News Type: Press release

Morocco’s Ministry of Economy and Finance launches new study

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Morocco’s Ministry of Economy and Finance launches new study – alongside FSD Africa – exploring financing options for small and medium sized enterprises in Morocco’s burgeoning Green Economy

  • Morocco’s small and medium-sized enterprises (SMEs) businesses represent 93% of all companies in the country and employ over 46% of its workforce which generate only 40% of the nation’s gross domestic product (GDP) and 31% of its exports.
  • SMEs are expected to play an important role in delivering Morocco’s Nationally Determined Contributions (mitigation and adaptation will require USD 38.8 billion and USD 40 billion, respectively), with around 40% of the mitigation actions and 55% of the adaptation actions to be implemented by SMEs either directly or through subcontracting to large enterprises (LEs).

Flagship research provides estimates of Morocco’s substantial green economic opportunity – as well as its alignment with the country’s efforts to address Nationally Determined Contributions – and explores the provision of green finance to SMEs so critical to the sector’s growth.

 Rabat, 23 May, 2023 – Morocco’s Ministry of Economy and Finance (MEF), alongside partners at FSD Africa and at the British Embassy in Morocco (Foreign Commonwealth Development Office), has commissioned a study that surveys the accessibility and diversity of financial assistance available to SMEs and MSMEs in Morocco, and the capacity of these businesses (which represent 93% of all companies int eh country, and employ 46% of its workforce) to accelerate Morocco’s transition to the green economy.

The provision of green financing has risen to prominence in the Kingdom, with several offers emerging in the last few years to support green projects. From public institutions mandated to support Moroccan business, to regional and continental development finance institutions and local commercial banks, there is an increasingly sophisticated eco-system of players able to – via debt, equity and grants – stimulate the growth of small, innovative Moroccan enterprises. The growing demand for green finance instruments creates a residual financing gap that needs to be addressed by innovative financing schemes.

The study concludes that the country’s commitment to sustainable finance growth will require coordinated effort from various stakeholders. Following the publication of this study, FSD Africa will outline the design and implementation of a new financial instrument that will increase the availability and accessibility of green financing for Morocco’s SMEs. In line with the updated Moroccan Nationally Determined Contributions (NDCs), SMEs are expected to play an important role in delivering Morocco’s Nationally Determined Contributions (NDCs), with around 40% of the mitigation actions (USD 15.5 billion) and 55% of the adaptation actions (USD 22 billion) to be implemented by SMEs either directly or through subcontracting to large enterprises (LEs).

Commenting on the project, Madam Minister of Economy and Finance, Ms. Nadia Fatah, added: “We are delighted to note the relevance of this study covering an analysis of supply gaps and needs of green financing targeting SMEs for the design a new instrument that could respond to the unmet demand of SMEs in terms of green financing. Indeed, this work comes at the right time to support the efforts undertaken to implement the Kingdom’s strategic orientation aimed at making sustainability a pillar of development. In this regard, we would like to acknowledge the support of British cooperation in carrying out this study.”

UK Ambassador to Morocco, Simon Martin noted: “In March 2023 the United Kingdom published its updated Green Finance Strategy. It emphasises the growth opportunity the transition to net zero represents for businesses, SMEs in particular, and the need for dedicated support to back them up. It further highlights how FSD Africa’s work in Morocco is already helping to stimulate capital flows in support of green economic growth. I am delighted that with this new study, we are able to take the next step in supporting Morocco’s flourishing green economy and expand our bilateral financial cooperation further.”

FSD Africa CEO, Mark Napier, added: ‘’Morocco’s potential as a green economy is extremely promising, but it’s critical that the country’s economic backbone – small and medium sized businesses – is encouraged and supported in their efforts to engage in green projects and activities. Only by devising a system of green financing can the Kingdom’s green aspirations be achieved. This study constitutes an important and timely intervention which, we hope, will stimulate discussion among policymakers, legislators, private capital, and other stakeholders.”

Emerging from the GAP analysis was a clear picture of areas requiring action within the green finance space. Certain key industries – such as construction, transport, electricity production – have a high greening potential but are underserved by green lines of credit, whereas areas such as agriculture are well catered for. Moreover, the study concludes that key sectors such as fishing and sustainable housing remain virtually untouched by green finance offerings and must be addressed. Finally, the research points to a lack of key instruments such as green insurance and guarantee products, or equity funds exclusively designed for green activities.

The study makes a series of recommendations, in areas ranging from public awareness to regulation and tax, technical assistance and technology, among others.

FSD Africa Investments backs Africa Climate Ventures

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The investment represents the first institutional backing for the venture builder, which aims to assemble a portfolio of businesses focused on climate action across Africa, boosting continental participation in global carbon markets.

22 May 2023, Nairobi – FSD Africa Investments (FSDAi) has invested £1 million in Africa Climate Ventures (ACV), a pioneering venture builder working to build a US$45 million portfolio. ACV will catalyse the carbon asset class in Africa by building innovative businesses focused on solving our generation’s greatest challenge and at the same time capturing a significant share of global carbon markets in Africa. The venture represents a series of “firsts” in Africa: from its entirely Africa-based founder team and its permanent capital structure based in Kigali, to its exclusive focus on carbon mitigation, capture and removal, the continent’s fastest evolving sector.

ACV represents a historic evolution in Africa’s carbon ecosystem and will contribute directly to capital mobilisation in climate action. Indeed, by 2030 ACV aims to eliminate one million tonnes of carbon every year while improving the lives of 50 million Africans and creating at least 5,000 jobs on the continent.

The venture builder features a peerless bench of experienced Africa-based founders with a record of pioneering innovation on the continent and championing disruptive enterprises. James Mwangi is a 2022 Climate Breakthrough Award Winner and the founder of the Climate Action Platform for Africa, a non-profit organization that aims to help Africa achieve broad-based economic growth through climate action leadership. James is best known as a co-founder of Dalberg Advisors, the firm’s first elected Global Managing Partner and then Dalberg Group’s Executive Director. Mohamed Cassim is a South African investor best known as an angel investor, the Chair of MFS Africa Board, and the Founder of Abacus Advisory. CJ Fonzi was also a Partner at Dalberg Advisors, with the firm for over a decade he served as the Group Director of Innovation and then founded Dalberg’s Rwanda business in 2017.

This team is working to build a portfolio of climate positive businesses across Africa, with the ultimate aim of launching and scaling 15 ventures in the next four years. ACV is seeking to build this portfolio by investing to: i) bring proven global climate technology to Africa, ii) accelerate and de-risk the continental expansion of technologies and business models that have gained traction in one or a few African market(s), and iii) add carbon revenue streams to existing African businesses with the potential to scale climate positive solutions.

ACV has adopted a structure more in-line with a global north venture studio in which the vehicle is structured as a permanent capital vehicle which sells equity rather than securing fund management mandates. This has allowed ACV to begin building ventures in parallel with fund raising, which the founders believe is paramount given the urgency of climate change, and the need for Africa to quickly establish itself as part of the solution.  There are already two ventures in the portfolio: KOKO Networks Rwanda, a co-venture between ACV and KOKO Networks which already provides sustainable bioethanol cooking fuel to over 900,000 Kenyan families and aims to reach a million Rwandan families by 2027, and Great Carbon Valley, a Kenya based developer of direct-use clean energy applications currently focused on developing a direct air capture and permanent carbon storage site in Kenya.

ACV’s pipeline of further opportunities demonstrates the breadth and versatility of the venture builder. They range from biochar and enhanced rock weathering technologies, to biodigester and e-mobility businesses, to harvesting carbon revenue for green growth across the portfolio of a well-established continental private equity fund. These are businesses and technologies which have the capacity to transform African economies and make a meaningful difference in climate change but they require risk capital and hands on venture builders to scale, attract further investment, and reach their potential.

FSDAi’s investment in ACV takes the form of a convertible loan of £1 million to support the venture builder’s formalisation and build additional ventures as demonstrations to attract investment from larger funds. On top of this investment, FSD Africa will provide £75,000 in grant funding to support the development of premium carbon credits and the marketing of portfolio and pipeline companies. Moving forward, FSDAi has secured the right to invest up to £8 million in ACV’s planned 2024 close.

FSDAi is the investment arm of specialist financial development agency FSD Africa which receives funding from the UK government and provides tools and resources to drive large-scale change in financial markets and support sustainable economic development. ACV is the latest in a series of investments by FSDAi in innovative green investment vehicles including Persistent Energy, a leader and pioneer investor in the off-grid energy and e-mobility sectors in Sub-Saharan Africa, and Nithio, which invests in renewable off-grid energy.

FSDAi has committed to support ACV on the basis that its activities will actively contribute to Africa’s transition to net-zero, the promotion and acceleration of the continent’s green sector, and the creation of quality, skilled jobs (around 600 will be created via this initial £1 million investment) in a strategically vital sector. Ultimately, FSD Africa believes that ACV can help the continent’s businesses participate in global carbon markets and capitalise on the continent’s unrivalled capacity for profitable climate-smart businesses. Moreover, FSDAi’s investment aligns with the emerging priorities of African policymakers who will gather in Kenya in September at the Africa Climate Summit to co-ordinate a unified, collective pan-African approach to the discussions at the next COP in Dubai.

Anne-Marie Chidzero, CIO of FSD Africa Investments, said: “In backing the ACV partners, FSDAi sees a tremendous opportunity to galvanise global investment and finance to promote Africa’s status as the pre-eminent climate investment destination.’’

James Mwangi, CEO of Africa Climate Ventures, said: “We are thrilled that FSDAi has joined us in building ACV.  The involvement of FSDAi has already been invaluable in refining the ACV model. As we work towards ambitious objectives, we believe FSDAi will be a key partner in ensuring our success.”

Rachel Turner, Director, International Finance, Foreign, Commonwealth & Development Office, said: “We are excited to be supporting this enterprising partnership between FSD Africa and ACV. The need to mobilise climate finance for Africa has never been greater, and this can’t happen without innovations that can build the pipeline of opportunities to absorb and deploy capital into productive, sustainable and inclusive uses. Tapping into the developing carbon market ecosystem represents a significant opportunity for Africa to raise capital at affordable terms whilst contributing directly to the climate challenge. This partnership with an impressive African team is pioneering in its approach.”

Regulations for insurance sandbox to deepen innovation, financial inclusion in Nigeria

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May 17th, 2023, Lagos – In a strategic move to deepen insurance penetration and financial inclusion through innovation in Nigeria, the National Insurance Commission (NAICOM) has released the insurance regulatory sandbox operational guidelines.

The guidelines are designed to determine insurance solicitation or distribution within the insurance value chain, facilitate insurance products; underwriting; policy & claims servicing, etc., before making them public.

The Insurance Regulatory Sandbox Operational Guidelines include Market Conduct Guidelines for Takaful and Retakaful Insurance Operators and Enterprise Risk Management Framework for Takaful and Retakaful Operators in Nigeria.

Takaful Insurance is generally based on the concept that the negative impact of a specific incident is distributed among a group of persons instead of making the person who experienced the loss bear its results alone. The means to achieve this is to establish a common fund to which everyone exposed to a specific risk may contribute in such a way that indemnity will be paid from that fund.

Retakaful is the Islamic alternative to conventional reinsurance and operates on Shariah principles. It is a way for a primary insurer to protect against unforeseen or extraordinary losses.

FSD Africa supported by the UK government has been providing technical support to NAICOM to enhance its ability to fulfill its development, regulation, and supervision mandate to support market development, market stability promoting innovation, and protection of policyholders in line with international standards.

The launch of the regulatory sandbox is part of the NAICOM’s strategic objective to drive innovation of products and services, and ensure operators are professional in the conduct of their businesses and in line with best practices.

Commenting on the launch of the regulatory sandbox:

British Deputy High Commissioner in Lagos, Ben Llewellyn-Jones said:

“Insurance remains a critical tool in building the resilience of businesses, livelihoods, and households globally. With the persistence of climate risks / disasters and fluctuating economic realities in Nigeria, it is more important for the insurance industry to leverage innovation to develop more contextualised products and services that would mitigate the risks for Nigerians and their businesses.

“The UK government is keen to see this innovation delivered in consultation with the insurance industry and regulators to maximise the usefulness and impact of this tool.”

Director, Risk and Resilience, FSD Africa, Kelvin Massingham said:

“It is vital for NAICOM to balance the need to facilitate and promote innovation with the protection of consumers and the adequate management of the risks that may arise. Support on market development focusing on regulating for innovation, will establish an environment that responds to innovation and market changes on an ongoing basis by building internal capacity, instruments and re-shaping their engagement with the private sector to foster a culture of innovation, learning and testing innovations.”

Another guideline released last week by NAICOM was the Enterprise Risk Management (ERM) Framework which is intended to establish minimum Risk Management Standards for Takaful Insurance Operators (TIOs) in Nigeria.

Under this guideline, all Takaful Insurance undertaking will henceforth establish and maintain a sound ERM Framework to support the adequacy of its solvency and comply with all relevant Sharia rules and principles.

This framework is expected to be “comprehensive in nature, dealing with all reasonably foreseeable and relevant material risks of the funds making up the Takaful Undertaking, and shall be formalized through a set of policies, consistently applied, the TIO’s approach to determining the appetite for risk, its process for managing risks and its Governance related to risk.

South African insurance stakeholders commit to sustainable insurance and building a resilient economy

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May 12th, 2023, JOHANNESBURG – South African insurance stakeholders have stressed the importance of all businesses across Africa in engaging with the net-zero ambitions, agreeing that by playing its role, the insurance industry will be critical in building a sustainable environment for the future.

FSD Africa and the Financial Sector Conduct Authority (FSCA) held a C-Suite breakfast session with CEOs of South Africa’s Insurance Industry and Regulators with a call to action to commit to the Nairobi Declaration on Sustainable Insurance as a first step toward creating a sustainable insurance industry and building resilience for the continent.

The event was an opportunity to cover the risks, challenges and opportunities facing the South African insurance industry in adapting to and mitigating climate change and responding to broader sustainability objectives. The session highlighted key considerations for South African insurance market players to enhance the resilience of the South African economy and have a responsive sector primed for contributing toward a more sustainable future. It is estimated that South Africa holds 70% of the African insurance industry’s market premiums1. As investors and stewards of significant financial resources, the sector must consider the role they play on the continent in driving sustainability objectives.

Formally launched in April 2021, the Nairobi Declaration on Sustainable Insurance (NDSI) is a declaration of commitment by African insurance industry leaders to support the achievement of the UN Sustainable Development Goals (SDGs). The Declaration was first unveiled in Nairobi, Kenya, at the UN Environment Programme’s Principles for Sustainable Insurance (PSI) initiative 4th Africa summit – hosted by ICEA LION Group as a founding signatory – and momentum continues to build.

With backing from more than ten inaugural signatories, the Declaration brings together senior leaders to accelerate solutions to a set of major sustainability challenges – ranging from climate change and ecosystem degradation to poverty and social inequality – that have assumed even greater urgency in a post-Covid-19 world. Currently, 102 organisations across the continent have signed up to the declaration.

Since its launch, FSD Africa has supported the Declaration through a series of events and thought leadership engagements as it encourages more institutions to sign up. The first in a series of planned C-Suite meetings was hosted in Lagos, Nigeria, in March 2022 by UNEP, FSD Africa and the National Insurance Commission (NAICOM) of Nigeria. Other C-Suite events have been held in Cairo, Egypt, Nairobi, Kenya and Addis Ababa, Ethiopia.

Speaking during the event, Kelvin Massingham, Director, Risk and Resilience, FSD Africa said: “Mainstreaming resilience into Africa’s economic development is essential to secure future prosperity and sustainable growth. Now is the time for the African insurance sector to play the significant role it should in creating this resilience. The Nairobi Declaration on Sustainable Insurance’s proactive and market-based approach is exactly what we need, and the commitment today is a strong statement to work together towards an African-led solution.”

Unathi Kamlana, Commissioner, Financial Sector Conduct Authority said” The financial sector is fundamental as an allocator of capital within an economy. We will continue working collaboratively with stakeholders, in South Africa and more broadly, to ensure that our sector is efficiently and effectively able to intermediate and direct capital flows in support of sustainable outcomes, while appropriately pricing for risks and promoting investor confidence.”

Anthony Phillipson, British High Commissioner to South Africa, said: “The financial sector has a key role to play in delivering our climate commitments. I am happy to see that sustainable finance is fast becoming a cornerstone of our UK-South Africa green partnership. I particularly welcome collaboration to strengthen capacities and embed sustainable practices across the insurance and pension industries in South Africa.”

FSD Africa, Swiss Re Foundation and National Bank of Rwanda Launch Partnership to Boost Financial Inclusion in Nine African Countries

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20th April 2023, Kigali, Rwanda – FSD Africa has partnered with the Swiss Re Foundation and the National Bank of Rwanda to launch BimaLab Africa Acceleration Program – a pioneering accelerator program that aims to grow insurance coverage among low-income consumers by investing in innovative solutions in nine African countries.

The expanded pan-African program is designed to support entrepreneurs in developing innovative solutions for the insurance sector. It targets Insurtech (insurance technology) innovations from Egypt, Ethiopia, Kenya, Ghana, Morocco, Nigeria, Rwanda, Uganda, and Zimbabwe.

The expansion of BimaLab is supported by $500,000 financing from the Swiss Re Foundation, which is among the world’s leading providers of reinsurance, insurance, and other forms of insurance-based risk transfer.

FSD Africa, Swiss Re Foundation and National Bank of Rwanda Launch Partnership to Boost Financial Inclusion in Nine African Countries

BimaLab Africa has been devised as a model which addresses crucial challenges facing African consumers, especially those at the base of the economic pyramid. While insurance provides a vital safety net for customers at risk of external threats including health issues, economic disruptions, and natural disasters, it has, for many Africans, been unavailable – only 3% of Africa’s GDP is driven by insurance, less than half the world average of 7%.

Kelvin Massingham, Director of Risk and Resilience, FSD Africa, said, “BimaLab offers hands-on venture-building support to high-impact start-ups that improve the resilience of underserved and climate-vulnerable communities. We are grateful for the financial support provided by the Swiss Re Foundation, which has enabled us to democratize the successful BimaLab model across the region.”

The incubator, which combines the demonstration of global best practices with in-depth local knowledge, offers applicants a rigorous five-month program in which they are supported with expertise, resources, and support for scalability and market readiness.

Stefan Huber Fux, Director at Swiss Re Foundation said: “We are committed to making insurance more accessible and affordable for low-income consumers in emerging markets, and we believe that supporting programs like BimaLab is one way we can help to achieve this goal. New digital technologies have the potential to enhance financial inclusion by providing access to unserved and underserved customers.”

The partnership will focus on three main areas: enhancing access to financial services; increasing insurance penetration; and promoting innovation in the financial sector.

Hon. John Rwangombwa, Governor, NBR said: “The National Bank of Rwanda is committed to promoting financial inclusion in Rwanda, and this partnership with FSD Africa and Swiss Re Foundation is a key step towards achieving that goal. We believe this partnership will help to increase access to financial services, promote innovation and boost economic development across Rwanda and Africa”.

BimaLab Africa expands on successful Insurtech initiatives in Kenya, Nigeria, and Ghana to provide African entrepreneurs with the tools and support needed to develop innovative insurance solutions. The program has helped 40 insurtechs scale their innovations, resulting in 20 partnerships and 43 new products in Kenya, Ghana, and Nigeria. BimaLab has reached over 500,000 customers and raised over USD 1 million, promoting innovation and inclusion in the insurance industry. The new program aims to contribute to the growth of the African insurance market and is implemented by Tellistic Technology Services.

 

The Women Leaders for Climate Action takes the lead in advancing sustainable finance through Green and Gender bonds capacity building for financial players in Zambia

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15th March 2023, LUSAKA – Starting today, the Women Leaders for Climate Action (WLCA) will be hosting a two-day Roundtable Event on Green and Gender Bonds with   potential green and gender issuers and arrangers in Lusaka.

This event will build stakeholder capacity on green and gender bonds requirements and needs. The event will explore the climate financing needs in Zambia and potential adaptation projects, and facilitating deep dives into the steps needed to make green and gender bonds one as key capital market instruments that will help the country meet climate and gender equality outcomes from target investments. Zambia already has in place a supporting regulatory framework to support green bond issuances, the Securities (Green Bonds) Guidelines of 2019.

In view of the need for Zambia to mobilise $50 billion to fund its National Determined Contributions (NDCs), it’s crucial that key players explore a range of financial instruments required to fund climate action in Zambia. It’s against this background that WLCA since 2022 have explored the possibility of a bond that could deliver green outcomes and gender equality outcomes. This is in full recognition that Zambian women face the brunt of climate impacts and are also leading enterprises adapting to new realities that need financial support.

WLCA has partnered with FSD Africa to deliver, the roundtable event. WLCA aims to collectively mobilize resources to support large scale response to climate change through financial instruments such as the gender green bond. The network seeks to enhance women’s resilience to climate change by eliminating gender gaps in accessing climate finance in Zambia. The women’s network is also focused on raising voices of communities impacted by climate change especially women.

Speaking at the same event, WLCA Co-Chairperson and WWF Zambia Country Director Nachilala Nkombo said that the organisation understands the challenges that exist in accessing climate finance for developing countries, the challenges are especially worse for women led innovations.

“This is the reason we as WLCA have offered ourselves to provide linkages for women entrepreneurs and innovators to local and global climate financing opportunities so as to close the financing gap. It is worth noting that WLCA’s objectives contribute to the economic transformation and environmental sustainability pillars of our 8 NDP by strengthening citizen participation in the economy as well as enhancing their mitigation and adaptive capacity to climate change for sustainable inclusive growth.”

As WLCA’s implementing partner, FSD Africa will be working with Zambian capital market stakeholders to identify potential issuers of demonstration green and gender bonds and lend its support.  FSD Africa is a is a specialist development agency working to help make finance work for Africa’s future. It is funded by UK aid from the UK government. This support is part of the Green Growth Compact, a framework for collaboration between the UK Government and the Government of Zambia to follow a green growth development pathway.  This will contribute to global ambitions on emissions reductions whilst protecting Zambia’s own unique biodiversity and natural capital for the benefit of future generations.

Sarah Bloom, Head of Economic Development, Foreign and Commonwealth Development Office, Zambia (FCDO) and WLCA Co-Chairperson said……

“The Government of Zambia has identified green growth and environmental sustainability as a key strategic pillar to achieve the aspirations of the 8th National Development Plan (8NDP) and Vision 2030.  The UK, through Women Leaders for Climate Action is pleased to play our part to build the capacity of market players and to introduce new and innovative products to Zambia, such as green and gender bonds as alternative funding sources to drive climate resilient sustainable development.”

FSD Africa has provided technical assistance towards the development of green and gender bond transactions across Africa, mobilizing over $400 million in the process. This entailed development and review of guidelines and listing rules in Kenya, Morocco, Ghana, Nigeria and Tanzania that have laid a solid foundation for green and gender bond issuances and subsequent listing on local exchanges. Through various demonstration transactions across the continent, FSD Africa plans to work closely with bond issuers to meet the $277 billion annual climate financing gap in Africa.

Evans Osano, FSD Africa’s Director Capital Markets had this to say:

“Zambia requires about $50 billion in climate finance to meet her enhanced NDCs. FSD Africa is delighted to support the development of capital markets in Zambia to provide much-needed long-term capital through diversified and innovative investment asset classes. By leveraging on her capital markets, Zambia is on the right track to enable the economy to realise its full potential and achieve impactful real and social sector outcomes.”

Through FSD Africa’s support, gender bonds issuances in Africa have now raised USD 52.7mn in local currency. These funds will help address the access to finance challenge that is prevalent amongst women entrepreneurs in Africa.  In addition, providing support for gender bond issuances continues to grow gender bonds as a distinct asset class, increasing appetite for impact investing amongst local investors. FSD Africa is particularly committed to ensuring that we support funding models that have a clear tracking mechanism for the use of proceeds.

Request for further information can be made by sending an email to bmilambo@wwfzam.org

Issued by
WOMEN LEADERS FOR CLIMATE ACTION

 

Former Climate Action Champion, Nigel Topping, to join FSD Africa as Senior Climate Adviser

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Nairobi, 17 January 2023 – FSD Africa is delighted to announce that Nigel Topping, until recently the UK’s High-Level Climate Action Champion, will be joining the organisation as a senior climate advisor to strengthen its offering in developing innovative approaches to addressing the impact of climate change in Africa.

Nigel was appointed as the UK’s High-Level Climate Action Champion in January 2020 ahead of COP26 in Glasgow, stepping down from the role in November 2022 after COP27 in Sharm-el-Sheikh. During this period, working closely with both the outgoing Climate Champion from Chile, Gonzalo Muñoz, and the incoming Climate Champion from Egypt, Mahmoud Mohieldin, Nigel worked tirelessly to promote climate action on the part of non-state actors – civil society and the private sector – and establish the Climate Champions Team as a formidable catalyst for climate action. The Climate Champions Team has been able to amplify its direct impact through an extraordinarily impressive range of innovative partnerships, including in Africa.

In his new role as a Senior Adviser, Nigel will complement FSD Africa’s work on climate finance, and particularly in innovative green financing.

It has been estimated that climate finance in Africa needs to increase by a factor of nine times (by an additional $250bn per annum) to meet the continent’s aggregate Nationally Determined Contributions and, in particular, to increase climate finance coming from the private sector which, at just 14% of the total, is a much lower share than in other regions. There is also a need to spread climate finance more equitably around the continent (as more than 50% of climate finance currently goes to just 10 countries) and to change the mix of climate finance more towards equity (or grants) than debt which the continent can scarcely afford at present.

To achieve this, FSD Africa is planning to both scale up its work in green finance and support new partnerships with organisations looking to drive climate and nature-positive action and which see advantage in leveraging FSD Africa’s financial sector expertise and networks.

Commenting on his appointment, Nigel Topping praised FSD Africa for its trailblazing work in developing Africa’s financial markets and innovation in tapping capital using new instruments such as green bonds and gender bonds. He observed that FSD Africa has been supporting green finance in Africa for several years having initiated green bond programmes in Kenya and Nigeria in 2017. It has used this experience to build out an extensive and diversified portfolio of other projects in the climate and nature space.

He commented: “Climate finance will be critical for enabling Africa to adapt to the growing impacts of climate change and to ensure that its future development path is consistent with the goal of limiting global warming to no more than 1.5°C. I look forward to working with the FSD Africa team of experts across the African market to fast track the development of innovative climate finance and nature programmes and ensure that more benefits are realised by the population and investors across the markets.”

FSD Africa’s CEO Mark Napier welcomed Nigel Topping’s appointment:

“We are delighted to have Nigel joining our team. Nigel is an incredibly impressive and collaborative leader with great sectoral knowledge on climate action. I have no doubt at all that he will be able to accelerate the impact of our work on climate, deepen our technical knowledge in relevant sectors and join us in brokering exciting new partnerships.”

FSD Africa’s Board Chair, Frannie Léautier, joined the CEO in welcoming Nigel Topping observing that a commitment to developing and implementing transformative adaptation programmes to tackle climate change in Africa will be key in tackling poverty and inequality: “Nigel’s decision to join FSD Africa as a Senior Climate Adviser is a fantastic endorsement of the work that our team has been doing for several years to develop solutions to the continent’s most pressing challenge of the day – climate change. We will benefit greatly from his leadership and experience,” she added.

Innovative Rating Agency Launched to Boost Biodiversity Investments

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African Leadership University’s School Of Wildlife Conservation (ALU’s SOWC), Dalberg, and FSD Africa Investments bring together their in-depth expertise in biodiversity conservation and restoration, finance, and impact investments to form a partnership that will help investors measure and track the impact of their biodiversity-related investments over time.

NAIROBI, KIGALI, DAR ES SALAAM – A pioneering initiative aimed to boost biodiversity investments by helping investors measure, rate, and track their impact on biodiversity conservation and restoration – the Biodiversity Investment Rating Agency (BIRA) – was launched today by the African Leadership University’s School of Wildlife Conservation, Dalberg, and FSD Africa Investments.

Biodiversity is ranked as the third most significant threat to humanity, after carbon emissions and nuclear war.  Yet, less than 16% of the required funding is currently available for biodiversity, leaving a US$ 700 billion funding gap for biodiversity conservation and restoration. Private capital can play a critical role in closing this funding gap while tapping into an attractive asset class that is poised to grow. However, investments are currently limited because there is no standard way to measure, rate, track, and communicate biodiversity impacts. Investors are looking for simple, credible tools based on biodiversity science.

 Figure 1: Illustration of the biodiversity conservation funding gap

Illustration of the biodiversity conservation funding gap
Source: The Nature Conservancy, Closing the Nature Funding Gap, 2020

To address these challenges, BIRA will advise investors on identifying the opportunities for impact investing in the biodiversity sector, spotlighting relevant frameworks to measure biodiversity investment impacts, and provide existing aligned frameworks with guidance on how to make their tools investor friendly. BIRA aspires to see measurement frameworks that can provide simple answers to investors’ questions about the potential outcomes of biodiversity investments. BIRA will work in collaboration with existing frameworks that meet certain design criteria to develop modules that match measurement frameworks with investor needs.

FSD Africa Investments and Dalberg are excited to welcome ALU’s SOWC as the science and training partner for the initiative. ALU SOWC will bring its expertise in scientific inquiry, research, and training to ensure that the modules developed are credible and usable. BIRA will also lean on SOWC’s expertise to develop and launch training programs that will help bridge the existing knowledge gap in the market.

By bridging the gap between investors and the existing biodiversity measurement frameworks, BIRA will support informed decision-making by investors. Ultimately, this will increase investments in conservation and restoration, leading to positive biodiversity outcomes.

Mike Musgrave, Conservation Leadership Faculty, School of Wildlife Conservation, said:

“Institutional investment in biodiversity as an asset class will be the key to unlocking the billions of private capital we need to address climate change and promote the business of conservation.”

Devang Vussonji, Partner, Dalberg Advisors, said: “We have lost 68% of monitored animal populations between 1970 and 2016. We face a USD 700 billion funding gap in reversing this effect, and private capital will be essential in filling this gap. BIRA aims to attract private capital to the sector by making it easier for private investors to measure, communicate, and track biodiversity outcomes.”

Anne-Marie Chidzero, CIO, FSD Africa Investments, said: “FSD Africa Investments is proud to partner with Dalberg and the African Leadership University’s School of Wildlife Conservation to create the Biodiversity Investment Rating Agency. This innovative initiative to help investors measure and track the impact of their capital on biodiversity conservation and restoration will play a central role in increasing investment in the sector.”

BIRA invites technical partners and investors to join the founding partners in developing the initiative. Interested parties should contact Devang Vussonji at devang.vussonji@dalberg.com.

FSDAi Nyala Facility B.V. invests USD 1.5 million in equity into ARUWA Capital Management

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Amsterdam, 05 December 2022 – FSDAi Nyala Facility BV (FNF BV or Nyala) has invested USD 1.5 million in equity into Nigerian based ARUWA Capital Management. ARUWA is a Gender Lens Investing (GLI) Fund which provides capital and post-investment management support to Small and Growing Businesses (SGBs). This investment has brought the Fund to its target size of USD 20 million.

In addition to the investment, Nyala will provide post-investment catalytic support to ARUWA’s team focused on achieving a sustainably investable proposition with a robust team and governance.

This transaction is a high-profile deal in the GLI space. ARUWA Capital Management is a Nigerian GLI fund, founded in 2019 by seasoned investment professional, Ms. Adesuwa Okunbo Rhodes.

ARUWA’s investment thesis is to make healthy returns by investing in female-oriented, female-owned or female-led SGBs in real economy sectors with steep growth curve potentials, thanks to the leverage of technology. ARUWA’s post-investment support to its portfolio companies is also well thought through as it makes use of high-quality finance and administration expertise from a locally renowned consultancy with a strong track record in venture building.

Joris van Oppenraaij, Senior Investment Officer at Nyala Venture stated that “Pre-investment, we closely worked with ARUWA on attracting more institutional investors to speed up the closing of the fund. During that period, I witnessed the swiftness with which ARUWA’s team executes high quality deals, followed by post-investment focused and tailor-made support to their investees”.

“This is Nyala Venture’s first investment and is an excellent fit with Nyala’s catalytic mandate given ARUWA’s focus on Gender Lens Investing and on Small and Growing Business. As part of our mandate, we aim to build a new asset class of Local Capital Providers, such as ARUWA, to further strengthen and deepen the SGB Financing ecosystem in Sub-Saharan Africa” added Bart Schaap, Managing Director at Nyala Venture”

“This marks an important moment to celebrate as we back female fund managers in Africa, future and formidable allocators of capital for our sustainable future” noted Anne-Marie Chidzero, CIO FSDAi.  “This investment builds upon the Collaborative for Frontier Finance’s vision for Africa that Small and Growing Businesses need local capital managers to address the systemic gap in financing these engines of growth and jobs” concluded Drew von Glahn, Executive Director, Collaborative for Frontier Finance.

 

Swiss Re Foundation announces $ 500 000 grant for Africa’s Insurance sector

Posted on by TIMOTHYRADIER

The grant is to be channeled through FSD Africa’s BimaLab accelerator programme to boost innovation in the sector.

 Nairobi, November 30th, 2022 – Swiss Re Foundation has announced a USD 500,000 grant for Africa’s insurance sector to spur innovation of insurance solutions for the underserved. The funding, to be distributed through the FSD Africa’s supported BimaLab insurance accelerator programme, will unlock and accelerate the transformation of Africa’s insurance sector through innovative offerings for the sector’s unique landscape.

Recently, there has been increased attention to Africa’s expanding and promising insurance sector. At the COP27 Summit, over 85 African insurers pledged to create a financing facility to provide $14 billion to support communities impacted by climate change. The cover will help the continent’s most vulnerable communities deal with climate disaster risks such as floods and droughts, cementing the insurance industry’s position in driving the continent’s economic expansion.

Despite its massive potential, research by Brookings Institute indicates that Africa’s insurance sector has a low penetration of 2.78% compared to the global average insurance penetration rate of 7.23%.

Low awareness and low employment levels in the formal sectors, coupled with a lack of trust and experience with traditional insurance institutions, have been attributed to low penetration rates.

To harness the opportunities presented by the insurance sector, FSD Africa, with its partners, launched the BimaLab accelerator programme in 2020. The programme provides resources needed by talented insurtech founders of early to mid-stage start-ups to leverage insurance technology and promote insurance penetration in the continent.

The BimaLab program now in Kenya, Ghana and Nigeria has enabled 40 insurtechs to gain visibility and push for resources to scale their innovations. So far, 43 unique products and services have reached over 600,000 customers since the program started in 2020.

Plans to launch the BimaLab Accelerator Programme in Ethiopia, Uganda, Rwanda, Zimbabwe, Malawi, Egypt, and Morocco are underway.

The support of the Swiss Re Foundation will further facilitate the growth of high-impact insurtechs through introducing and scaling innovative products and services to the underserved African market.

Commenting on the new grant, Kelvin Massingham, Director of Risk and Resilience, FSD Africa, said: “The importance of the insurance sector to alleviate the challenges of today cannot be understated. While the African continent continues to report low insurance uptake, there are numerous opportunities for innovators in insurance. We are optimistic that through the grant, the underserved communities will soon start enjoying the safety net provided by insurance from many external threats like natural disasters, health threats, and economic disruptions.”

Elias Omondi, Senior Manager of Risk Regulations at FSD Africa, said: “The support of the Swiss Re Foundation is a significant step towards building an innovative and climate-focused insurance industry that will accommodate the evolving needs of the uninsured.”

Stefan Huber Fux, Director of the Swiss Re Foundation said “We acknowledge the role of the insurance sector in spurring the growth and development of the African continent. Through programmes such as BimaLab, the most vulnerable and low-income people will gain from innovative, affordable, and efficient insurance products and services.”