Pillar: Early-Stage Finance

Rethinking benefit sharing in African carbon projects

As the global carbon market evolves, the demand for high-integrity carbon credits is surging—credits that not only mitigate climate change but also deliver meaningful socio-economic and environmental benefits. Africa, with its rich natural resources and diverse communities, is uniquely positioned to lead this transformation. However, achieving this potential requires a shift towards more equitable benefit-sharing mechanisms that genuinely empower local communities.

In this report, we provide a comprehensive analysis of the critical role Benefit-Sharing Mechanisms (BSMs) play in ensuring that carbon projects deliver real value to those most affected. Through detailed case studies from Zambia and Kenya, we explore how traditional practices, community agency, and robust governance can be integrated into carbon projects to maximize their impact.

This report offers actionable insights for policymakers, project developers, and investors seeking to build an African-centric approach to benefit sharing—one that not only attracts investment but also fosters transparency, accountability, and fairness. By rethinking benefit sharing, Africa can unlock its carbon potential, create sustainable development opportunities, and contribute to the global fight against climate change. Join us in exploring how we can collectively pave the way for a more just and sustainable future.

Sudan emergency food response rapid assessment

On 15th April 2023, war erupted in Sudan between the Sudanese Armed Forces (SAF) and the paramilitary Rapid Support Forces (RSF). The war broke out when Sudan’s main planting season was approaching. Aside from impacting production, the supply routes were disrupted. The fighting concentrated in Khartoum, the country’s hub for farm input suppliers, Agri processors, logistics and finance. There was destruction and looting of factories, markets, businesses, and private residences. The situation was exacerbated by disruption of the health, water, fuel, electricity, and financial systems.

As a result, the conflict has contributed to a food insecurity crisis. The most recent Integrated Food Security Phase Classification (IPC) report identified over 20 million Sudanese who are currently experiencing acute food insecurity – 42% of the population and the highest number ever recorded in the country.1 Consequently, the Foreign and Commonwealth Development Office (FCDO) Sudan and FSD Africa commissioned a rapid assessment of the agri-food and enabling payment systems in Sudan, to inform a coordinated emergency response that promotes food security.

The assessment was carried out in August -October 2023 and involved extensive consultations with 52 stakeholders who had real-time insights, from across agri-food, financial, and enabling sectors such as logistics and energy, as well as civil society, donors, international non-governmental organizations (INGOs), and other multilateral organizations. These consultations were complemented by a review of 46 publications, non-public documents, and recent studies detailing the context of agri-food and financial sectors in Sudan as well as current market intelligence, to the extent available.

We are pleased to share the report which provides insights on the current situation and critical challenges across both agri-food and financial & payment systems. The report proposes potential interventions for development partners, including FCDO Sudan and FSD Africa, to take forward into rapid deployment. Sudan urgently needs multifaceted support. The ideas shared for resilience-building interventions in this rapid assessment aim to complement the many ongoing efforts of Sudanese farmers, civil society, businesses, financial institutions, international donors and others interested in the welfare of the people of Sudan. FCDO Sudan and FSD Africa are actively considering how they can contribute to these efforts and welcome collaboration.

Fintech for Climate Resilience

Climate change impacts are likely to send more than 130 million into extreme poverty by 2030. Africa, Latin America, and South Asia are among the most vulnerable regions, where natural disasters, food insecurity, and health hazards are already exacerbating the vulnerability of local communities. There is on urgent need to buildclimate resilience among households and communities vulnerable to the impacts of climate change.

Startup innovators ore at the forefront of creating the tools and services people need to manage disasters, adopt their assets and livelihoods, and build long-term resilience, They ore collecting data on disaster risk, launching insurance products, crafting regenerative agricultural models, and designing ways to access carboncredit markets.

As promising and impoctful as these innovations ore, they struggle with many of the challenges that face early-stage ventures: funding, talent, customer acquisition, partnerships, and more. At the heart of these challenges Is a commontheme: the difficulty of creating monetizable, commercial models that ore scalable with venture funds.

Fortunately, !he last decade hosshown us that fintech can enable greater accessibility and affordability of products for underserved, last mile populations, leveraging digital payments, satellite data, online marketplaces, and embedded finance infrastructure lo bring down costs. deliver access for low-income populations, and drive scalability of business models. Such achievements explain why investments in fintech companies increased from nine billion in 2010 lo over 220 billion in 2Q21.

Supporting digital payments in cash programming in Sudan

We commissioned Strategic Impact Advisors (SIA) to examine the challenges and opportunities of providing digital financial services (DFS) in Sudan, particularly to displaced populations and low-income segments. The aim was to explore ways of supporting digital payments in cash programming. The assignment examined the supply side by conducting a private sector stakeholder mapping and product summary. These identified players, including government entities, involved in delivering digital finance, their roles, responsibilities, and products and services provided.

On the demand side, SIA leveraged the Connectivity Usage and Needs Assessment (CoNUA) data by the Norwegian Refugee Council (NRC), supported by GSMA, to conduct additional analysis on beneficiary digital readiness and assess the key challenges stopping them from either accessing or using their mobile devices in more diverse and confident ways. It also explored key barriers to digital inclusion within these groups and what stakeholders might do to address them. The CoNUA analysis covered White Nile and West Darfur.

Based on the analysis of the key barriers for both the supply and demand side, SIA came up with recommendations for how the humanitarian sector can help improve access to financial services and strengthen the underlying digital payments infrastructure. SIA also developed a high-level revenue potential analysis to help service providers assess the market opportunity for delivering digital cash transfers.

Rebuilding livelihoods in displacement

Together with FSD Uganda, we have been supporting the Financial Inclusion for Refugees (FI4R) project where 3 financial service providers (FSPs) have been offering financial products to refugees and host communities in West Nile and South-West regions. The implementing partners – Equity Bank Uganda Limited, VisionFund Uganda, and Rural Finance Initiative – started off activities in these areas in September 2019.

In January 2020, the project engaged BFA Global to undertake a baseline study that provided an in-depth analysis of the incomes, expenses, and financial management of refugees in Uganda, compared their status then, with their lives prior to leaving their countries of origin and their journeys to Uganda. This was followed by four rounds of financial diaries over two years using BFA Global’s financial diaries methodology.

The results from each round are below.

The financial diaries involved tracking incomes and spending habits of 41 households recruited from the three implementing partners. During each round, qualitative interviews were also conducted with the households. In November 2021, an end-line study was conducted to understand the evolved financial behaviour of refugees, get feedback on financial products offered by the implementing partners and assess how new financial products were used by the refugees. The Covid-19 pandemic occurred during the study period and offered the opportunity to track how households coped with the situation. Below is a timeline of the research activities undertaken dung the project.

The end-line report dubbed, Rebuilding Livelihoods in Displacement has shown there is increased use of cash at home as refugees seek easy access to money in case of emergencies, despite the growth of phone ownership which supports mobile money transactions. According to the study, refugees found the use of cash convenient in responding to emergencies, especially those that are health-related. The study which sought to examine the financial strategies employed by refugees attributed increased phone ownership to the 2019 legislative changes which allowed refugees to access SIM cards in their names. Ownership of smartphones is 9% higher among female refugees compared to men.

The report further revealed that while refugees have a wide range of income sources, self-employment remains one of the primary sources of income. However, proceeds from agriculture are on the rise with more people paying attention to the sector because of reduced food rations. The report found access to banking agents to be low which limited the use of formal financial services. Most agents are found at the centre of the settlements which is far from some of the refugees.

The report recommends the development and refinement of financial products to cater to the needs of refugees. These could include branchless banking to make financial services more accessible and microinsurance for medical emergencies. The report recommends the provision of renewable energy solutions for lighting and cooking and upskilling for economic self-sufficiency.

With about 30 million refugees on the continent, the findings could provide insights for other refugee populations outside of Uganda.

Journey to a new Digital Finance Professional

The development of digital finance tools and systems is a key pillar of inclusive finance. One of the key challenges facing the penetration of digital finance in Africa is digital finance capacity and knowledge gaps among professionals and policymakers in financial institutions and governments across the continent.

In 2016, FSD Africa partnered with the Digital Finance Institute (DFI) to address this challenge. Through this five-year partnership, we supported the pilot and scale of the institution’s flagship professional program – Certified Digital Finance Professional (CDFP).

Since then, we have been able to achieve some of the below milestones:

As a result of this work:

Capacity in digital finance professionals and services providers has increased.
Institutional capacity for digital finance regulation has increased in both regulators and digital finance providers.
Digital finance policies, regulations and directives have been developed or adapted by DFI alumni.
Cross-Sector collaboration has increased resulting in new country-based initiatives on policy, product, customer needs and inclusion.

This partnership leaves the sector with a specialised capacity building utility company (Digital Frontiers), an e-learning school focused on building capabilities and skills aligned to the SDGs (Digital Frontiers Institute), a services business (Gateway), and the formation of a new global Alliance that represents the Inclusive Digital Finance Profession.

Financial inclusion for refugees in Uganda: baseline report

We have launched a landmark study in Uganda with the aim of understanding the different sources of income for refugees in collaboration with FSD Uganda and BFA Global. This study aims to uncover the uses of their finances and the financial products and services they use and supporting the development of financial products and services offered by Equity Bank Uganda Limited (EBUL), Vision Fund Uganda (VFU) and Rural Finance Initiative (RUFI) and evaluating the impact of those products and services on refugee livelihoods.

Uganda is host to over 1.1 million refugees, most of whom are new arrivals from July 2016 as a result of instability in South Sudan. Uganda also has a progressive policy towards refugees allowing them to freely move, work, go to school and access healthcare. The refugee population also forms part of the country’s National Development Plan. According to 2018 figures from UNHCR and Office of the Prime Minister (OPM), refugees are economically active. A total of 45% are engaged in entrepreneurship or formal employment, 24% in farming, 15% receive remittances, and 6% receive assistance from UNHCR/WFP. Despite this, financial inclusion remains a challenge for the refugee population, with few financial service providers (FSPs) aware of or interested, preferring to focus on more traditional banking clients. As a result, most refugees are only able to access financial services through informal savings groups, SACCO linkage banking and mobile money. The limited new FSP activity that does exist tends to focus on mobile-enabled cash transfer services.

Assessing the demand for goods and services among refugees and IDPs in the Democratic Republic of Congo

In 2018, together with ELAN RDC, we commissioned a study carried out by Digital Disruptions in three locations in the Democratic Republic of the Congo (DRC) – South Kivu, Tanganyika and Kasai – to investigate the demand for goods and services among refugees and internally displaced persons (IDPs). Its aim is to provide a baseline for financial service providers (FSPs) and others who see the opportunity to do business by providing services to this sizeable population of people.

We have supported FSPs that have successfully brought financial services to refugee and IDP groups in Rwanda and Uganda. We sponsor design innovation competitions and offer strategy and funding support, and guidance from lessons learned. ÉLAN RDC aims to reduce poverty, improve the daily lives of the Congolese and facilitate their inclusion in market systems by addressing constraints and allowing them to benefit from economic growth.

Designing products and developing institutions to serve low-income women

Through our support, over the last five years, Women’s World Banking partnered with three large African banks — in Nigeria (Diamond Bank), Tanzania (NMB) and Malawi (NBS Bank) — on an array of projects to reach low-income women and girls with credit and savings projects, accompanied by financial education.

Major takeaways from this publication include: How to develop a successful digital savings product for women, how to create sustainable financial products for youth and their families, must haves for credit programs focused on women-owned businesses, and best practices for creating leadership programs to drive change.

Zimbabwe fintech ecosystem study

The opportunities for fintech in Zimbabwe are wide-ranging, but the sector needs support to enable greater innovation, growth and development. To date, fintech in Zimbabwe is largely a story of digital payments. Driven by a range of factors, the volume of digital payments grew from 38 million in 2012 to 367 million in 2016, and then accelerated to 1.96 billion in 2018.

As of July 2019, the 50 fintechs identified, primarily working in payments and remittances, have a key role to play to provide innovation for the financial sector.

This study report looks at the supply and demand of the fintech market and its patterns of growth as well as examins the interaction of supply and demand within the market ecosystem.

The report also presents a summary of the strengths, weaknesses, opportunities and threats for fintech in Zimbabwe and provides a series of recommendations for the short, medium and long term.