Fefisol II

Equity : May 2022

BIO has granted a EUR 3 M loan to FEFISOL II, an FI fund focused primarily on sub-Saharan Africa

Amount

€ 3,000,000.00

Type of investment

Equity

Development impacts

Local economic growth
Private sector consolidation/innovation
Financial inclusion
Food security & rural development
Promotion of ESG best practices

Beneficiary locations

Middle East & North Africa:

Sub-Saharan Africa: Burkina Faso, Côte d'Ivoire, Democratic Republic of Congo, Kenya, Mali, Niger, Uganda

Investment field

Investment Companies & Funds

Activity

KK.64.302 FI Fund

Organisation

Fefisol II

Website

https://www.inpulse.coop/managed-funds/

Domicile

Luxembourg

More investments in

Fefisol II

Subsidy € 350,000.00 (2022)

FEFISOL II, the European Solidarity Financing Fund for Africa II, is a fund that will provide medium to long-term loan financing, essentially in local currency, to African MFIs and agricultural entities, including smallholder producer organisations and small agricultural entities.

Development impacts

Local economic growth
Financing of different MFIs and a strong MSME and agricultural and/or rural outreach, enabling effects expected in terms of job support, value-added and local economic growth

Financing and strengthening of agricultural entities engaged in the production or processing and sale of agricultural products, which can directly contribute to strengthening the agricultural value chains, creating (rural) employment and fostering local value-added economic growth.
Private sector consolidation/innovation
Focus on the private sector through direct or indirect financing in a widely underserved market.

More than 75% of the loan portfolio will be invested in Sub-Saharan Africa

Fund with a strong impact mindset (including clear impact commitments and targets) and supported by social investors with strong knowledge and high experience

Providing Technical Assistance (TA) to help investees consolidate businesses and guarantee their economic and social viability, including through strengthening their governance, management, and ESG practices, as well as the uptake of environmentally sustainable practices and digitalization of processes and products (for MFIs)
Financial inclusion
Financing MFIs that provide mainly income-generating activities, with at least 50% of their portfolio dedicated to financing rural clients and/or vulnerable populations and/or micro and small enterprises, including in the agricultural sector.  

Contributing to the diversification of the financial offer
Food security & rural development
Supporting MFIs with a strong rural presence and outreach with high potential in terms of financial inclusion and economic development

Targeting smallholder producer organizations and agricultural SMEs - agricultural entities - that source over 60% of their raw material from smallholder farmers, supporting economic activities in rural areas and strengthening local agri-value chains, and that target premium and certified markets - especially fair trade and organic.
Promotion of ESG best practices
Widely accepted microfinance standards are promoted and monitored for MFIs, including the Client Protection Principles of SMART campaign

Focus on agricultural entities with at least one organic or Fairtrade certification (93% in FEFISOL I). TA will support more than 50% of agricultural investees to i.e. provide them certifications, improve their practice and access premium markets.

E&S Impact

Fefisol II will improve the fund’s Environmental and Social Management System (ESMS) to align it to the IFC Performance Standards (IFC PS). Furthermore, the fund manager agreed to extend its exclusion list to the EDFI fossil fuels items, to adopt an E&S due diligence tool dedicated to agri-projects and to develop some basic E&S legal clauses to be included in the contract with its investees. Finally, the fund’s team will attend E&S trainings.

Current situation

The strong focus on positive impact ensures that the fund manager already embeds some E&S aspects into its investment practice, especially with microfinance institutions. It also offers Technical Assistance to help its investees adopt E&S corrective measures.

Risk Category: B