Regional MSME Investment Fund For Sub-Saharan Africa S.A., SICAV- SIF
Status: Approved investmentWhy disclosure?
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In case of questions, please contact us at disclosure@fmo.nl
Disclaimer
The information as disclosed is indicative and provided on an "as-is/as available" basis for general informational purposes only and should not be construed as financial, legal or investment advice, nor as a commitment or an offer to arrange or provide any financing. The final decision to provide financing is subject to the terms and conditions of FMO in its sole and absolute discretion. When providing links to other sites, FMO bears no responsibility for the accuracy, legality or content of the external site or for that of subsequent links. The information on proposed investment for high-risk investments is made available in the language relevant to the country or region where the bulk of operations take place. Translations of any information into languages other than English are intended as a convenience for local stakeholders. In case of any discrepancy, the information provided in English will prevail.
Who is our customer
The Regional MSME Investment Fund for Sub-Saharan Africa S.A., SICAV-SIF (REGMIFA) was launched in 2010 by KfW in close collaboration with experienced development finance institutions (DFIs), international financial institutions and donor governments. The mission of REGMIFA is to foster economic development and prosperity, as well as employment creation, income generation and poverty alleviation in Sub-Saharan Africa. REGMIFA supports this mission by providing innovative financial products and technical assistance support to eligible partner lending institutions that serve micro-, small- and medium-sized enterprises (MSMEs). The fund is managed by Symbiotics Asset Management SA, a specialized asset management company based in Geneva, Switzerland, which acts as both Investment Manager and Technical Assistance Facility Manager.
What is our funding objective?
FMO has been involved with REGMIFA (the Fund) since its foundation, following a strategy of supporting the fund's growth and of ensuring its financial viability. FMO also supported the start-up phase of the Fund by financing a market study with capacity development financing. FMO's new USD 10 million investment marks FMO's fourth investment in the Fund. Similar to the previous transactions, FMO invests in the Fund's B-shares, which is a mezzanine-like capital layer. The investment is fully redeemable after 7 years. The funding objective is to provide liquidity to the Fund for on-lending to microfinance companies, Fintechs and smaller SME banks across Sub-Saharan Africa.
Why do we fund this investment?
FMO's investment in REGMIFA is complementary as the Fund invests in a large portfolio of smaller FIs in Sub-Saharan Africa (SSA) with mostly local currency financing. The Fund is able to invest in FIs that are too small for FMO to invest in. In addition, the Fund can invest in countries that FMO is currently not operating in, including several Least Developing Countries. The Fund fills a financing gap by addressing the unmet demand for local currency financing to MSMEs in SSA and as such it is highly impactful and additional to FMO. FMO's early involvement with REGMIFA played an important catalyzing role for other lenders to co-invest. This new investment in B-shares will catalyze additional private sector investments into the Fund by strengthening the capital buffer. The Reducing Inequalities Label is applicable to this transaction.
What is the Environmental and Social categorization rationale?
REGMIFA has an E&S categorization of B, which can be explained by the customer being a fund investing in partner lending institutions that on-lend to micro and small businesses. 89% of loans are on-lent to MSMEs with an average loan size of USD 831 for micro-loans and less than USD 14k for SMEs. The Fund has little exposure to higher risk sectors (e.g. agriculture: 11%). E&S risk management is fully integrated in the Fund's investment process and portfolio management. Given the high focus on investment in microfinance companies, the client is considered a high risk for Consumer Protection Principles (CPP), however has a strong risk management process in place for assessing the CPP risks in underlying investments and supporting clients to integrate and promote responsible finance practices in line with the SPTF-Cerise's Consumer Protection Principles. FMO analyses risks from different perspectives and assessments. In the case of microfinance investments, the E&S classification is typically low because the exposure generally is limited to retail and micro-entrepreneurs. The risks that might come with microfinance investments, such as, among others, over-indebtedness, transparency of interest rates, and responsible pricing, are covered by FMO in other assessments such as the Client Protection Principles (CPPs). In case of high contextual risk, a human right assessment can be carried out.
More investments
| Date | Total FMO financing |
|---|---|
| 6/30/2021 | USD 10.00 MLN |
| 6/21/2022 | USD 7.53 MLN |
- Website customer/investment
- https://regmifa.com/
- Region
- Africa
- Country
- Africa
- Sector
- Financial Institutions
- Publication date
- 5/3/2024
- Effective date
- 6/14/2024
- Total FMO financing
- USD 10.00 MLN
- Funding
- FMO NV
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Risk categorization on environmental and social impacts, A = high risk, B+ = medium high risk, B = medium risk, C = low risk
Environmental & Social Category
(A, B+, B or C) - B