Project detail - Regional MSME Investment Fund For Sub-Saharan Africa S.A., SICAV- SIF

Who is our prospective 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 will invest 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 want to 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.

More investments

Date	Total FMO financing
6/30/2021	USD 10.00 MLN
6/21/2022	USD 7.53 MLN