.

This finding shows the urgent need to bring the debt issues upfront when discussing climate change, and the call on lenders to see their role in Africa’s growing environmental burden.

Policy options

The current Intergovernmental Panel on Climate Change (IPCC) report indicates the need to urgently hold global warming to relatively safe levels but in doing this would require global cooperation such as working with African government in this area.

In the short term, it is important for lenders both multilateral and bilateral, and international community to accelerate debt restructuring and with all seriousness and urgency provide the needed support to put countries back on a more sustainable fiscal path. The distressing debt levels mean there is very little fiscal space to invest in health, education and on climate to support the population.

The ongoing debt restructuring negotiations must take into account these intersections with the environment and climate change as well as the mutual benefits. With support from the international community, it is important to put together a more agile and effective sovereign debt resolution framework that can provide African countries with the needed financing assurances and debt relief in a timely manner.

In the long term, African countries must rethink their growth and development paradigms and focus on creating wealth via adding value to these vast raw materials. With all the natural resources and the discovery of new rare earth elements (cobalt, lithium, nickel, tantalum, tungsten etc.) essential for facilitating the green energy transition, African governments must focus on how they can be more involved in the value chain across all material category, especially in the manufacturing sector.

Given the large reserves of many critical minerals on the continent, particularly in South and East Africa, Africa should work towards positioning itself as the global supplier of critical minerals and a hub (mining and production) for rare earth element acquisition in the world.

This would involve pulling together a new approach and policies that would ensure mutually beneficial mining investment on the continent aimed at wealth creation, particularly investing in the networks and value chains and harnessing the African Continental Free Trade Area (AfCFTA) to boost productivity and investments.

Also, as has been done by the Dangote group in the building of the oil refinery in Nigeria, African governments should create the enabling environment and necessary support such as providing public incentives for private projects to attract private finance to develop the networks and value chains in the sector.

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Why financial inclusion remains crucial in Africa

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According to data from the World Bank, about 1.4 billion adults globally remain unbanked. Many of these are low-income people in rural areas, especially women and youth and those with little or no financial literacy support.

Financial exclusion exacerbates rural poverty and erodes the capacity of individuals and households to withstand shocks.

Indeed, regions in Africa have been impacted by major climate, political and health-related shocks which not only restrain efforts for wider financial inclusion but also threaten the economic and social development gains achieved in reducing poverty among rural communities.

However, there is a silver lining. Over the last decade, financial inclusion has continued to gain traction and supports many of the United Nations’ Sustainable Development Goals (SDGs).

It is a critical component in reducing poverty and improving the standard of living of millions of people left out of financial systems.

Account ownership in developing economies, for example, grew from 63 percent to 71 percent between 2017 and 2021, driven by services like mobile money.

According to data from the World Bank, about 1.4 billion adults globally remain unbanked. Many of these are low-income people in rural areas, especially women and youth and those with little or no financial literacy support.

Financial exclusion exacerbates rural poverty and erodes the capacity of individuals and households to withstand shocks.

Indeed, regions in Africa have been impacted by major climate, political and health-related shocks which not only restrain efforts for wider financial inclusion but also threaten the economic and social development gains achieved in reducing poverty among rural communities.

However, there is a silver lining. Over the last decade, financial inclusion has continued to gain traction and supports many of the United Nations’ Sustainable Development Goals (SDGs).

It is a critical component in reducing poverty and improving the standard of living of millions of people left out of financial systems.

Account ownership in developing economies, for example, grew from 63 percent to 71 percent between 2017 and 2021, driven by services like mobile money.

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Banque Populaire Launches Microfinance Program for Moroccan Women

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Rabat — On Monday, Morocco’s Banque Centrale Populaire (BCP) announced the creation of “Gender Bond,” the country’s first microfinance project geared towards women.

The announcement comes on International Women’s Day, a worldwide celebration of womanhood and femininity and a focal point in the global movement for women’s rights.

BCP’s new project will spearhead a new subordinated bond, implemented through BCP-subsidiary Attawfiq Microfinance, dedicated to financing Morocco’s female entrepreneurs and project leaders.

The Casablanca-based bank’s new “Gender Bond” follows a similar structure to BCP’s innovative green bond program inaugurated in 2017. The project, which blends traditional investment and sustainability, secured nearly €150 million (MAD 1.6 billion) in foreign funding dedicated to renewable energy projects across the country.

BCP hopes the women-centered microfinance project, the first of its kind in Morocco, will mark a step in the right direction in improving financial independence and mobility for the country’s women.

In 2019, the United Nations’ Gender Equality Index ranked Morocco 121 of 189 countries based on factors including educational access for women, maternal mortality rates, and labor force participation.

The study quantifies that Moroccan men are over three times as likely to have a job as the country’s women, while the disparities are even greater for positions of leadership.

Only one in 10 of Morocco’s entrepreneurs are women, per recent figures from the Association of Women Entrepreneurs (AFEM). The findings indicate that the country’s greatest obstacles to female entrepreneurship include social pressures, familial expectations, and lack of access to startup capital for women.

The latter is especially damaging to women worldwide who strive to start their own businesses. A study from Harvard University quantified that only 13% of venture capital in the United States goes to startups with a woman on the founding team.

For startups entirely led by women, the figure falls to a measly 2.4%.

The same problem rings true for Morocco, according to non-profit leader Sana Afouiz. Afouiz founded the Womenpreneur Organization, an NGO that helps women across North Africa start, maintain, and grow their own businesses.

“When it comes to Morocco, a country where I grew up myself, the challenges are different. You have the economic difficulties — less economic investors who take you seriously,” she said. “There’s cultural issues — as a female entrepreneur you have certain limits. For example, being a female entrepreneur means working late, traveling around, et cetera.”

However, programs like “Gender Bond” can make all the difference by putting capital directly into the hands of female entrepreneurs.

“It’s not that women can’t do the things, because it’s forbidden, or things like that. No, they can’t do it because they don’t have the real support they need,” said Asmaa Benachir, Moroccan social entrepreneur and women’s rights advocate. “My advice [to women] will be to always empower themselves by learning — not stop learning.”

Banque Centrale Populaire is Morocco’s second-largest bank, reporting over $20 billion (MAD 180 billion) in revenue annually.

BCP also holds overseas offices in Spain, England, Germany, France, Gibraltar, the Netherlands, Canada, and Belgium.

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Why NMB Bank opted to list Jasiri Bond on Luxembourg bourse

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Summary

  • Trading of the bond at the DSE will continue, and the hope is its listing in Luxembourg will attract the attention of global investors on sustainable and gender-based bonds

Dar es Salaam. NMB Bank’s Sh74 billion Jasiri bond was listed on Wednesday on the Luxembourg Stock Exchange (LuxSE) in a move that showcases to the world the top lender’s first debt instrument aimed at financing women-owned small businesses in sub-Saharan Africa.

A statement from NMB Bank Plc issued in Dar es Salaam yesterday says the Sh74 billion Jasiri bond was officially displayed at the Luxembourg Green Exchange (LGX) at an event that also marked the launch of the Luxembourg Women in Finance Charter.

The Luxembourg Minister of Finance, Yuriko Backes, who officially unveiled the Luxembourg Women in Finance Charter, said the listing marks an important milestone for global efforts to promote gender finance.

The events were timed to coincide with International Women’s Day.

“… it underlines the Luxembourg Stock Exchange’s pioneering role in helping to drive new and emerging sustainable financial products. By directing capital towards initiatives that empower women and advance their participation in the economy, the financial sector can thus support the unlocking of new opportunities for growth and innovation to help build a more equitable and sustainable future for all,” she is quoted in the statement as saying.

Though the bond will continue to be traded only at the Dar es Salaam Stock Exchange (DSE), its listing at the LGX sends a clear message to global investors that there is a sustainable and gender-based bond in Sub-Saharan Africa that was issued by a Tanzanian lender, the NMB statement further notes.

This also gives room for global investors, who will have seen the Jasiri Bond at the LGX, to think about Tanzania in general and NMB in particular whenever they want to invest in a sustainable debt instrument in Sub-Saharan Africa, the statement adds.

The Jasiri Bond, which saw its offer oversubscribed by 197 percent in April last year before its listing at the DSE, specifically seeks to finance women-owned micro, small, and medium-sized enterprises in Tanzania.

NMB Bank expects that the proceeds of the social bond will provide up to 2,000 women in Tanzania with access to the necessary financing to start or grow their businesses.

According to the CEO of the Luxembourg Stock Exchange (LuxSE), Julie Becker, the bond provides female entrepreneurs in Tanzania with the opportunity to contribute to the socioeconomic development of their communities.

“At LuxSE, we see it as our duty to give issuers such as NMB Bank a pathway to international capital markets so that we can encourage other issuers to raise financing for women’s empowerment while also providing the visibility needed for investors to access these gender-focused investment opportunities more easily,” she said.

NMB Bank CEO Ruth Zaipuna said the listing of the Jasiri Bond on the Luxembourg Stock Exchange underscores the lender’s commitment to gender empowerment.

“Going forward, we remain committed to being a beacon of innovation excellence and sustainability leadership within and outside Tanzania,” said Ms Zaipuna.

In May last year, LuxSE entered into a Memorandum of Understanding with UN Women in which the two institutions committed to joining forces to advance gender finance and gender-lens investing.

As part of its commitments, LuxSE established a gender-focused bond flag on LGX, which highlights debt securities listed on LuxSE and displayed on LGX that raise financing for projects advancing gender equality.

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Why East Africa refugees remain financially underserved

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Summary

  • There has been progress in providing financial solutions to displaced populations.
  • This is particularly in stable contexts where business and personal financial interests are protected by governments.
  • The heterogeneity of refugees carries over to their financial services needs.

Properly integrating displaced populations within a host country’s financial system invites often thorny political issues and private sector players are erring on the side of caution.

There has been progress in providing financial solutions to displaced populations, particularly in stable contexts where business and personal financial interests are protected by governments and civic institutions and personal identities are more entrenched. But in the contexts where refugees struggle with instability, little documentation, a tenuous status or few financial links, those strides can vanish.

As politics sometimes place insurmountable complications for even well-designed solutions, expanding financial inclusion to displaced individuals in difficult locales requires a shift in approach that integrates both refugee and solution within a wider market.

Beyond the shared experiences of forcible displacement and perhaps downward mobility, refugees are far from a monolith, differing across gender, age, economic and professional backgrounds, among other demographic markers. Economic status diverges further considering their given status or length of stay.

The heterogeneity of refugees carries over to their financial services needs, which makes achieving scale for solutions difficult.

Self-sufficient

Some refugees in Kenya’s Kakuma settlement camp, for instance, are self-sufficient, with thriving businesses selling to the other settlement camp members. Within the same camp, however, are poverty-stricken families, making up 68 percent of the population in the camp.

These two groups’ needs differ, with the latter reliant on cash transfers while the former is more likely to take up more sophisticated services like loan products and insurance.

Private sector players have consequently been slow to serve these groups, erring on the side of caution.

Rwanda’s refugee population is served by a handful of financial service providers, including only one bank – Equity Bank – and a few fintech startups like Leaf Global, which are the only firms that accept refugee IDs to create accounts.

Lack of financial options

In general, a lack of financial options persists in spite of the many refugees who have graduated from relying solely on cash transfer programmes, numbering about 54 percent of the population.

Yet this untapped market is still small and fragmented.

Rwanda’s population of refugees, at about 144,000, is a small market size, especially when divided further along the various demographic and financial situations.

To serve them and achieve growth, a shift towards incorporating refugees among larger, more similar populations becomes necessary.

The issues often riddling refugees’ access to financial solutions – lack of documentation, ID, a stable address, savings or a financial history – often mirror those at the bottom of the pyramid, after all.

Success stories

There are a few examples of initiatives with some modest success.

Rwanda’s Save, a digital platform for savings groups, targets refugees and rural communities. Just a year after it was piloted, Save had over 4,000 users in 232 groups.

In the global south, Leaf Global Fintech, which provides digital wallets for safe financial transactions and storage, began with an aim to help displaced people as they crossed borders. Four years after its inception, it’s expanded to focus on migrants as well across its countries of operation, including Rwanda, Kenya and Uganda.

Solutions focused solely on refugees run the risk of only excluding further these populations from key financial products.

Refugees in Kenya cannot directly access regular M-Pesa wallets. Closed loop or locked wallet accounts designed for refugees enable the World Food Program (WFP) to distribute cash equivalents redeemable for food items at select stores within settlement camps – a tech-enabled dependency that simultaneously locks them out of access to payment, remittances and money storage in the epicentre of East Africa’s fintech revolution.

Financially excluded

Yet solutions that are exclusive to refugees – or rather, those that keep them financially excluded – are inevitable results of broader systemic issues.

To open a bank account or mobile money wallet in most countries, a formal ID is required, and refugees – often stateless and with little to no documentation at all – can be quite constrained by this alone.

A given country’s policy seals the fate for many refugees in need of financial access.

In Mauritania, a country with over 76,000 refugees and asylum seekers, a refugee ID provided by UNHCR is not recognised by banks, dooming most to exclusion.

Rwanda offers an in-between model, with particular banks and mobile network operators permitted to issue accounts to UNHCR ID-holding refugees, such as Equity Bank and Leaf Global Fintech.

Thorny political issues

Properly integrating refugees within a host country’s financial system invites often thorny political issues. Inclusive policies may arouse accusations of supporting foreigners at the expense of a country’s own citizens, and Anti-Money Laundering/Combating the Financing of Terrorism issues can be hard to sort out when hosting refugees from war-torn countries with little documentation.

Organisations like UNHCR and CALP Network are hard at work trying to bring about interventions that facilitate greater financial inclusion, but the journey is long and slow.

UNHCR advocacy efforts enabled Zambia’s Central Bank to allow the use of refugee IDs to access mobile money services. Uganda also now enables refugees with valid IDs to acquire SIM cards. But in Kenya, refugee IDs cannot be used to acquire SIM cards, and refugees are unable to freely move outside of settlement camps without permits.

Underground solutions

With policy roadblocks, it is no wonder that informal hawala money transfer systems thrive within asylum-seeking corridors. Certainly, hawala has its enduring uses; humanitarians still use these systems to send out large amounts of cash, as large as $100,000, to areas that are hard to reach, such as Somalia and Afghanistan, according to Kimberly Wilson, a researcher whose work has focused on the financial journeys of refugees.

“[Fintechs] know they are competing with the underground solutions and they don’t have a competitive solution. They lack familiarity [among the refugee populations], and… they want to go to something they understand and trust. Then you add the ID problem as well as the KYC rules. These problems need to be solved if people want to see more formal solutions,” said Wilson, senior lecturer at the Fletcher School at Tufts University.

While the Hawala systems work and are quite reliable, they are often illegal in many countries and have been linked to money laundering and funding of terrorist activities.

“The technological and the technocratic solutions are pretty straightforward. It just comes down to the politics of the country,” said Rory Crew, technical advisor, data and digitalisation, CALP Network.

Blockchain technology

Crew gives the example of a blockchain technology provider in Latin America who considered the technology a potentially great way to move money for refugees between countries. But a bank account or mobile money wallet connection is needed to facilitate the blockchain capabilities, which inherently limits potential scale in a region where mobile money uptake is still quite low and bank account ownership is limited.

Workarounds can be reached; Leaf Global Fintech for example, has managed to plug in their blockchain-based solution to the vibrant mobile money ecosystem of East Africa. A Leaf mobile wallet user can cash out using any mobile number from its countries of operation (Kenya, Uganda and Rwanda).

Yet invariably, few tech solutions truly take off because local policy makes it near impossible for the refugee and entrepreneur alike.

Confronting this murky regulatory environment, financial service providers serving refugees must diversify approaches, integrating both product and refugee within the fabric of a host country’s financial system thus engendering both the needed inclusion and business model success.

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