Following the success of the first FEFISOL fund, which closed in July 2021, its promoters – social investors Solidarité Internationale pour le Développement et l’Investissement (SIDI) and Belgian cooperative Alterfin – have structured a new fund dedicated to financing African rural microfinance institutions and agricultural entities sourcing from smallholder farmers in Africa.
Finance institutions the European Investment Bank, Proparco through its FISEA+ (the French Development Agency Group’s facility implemented by Proparco as part of the Choose Africa initiative), BIO, the Alternative Swiss Bank, Crédit Coopératif, Banca Etica and SOS Faim Luxembourg have signed up for a stake in the fund.
The FEFISOL II Fund is designed to respond to the crucial issues of financing vulnerable populations in rural areas in Africa and, more specifically, the financing of the agricultural sector. Managed by Inpulse (a Brussels-based investment manager and subsidiary of Crédit Coopératif and SIDI), FEFISOL II is structured to financially and technically support locally designed solutions to these challenges.
Social and environmental performance
In addition to SIDI and Alterfin, which are contributing €4.8-million and €2-million, respectively, the EIB and Proparco are each investing €5-million. The French social bank Crédit Coopératif and the Italian Banca Etica have also renewed their commitment. These commitments are expected to enable the fund to pursue and deepen its social mission.
FEFISOL II is posited to be able to build on the experience and the client base it has acquired, and focus its efforts on the quality of the services to be provided, therefore being even more ambitious in terms of social and environmental performance.
FEFISOL II will be implemented in more than 28 African countries and should eventually support 110 microfinance institutions or agricultural companies and cooperatives sourcing from smallholders, most of which are Fair Trade or organic certified.
The new fund will offer diversified and adapted financial products in 12 to 15 local currencies to avoid exposing partners to exchange rate risk and will implement specific assessment and monitoring tools for agro-ecological performance.
FEFISOL II will propose a new technical assistance facility with a more in-depth scope and upgraded procedures. Its aim will be to support its partners in strengthening their institutions and their resilience to climate change.
FEFISOL II is making its first closing at €22.5-million, and a technical assistance package of €1-million from Proparco via FISEA+, with the final objective of raising €6-million. The second closing will be in 2023. The first disbursements will be made in July.
By supporting the implementation of socially and environmentally sustainable practices, FEFISOL II directly aims to improve the living standards of vulnerable populations in rural Africa, reduce inequalities and promote sustainable agricultural development.
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