Africa’s First Microfinance Fund For Sustainable Farmers Launched
Africa, July, 21 2011 -
Africa’s first specialist rural microfinance fund supporting fair trade and organic small business, FEFISOL, the European Solidarity Financing Fund for Africa, was launched earlier today by the European Investment Bank, Agence Française de Développement and a broad grouping of development bodies, social investors and microfinance service providers.
The EUR 15 million FEFISOL fund will provide much needed microfinance funds for poor rural households across Africa and help finance small scale investment in agricultural activities.
Three social investors with more than 25 years of experience working with microfinance institutions, agricultural cooperatives and small businesses in emerging countries will provide specialist support to the fund. These include French development association Solidarite International pour le Developpement et l’Investissement (SIDI), who will manage of the FEFISOL fund, Belgian development organisation Alterfin and Etimos from Italy. The FEFISOL fund is expected to double in size by 2013 and will assist microfinance institutions that help poor households in rural areas where no formal lending exists. Rural microfinance will support income generating activities and reduce dependence on outside help.
“The European Investment Bank recognises FEFISOL’s dedicated support for organic African farmers and improving access to fair trade markets. We are committed to helping microfinance foster economic development and poverty reduction across Africa.” said European Investment Bank Vice President responsible for Africa, Plutarchos Sakellaris.
“Microfinance is key to enhancing economic growth in sub-Saharan Africa. The FEFISOL initiative will reach remote rural communities, helping small businesses develop and progressively reduce poverty.” Added Marie-Hélène Loison, Head of the Private Equity Department of PROPARCO, the private sector arm of AFD.
“During our 25 years of activities as a social investor, we noted that the microfinance sector, especially in Africa, had ample room for further progress; that this called for a new stage of development, to respond to new needs for financing the impact – both economic and social – of the sector, particularly in the rural context. These needs translate, among others, in the availability of increased resources, on a stable and longer term basis, and, from a technical point of view, more sophisticated tools and competences, while preserving the dynamics of new initiatives and experimentation that were at the heart of this success” said Christian Schmitz, Managing Director of SIDI.
FEFISOL will fund microfinance institutions and producer organisations across the continent in local currency. African microfinance bodies will benefit from a subsidised loan provided by AFD that absorbs foreign exchange loss on local currencies. Dedicated support for fair trade and organic producer organisations will help improve the quality and development of their activities over the long-term, notably by gaining access to new market sectors. SOS Faim and the African Microfinance Institutions Network will assist in this process, along with specialist fair trade organisations based in Africa.
The support of private and public investors has been crucial in the successful launch of the fund. The European Investment Bank will provide EUR 5m for FEFISOL to help develop microfinance operations and small holder organisations in rural areas across Africa and improve access to fair trade and organic export markets. AFD is providing a subsidised EUR 3m loan to mitigate foreign currency risk and Proparco structured the equity investment of FISEA for a total consideration of EUR 5.4m.The Norwegian Microfinance Initiative (NMI) will also make a EUR 1.8m contribution to the Fund along with Crédit Coopératif, Societa Europea Finanza Etica ed Alternativa (SEFEA), Développement International Desjardins (DID) and Fondation Caritas France.
Technical assistance will also be provided to help microfinance institutions develop new products, improve business planning and develop legal and human resources capabilities. This initiative compliments the REGMIFA rural microfinance fund launch earlier this year and supported by the European Investment Bank and European development finance institutions.