News Type: News

A quarter of Africa’s GDP is dependent on nature; it must be managed responsibly

Posted on by Kihingu Inc

We are all asset managers,” writes Professor Partha Dasgupta in his seminal study on the economics of biodiversity. “Whether as farmers or fishers, foresters or miners, households or companies, governments or communities,” we all influence the store of value held in our most precious asset — the natural world around us.

We depend on nature for food and water, for our health, and also for our economic wellbeing. Every business at some level depends on resources drawn from nature, such as crops, fish, timber, fibre, or rare earth elements, or on the stability of ecosystems.

Often we only see this when those ecosystems are upset such as when over-extraction from natural water sources causes drought or unsustainable agricultural practices lead to soil degradation and ultimately to food shortages.

And while, rightly, our attention is focused on our warming planet, we must recognise that the climate crisis and nature-loss are inextricably linked. All paths to net zero require the large-scale removal of com the atmosphere and the only affordable and immediately available methods of doing this are in nature.

Nowhere is this interdependency more clear than in Africa, which is among the regions of the world most vulnerable to climate change and most dependent on nature. With almost a quarter of its GDP dependent on nature, every development pathway for the continent relies on its responsible management.

But, between 1970 and 2016, the stock of natural capital in African countries fell on average by 65%, driven largely by land-use change. Almost three million hectares of rainforests in Africa are lost each year, resulting in soil degradation and unstable weather patterns, while drought and soil erosion have degraded 65% of its rangelands.

Africa’s reliance on nature is a source of vulnerability, but potentially also of competitive advantage.

Consider, for instance, that every $1 invested in marine protected areas in Senegal and Tanzania generates more than $5 000 in economic value, wetland conservation in South Africa returns $200, while agricultural land remediation in Uganda delivers $230.

What causes an economy to choose between destruction and regeneration, risk and opportunity, is its capacity and willingness to properly value nature. This begins with the financial sector.

Between now and 2030, there are $10-trillion of business opportunities up for grabs by investing in nature worldwide.  But, to capture this potential, $2.7-trillion of finance needs to be redirected to nature-positive business opportunities. This may seem a huge ask, but financial institutions with $130-trillion in assets have already made similar climate change commitments through the Glasgow Financial Alliance for Net Zero.

There is simply no path to protecting and restoring nature without mobilising the huge reserves of private capital controlled by the financial sector. But these institutions need better quantitative data on their exposure to nature-related risks to make targeted decisions about their portfolios.

At a global level, the Taskforce for Nature-Related Financial Disclosures (TNFD) has recently been set up to respond to this challenge and create a harmonised framework for assessing and reporting these risks. If the TNFD is to work, it needs to avoid the pitfalls of standard-setting processes in the past, steer clear of an approach that only works for developed nations, and reflect the specific conditions of operating in regions like Africa.

Amid global efforts to retool finance in favour of nature, African nations have a unique opportunity to not only contribute, but to lead. COP27, later this year, is Africa’s COP where this link between prosperity and nature will at the heart of building resilience to climate change and to building sustainable livelihoods.

But, first, we need coordination across financial institutions to get the right data to unlock investments. That is why the United Nations Economic Commission for Africa (UNECA) and the financial sector development agency FSD Africa have joined together to launch the African Natural Capital Alliance (ANCA).

Led by some of Africa’s leading financial institutions and partnered with the TNFD, the ANCA will help financial institutions, finance ministries and regulators manage the risks and capture the opportunities tied to Africa’s natural capital.

Over the coming months, the alliance will work with financial institutions operating across the continent to help them better understand their exposure to nature-related risks and opportunities. This includes testing the TNFD’s draft framework among a group of pioneering members. These African financial institutions will share data and learnings from their pilots, acontribute to shaping this crucial standard.

The story of natural capital in Africa need not be one solely of risk and vulnerability. If protected and harnessed intelligently, Africa’s natural endowment can generate hundreds of thousands of new jobs and help reshape the economic system to suit the continent’s natural riches. The case is clearer than ever for Africa to seize its moment for global leadership.

This opinion editorial was originally published in the Mail & Guardian.

COP26 Highlight – Financial sector greening: Building foundations for sustainable finance in developing countries

Posted on by Kihingu Inc

By 2025, more than a third of global assets under management could be ESG-aligned. With public budgets constrained in the wake of the Covid-19 pandemic, this mass transition by the financial sector has the capacity to drive green, inclusive, and resilient growth in the real economy. However, with limited skills, data, regulations and policies to support green finance, many of the most climate-exposed developing countries struggle to attract sustainable investment. At the same time, the greening of the global financial system must account for the unique challenges and opportunities in regions outside of Europe and North America or risk entrenching existing barriers to funding.

This event brings together expert voices from developing countries and private finance to show how nations with emerging financial sectors can lay the right foundations to tap into global pools of ESG-aligned capital and use it to accelerate the growth of green businesses. It will provide replicable examples of green financial market building and launch a conversation running through to COP27 on how developing countries can take a more prominent global role in transforming financial systems.

On Finance Day, 03 November, we convened a panel on Financial sector greening: Building foundations for sustainable finance in developing countries where policymakers, donors and the private sector came together to discuss how developed and developing countries can work collaboratively to help the latter develop local markets for green finance, attract a greater share of global sustainable investment, and shape international frameworks, standards and reporting.

Moderator: Dr Nicola Ranger – Deputy Director, UK Centre for Greening Finance and Investment

Panellists:
Ayaan Zeinab Adam – Senior Director and Chief Executive Officer AFC Capital Partners

Zoe Knight – Managing Director and Group Head of the HSBC Centre of Sustainable Finance

Mark Napier – CEO, FSD Africa

Alexia Latortue – Deputy CEO, Millennium Challenge Corporation

Watch recording here>>

Building resilience against flooding in urban areas

Posted on by Kihingu Inc

Flooding in urban areas across Africa is on the rise. The continent needs to implement risk-management techniques to ensure its cities are resilient to climate change and the devastation it can cause. This article explores possible ways Africa can build resilience against flooding in urban areas.

Across Africa the annual wet season sees our news reports and social media feeds “flooded” with images of commuters wading through rain and sewerage to get home, cars washed off roads and businesses and livelihoods floating on busy streets. Then, the cleanup begins, the news forgets, people rebuild and, before long, the process repeats.

But it shouldn’t be this way and if we don’t act now the situation will only get worse.

Take Lagos in Nigeria as an example: annual flooding in Lagos has risen in severity over recent years, as climate change progresses. In 2018 alone, flooding caused $4 billion worth of damage, costing around 4.1% of Lagos State’s GDP. The city struggles to manage and recover from these floods, which not only causes disruption to business and social activity but also threatens to eventually make the city unlivable.

Lagos is not alone. More than 70 urban areas face significant flood risks, with 171 million people in sub-Saharan Africa exposed to the dangers of flooding.

In 2019, over 1,000 people were displaced, with roads and bridges destroyed after several days of constant rain in Dar es Salaam. The same happened in 2017 and 2018. In August, at least seven people died after floodwater inundated Addis Ababa

While people will routinely think about taking out insurance for their cars and to cover their health needs, too often they don’t insure against risks like floods. In 2019, SwissRe estimated that 91% ($1 billion) of losses from climate risks in Africa were uninsured.

We need to better manage risk to make our cities more resilient to climate change and the devastation it can cause.

But where do we start? Using Lagos as an example, we combined data, interviews, and models to see how flood risk in the city could be better managed and identified five key takeaways for improvement.

Number one, while flooding happens regularly, most public agencies and private businesses can’t quantify the risk. This includes insurance companies who often struggle to determine their own clients’ exposure. Or think of it this way; how do you know how high to build the bridge, when you don’t know how high the river flows when it floods? When we know this, we can build investment cases for resilient infrastructure and bespoke insurance products.

Which links closely to our second finding: the lack of usable consistent data. Too often data is missing or fragmented. When we lack data, we lose the ability to accurately model risks and impacts. And when we do have data, there is a need for more collaboration between stakeholders to ensure it is used meaningfully.

Third, trust is critical. Throughout the world, consumers can be sceptical of insurance companies and the same is true here. Innovative insurers are looking to address this through deliberately seeking out opportunities to offer clients real value. This also means that insurance companies should move beyond just policy sales, and instead become advisers who can better help clients understand and manage the exposure of their business or property.

Fourth, from flood sensors to satellite-based early warning systems, technology can have a profound impact on how we identify and respond to immediate threats. Partnerships are needed to develop and realise these opportunities, and this requires strong leadership from the local business community and public administration. The insurance industry, and indeed the broader financial sector in Nigeria, have a crucial role in developing local innovation and collaboration, and in leveraging the readiness of African and global reinsurers and experts to provide finance and support.

But as always, even the best data and innovations can only go so far. Leadership is critical. Insurers can step up by adjusting their corporate strategies, but they also need partners with whom to act. In Lagos, institutions such as the Lagos Resilience Office, the Financial Centre for Sustainability Lagos and the Lagos Business School could provide tangible solutions as well as practical advice. Alongside this, agencies such as UKAid funded FSD Africa and other global experts can facilitate support and investment for this process.

Lagos is just one example, but many of the findings offer insights for cities across the continent. With flooding likely to get worse, it is critical to act now to help our cities and communities withstand the flood.

Insurers have a big role to play, and many institutions, including FSD Africa, are ready to partner with innovators to develop new solutions. It’s vital this work is prioritised – to safeguard development gains made in recent years, boost sustainability and protect livelihoods.

This opinion piece was originally published in ESI Africa on 03 October 2021.

 

Developing Nairobi as a financial hub will open the region to climate finance

Posted on by Kihingu Inc

When it comes to the big debates about climate change, Africa is the forgotten continent. It receives less than 3% of global climate finance and yet 30 out of the 40 most climate-vulnerable countries in the world are in Africa. It contributes the least to global warming and yet extreme weather events are growing in both frequency and severity with a shocking knock-on impact on biodiversity loss.

However, while we tend to see Africa merely as a victim of climate change, this ignores the fact that could be a large part of the solution as well.

From the forests of Gabon to the Congo Basin in Central Africa, the continent is rich in natural capital while countries like Kenya have been leading on the shift to green energy with 90% of its energy production already in renewables. Although progress has been too slow and fragmentary, African countries have been getting themselves ready to receive a much bigger share of global climate finance. Once this is invested in green projects, it will benefit the whole planet.

Kenyan President Uhuru Kenyatta’s visit to London has highlighted Kenya’s role as a leader in green finance.  The country has already removed tax on interest on green bonds. It has drafted a green fiscal policy incentives framework covering the entire whole economy and is now considering a carbon tax as well. In addition, Kenya’s inaugural sovereign green bond is now imminent.

This is significant in several ways not least that it is about a new type of relationship between sub-Saharan Africa’s 3rd biggest economy and the UK; one based on investment rather than aid, whilst at the same time showing how smart, targeted British support, which has been crucial to the development of the green bond, can help unlock that investment.

There can be no better symbol of that new relationship than the agreement, announced between the City of London and Nairobi’s International Financial Centre (NIFC), backed by one of the UK’s biggest financial institutions. NIFC has been established to make it easier and more attractive for firms to offer financial services and related activities in Kenya and the region, reinforcing Kenya’s position as a hub for investment in the region. The hope is that the NIFC will provide a huge boost to investment in Kenya, and it is expected that an increasing amount of this will be from the UK and green.

For UK investors who may have shied away from what they regarded as risky investments, green bonds offer an attractive route to investing in developing markets because of the greater transparency requirements they need to be verified as genuinely green.

For Kenya and other developing countries, green finance is attractive because of the huge growth in ESG funds chasing investment opportunities. This is particularly important at a time when these countries are having to deal with the financial impact of the Covid pandemic.

If they are to truly capitalise on this opportunity, they will need to provide assurance to investors that they can offer a stable, regulatory environment. Having a clear tax and contract enforcement framework is vital.  But they will also need to demonstrate their commitment to a green economic development pathway.

One of the biggest challenges for Kenya and other African countries is to create investment grade projects that are large enough to absorb the capital that is already available. For instance, a large institutional investor in the UK might look for a minimum investment size of $50-150m but they might only be allowed to take a small proportion of the total capital being raised. These two factors together would imply a total deal size that is huge by African standards.

So more effort needs to go into, first, supporting green project transaction development, and, secondly, creating the guarantee structures that will help to get the project financing over the line.

We also need different conduits to pool institutional capital and give big investors diversified exposure to a basket of green projects, so that Africa can get the capital it needs to build a sustainable future. That is where initiatives like the NIFC can play a big role in ensuring that Africa is no longer the forgotten continent but a leader in the green finance revolution.

This opinion piece was originally published in the print version of the East African on 30 July 2021.

FSD Africa celebrates key milestones announced during the President of Kenya’s visit to London in July 20

Posted on by Kihingu Inc

The visit to London by Kenya’s President, HE Uhuru Kenyatta, starting 27th July saw the announcement of a number of projects with which FSD Africa is proud to be involved.

President Kenyatta was welcomed by the UK’s Foreign Secretary Rt Hon Dominic Raab and the Lord Mayor of London, William Russell, to an event at the Mansion House, in the heart of the City of London, the UK’s financial hub.

The Nairobi International Financial Centre

One milestone that captured headlines was the announcement that Prudential, one of the UK’s most established insurance brands, is to join the new Nairobi International Financial Centre as one of its anchor clients.

For FSD Africa this represents the culmination of six years of work, starting in September 2015, during which we have facilitated the incubation of the NIFC providing financial and technical assistance on behalf of the UK government.  We continue to provide support, including tax and strategic commun
The aim of the NIFC is to position Kenya as a leading financial services centre in Africa attracting long-term, foreign investment to the country and the region, thereby delivering sustainable economic growth and creating jobs. It will also provide an important conduit for green finance which will be crucial to fund Africa’s efforts to combat the effects of climate change.

When financial firms come together working in proximity, there will be an exchange of ideas and technical expertise and we should expect financial markets to become more innovative and competitive, making it easier for those seeking capital to find it on more affordable terms.

Green, affordable housing

Another key announcement was the Kijani initiative, a partnership between FSD Africa Investments and the UK Climate Investments, through which the UK government is committing £35 million (Ksh 5.2 billion) to the development of green affordable housing in Kenya.

Kenya needs at least 250,000 new homes annuallyet the housing demand, yet only 50,000 new homes are built. The investment will help address this through a new 10-year locally managed fund which aims to deliver around 10,000 new green, affordable homes for low-income families.

Importantly it will also support the development of sustainable building as a new green asset class for local investors through a new housing market intelligence portal led by the Centre for Affordable Housing Finance in Africa, designed to provide housing finance investors with the data they need to make investment decisions.

Capital market development

President Kenyatta also referred to the support Kenya had received from the UK on bond market development and especially on green bonds.  While there were no details on Kenya’s long-awaited sovereign green bond, we expect further announcements on this in the coming months.

The President referred in his speech to the importance of deepening the domestic debt market, improving pricing efficiency, and g the cost of credit in the economy.  This echoed the Budget Statement in June 2021 which confirmed plans to set up an Over-the-Counter secondary market platform for Government securities, to be in place by June 2022.

FSD Africa has been instrumental in the development of Kenya’s green bond market, through the Kenya Green Bond Programme, and of the OTC exchange.

 Patient capital

Both these projects have been a long time in development and are a good demonstration of FSD Africa’s “patient capital” approach. To bring about change, at scale, in financial markets takes time and depends on good ideas allied with technical ability, a collaborative approach and the development of good relationships with partners across the sector.

We thank the governments of the UK and Kenya for their support and look forward to more good news in t

Finalists selected for the DRC Innovation & Financial Services Challenge, in partnership with the Central Bank of Congo

Posted on by TIMOTHYRADIER

The DRC Innovation & Financial Services Challenge is a competition organised by FSD Africa in partnership with the Central Bank of Congo to promote the development of innovative, relevant and value-added payment solutions and financial services in the Democratic Republic of Congo.

Following an in-depth selection process, FSD Africa and the Central Bank of Congo have selected 6 companies from across the country to move forward to the final stage of the challenge.

The final stage of the competition will see each of the 6 finalists receive technical assistance from FSD Africa and the other contributors, including an individual grant proposal from FSD Africa of $13,000 USD provided to each of the finalists. At the end of the final stage, two winners will be selected to have access to the FSD Africa investment process, with the possibility of raising up to $130,000 USD each in funding.

Infoset SARL, A H&F Consulting SARL and Pluritone SAS were selected as finalists as they proposed innovative financial solutions to help with the economic and social development of the Congo. Smart Information eXchange SARL, Flash Services SARL and SINTEL SARL were selected for being innovative companies able to offer financial solutions to meet the needs of displaced populations and refugees in the region.

Henri Plessers, Country Manager, DRC, FSD Africa said: “Innovation in financial services is the key to ensuring democratic access to the core products that every person in Congo should be able to use. We are proud to be supporting this exciting competition and would like to thank all the applicants for their submissions and all thecontributors who agreed to support the development of these projects in the best possible conditions, with a view to creating value for the national economy and Congolese society. We look forward to working with the 6 finalists as the competition continues.”

Mr. Deogratias Mutombo Mwana Nyembo, Governor of the Central Bank of Congo, sa”We are pleased to congratulate the 6 companies selected for the second phase of the call for applications, as well as the other 93 candidates. We thank them all for the quality of the solutions proposed. We would also like to thank the members of the juries – from the Central Bank of Congo, UNHCR and FSD Africa – as well as the auditors for their consistent and meticulous work, despite the many constraints and the impact of the health context. Their verdict now allows us to select these 6 candidates for the next stage, with an individual grant of USD 13,000 proposed by FSD Africa, a programme funded by UK Aid.”

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Welcoming our new director for credit markets

Posted on by Kihingu Inc

We are pleased to have Jared Osoro join us as the Director for Credit Markets effective 1st September 2020.

Jared has two decades of experience as a practising economist in the financial sector. Prior to joining FSD Africa, he had the dual responsibility of being the Director of Research and Policy at the Kenya Bankers Association (KBA) and the Director of the KBA Centre for Research on Financial Markets and Policy®.

For nearly eight years in that role, he spearheaded analytical work on policy and market dynamics to support market deepening and policy engagement. The body of knowledge arising from the research work has supported financial sector players in Kenya and the broader East African region in their strategic endeavour to drive the development aspirations of the region.

Jared’s passion and intellectual interest in finance as an engine of development were nurtured at the East African Development Bank where he served as Bank Economist for more than ten years.

Jared holds a Master of Science Dee in Economics from the University of Zimbabwe and a bachelor’s degree in Economics from the University of Nairobi. Jared has published numerous journal essays for technical audiences as well as articles for a wider readership.

On his appointment, Jared said, “As I join FSD Africa, I have a good understanding of the various imperfections that characterize financial markets in Africa. While acknowledging the challenge of bridging the gap between the growth that the continent’s financial sector is experiencing and the ability of such growth to deliver development outcomes, I welcome the opportunity to be part of a diverse team that is dedicated to supporting the deepening of the financial system.”

“We are delighted to welcome Jared to FSD Africa. We will benefit greatly from his intellectual heft and unique insight into the regional financial system”.
“font-size: 21px; letter-spacing: 0.4px; color: #333333;”>Mark Napier, CEO

Jared lives in Nairobi with his wife and son. He is ideas-driven, hence his keen interest and obvious passion for reading.  He is an avid golfer playing as often as he can get a chance, which he regrets is as rare as once a week.

COVID-19 – a statement from the CEO

Posted on by TIMOTHYRADIER

 

Friends and colleagues,

COVID-19 represents an unprecedented challenge for all of us, including those of us working in developing markets to build a sustainable future for the poor.  Africa has so far escaped the worst of the pandemic but as countries across the continent impose measures to contain the spread of the virus, FSD Africa is also adjusting to the new realities.

With the health and safety of our staff and partners at the forefront of our minds, travel has been curtailed.  We are not planning to organise or attend workshops or conferences anywhere for the foreseeable future. Our people are working from home and our offices in Nairobi are closed to visitors although they will stay partially open to give staff members a quiet and place to work from, in case working from home is difficult.

However, we are determined to push forward with our plans, providing the best possible assistance to our partners across Africa.  Much of the technical support we provide can be done virtually and we will ensure that our partners continue to benefit from the global expertise that we can access through our networks.

We will also be giving careful thought to how our strategy can be modified to address the profound challenges that this pandemic has revealed.  The financial system can be part of a solution, both now and in preventing future disasters.  We welcome any ideas you may have on this.

If you are a grantee or if you are working for us under a contract, please stay close to your main counterparty at FSD Africa so that we can keep assessing how the pandemic is going to affect service delivery.

Useful links are as follows.  Advice from Kenya’s Ministry of Health can be accessed here – our offices are in Nairobi.  Information on the Government of Kenya’s stringent travel restrictions on inbound travellers into Kenya can be accessed here.  Finally, Public Health England’s website, which offers guidance on hygiene and social distancing, can be accessed here.

FSD Africa is open for business and we look forward to working with you, in solidarity, in the coming months.

Mark Napier
CEO, FSD Africa

—

Published on 18 March 2020

Launch of country diagnostic report on long-term finance in Côte d’Ivo

Posted on by Kihingu Inc

Together with our partners the African Development Bank, the German Economic Development Cooperation (implemented by GIZ), the Making
Finance Work for Africa (MFW4A) and Centre for Affordable Housing, we recently launched a country diagnostic report on long-term finance (LTF) in Côte d’Ivoire.

This country report focuses on infrastructure, housing, and enterprise finance in Côte d’Ivoire and applies a flexible definition of LTF that reflects the differing productive life of assets being financed, which may vary from 20 to 30 years in the infrastructure and housing sectors and 5 years or less for enterprises.

Given scarce fiscal resources and the underdeveloped status of domestic financial markets, the report identifies sizable long-term financing gaps in the infrastructure, housing, and enterprise sectors.

The Africa Long-Term Finance (LTF) Initiative seeks to rebalance the focus toward this perspective by (a) assembling data and establishing an “LTF Scoreboard,” on which individual countries are benchmarked against one another on the availability of LTF, and (b) undertaking country diagnostics in a number of African countries to identify specific hurdles faced in deepening markets for LTF and ways such hurdles could be overcome. This report is the first of these country-diagnostic reports.

We started the Africa LTF Initiative to assemble information about the provision of LTF across countries in Africa as well as to provide guidance as to how the public and private sectors can work together in strengthening the provision of LTF.

FSD Africa welcomes £90m commitment from UK aid to initiate a new phase of financial sector developmen

Posted on by TIMOTHYRADIER

Commitment comes as part of ambitious £320m UK aid package to strengthen Africa’s financial markets, designed to boost economic growth and reduce poverty at scale.

FSD Africa today welcomes a £90m commitment from UK aid, part of a £320m package that will initiate an ambitious new phase of financial sector development across the continent. Announced ahead of the <a “https://www.gov.uk/government/topical-events/uk-africa-investment-summit-2020”>UK-Africa
Investment Summit in London, the package includes funding for 8 existing local Financial Sector Development programmes and to set up and scale new FSDs in high-priority markets.

The new commitment, announced by DFID Secretary of State Alok Sharma, represents the start of an important new phase of financial sector development in sub-Saharan Africa. The package from UK aid recognises that a comprehensive, integrated approach to financial market development in Africa is required to realise the continent’s significant economic potential and address the United Nation’s global goals. The £320m commitment, therefore, provides funding for innovative programmes that enable access to finance amongst micro-enterprises and individual households, but also ambitious programmes that drive business and infrastructure investment through capital market development. It also means operating closer to the interface between finance and the real world.

Announced ahead of the landmark UK-Africa Investment Summit, this £320m package reinforces the UK government’s commitment to accelerating the flow of critical long-term investment into Africa’s high-potential economies, and to harnessing UK and the City of London’s expertise to help position the continent as a world-leading investment destination.

Africa’s substantial investment potential is clear, with many African countries outstripping global economic growth in recent decades. London is already the top market of choice for Africa’s businesses and we want investors to seize the exciting opportunities that Africa offers.

 

These new initiatives, announced ahead of the UK-Africa Investment Summit, will make it easier, greener and more secure to invest in Africa, mobilising billions of pounds of sustainable investment to help end poverty

Alok Sharma, UK International Development Secretary

The next frontier for financial inclusion

Building on the success of over a decade of programming by FSDs and their partners, which has helped increase access to finance to 43% of adults in sub-Saharan Africa, this new funding package represents the next phase of the financial inclusion effort. New programmes led by FSD Africa and the FSD Network will improve regulation, market information and financial products and channels to connect millions of these newly financially included households with access to basic services, like energy, affordable housing and healthcare. This work will also will drive investment into financial markets to make them more innovative, competitive and accessible to those who need them.

Within five years, FSD Africa and the FSD Network aim to improve access to basic services for 7m people across sub-Saharan Africa and reach 22m individuals and 3.9 micro-enterprises and SMEs with improved financial services, with a focus on traditionally marginalised groups.

We are delighted to welcome this significant new commitment from UK aid, that will allow us to scale our programming over the next five years. This commitment represents an important step forward in our approach to financial sector development.

 

The new package recognises that capital markets have a critical role to play in making financial markets truly inclusive and that innovative investment is needed to complement other market-building work, such as regulatory reform.

 

African financial markets are a long way from playing the kind of role needed to address profound challenges on the continent like jobless growth and to capture new opportunities, such as in regional e-commerce.

 

This new programme will allow us to work with our partners to address the intractable financial sector issues that have held markets back. It shows the UK continuing to be the global thought-leader in financial sector development, as it has been for over two decades.

Mark Napier, CEO, FSD Africa

An expanded role for capital market development

The new funding package also places a renewed emphasis on strengthening Africa’s nascent long-term finance markets, a driver of job growth and a specialism of the FSD Africa team. This includes significant new programmes to help overcome the challenges currently faced by investors at a regional and local level: addressing persistent regulatory barriers; providing more timely, reliable market information; and enabling the development of pioneering new products, such as Green Bonds, to build confidence for future transactions. Increasing access to long-term finance ensures that governments and businesses alike are able to invest in the basic services that are critical to poverty reduction, from essential infrastructure projects to healthcare and education.

A new chapter for the FSD Network

The £320m package also marks an important step forward for the FSD
Network. After over 10 years of operation and UK aid support, the FSD Network now comprises 9 mature FSD programmes, with a strong track-record of impact, unparalleled local insight and a powerful network of relationships with local regulators, policy makers and industry bodies.

From 2020, FSD Africa and the FSD Network will build on that strong foundation to collaborate on addressing the common challenges that our distinct markets share. Led by new dedicated FSD Network staff and infrastructures, FSD Africa and the FSDs will design and lead a range of collaborative programmes; from multi-country climate finance work and knowledge-sharing on gender inclusion to cross-border remittances and e-commerce and the common application of the latest impact measurement standards.

The new commitment will support the 8 existing FSDs within the FSD Network, including; FSD Kenya, FSD Mozambique, Enhancing Financial
Innovation & Access [Nigeria], Access to Finance Rwanda, FSD Tanzania,
FSD Uganda, FSD Zambia and the FinMark Trust [SADC region].

The £320m package also includes funding to expand the reach of the FSD Network, specifically to set up and scale new FSD programmes in high-priority markets, including: Ethiopia, Ghana, Sierra Leone and the West African Monetary Union. FSD Africa will help to establish these new FSDs, which will then operate as independent entities, able to adapt to the distinctive needs of each country and to build crucial local-level relationships. The new FSDs will also join the FSD Network, enabling them to benefit from, and contribute to, continent-wide knowledge sharing and essential cross-border collaboration.

On behalf of the nine existing members of the FSD Network and those new FSDs in formation, our sincere gratitude to the UK Government for this generous, constructive, and thoughtful five-year commitment.

 

We pledge to broaden and deepen our innovative work across Africa to make money work for low-income families, women, youth, the excluded and those who need financial services the most. This new package will enable us to apply finance – in all its forms – to the challenge of the Sustainable Development Goals.

 

The FSD Network will enhance livelihoods for poor people; improve access to basic human services where finance is a barrier; and enable a sustainable future, particularly addressing the financial aspects of climate change and illicit capital flows.

Betty Wilkinson, Chair of the FSD Network Council

The £320m commitment will be dispersed to FSD Africa and local FSDs incrementally over five years, providing support until 2025. To enable strong, operational and strategic oversight, DFID representatives sit on the Boards of both FSD Africa as well as individual FSDs within the FSD Network.