FEFISOL MICROFINANCE FUND II

Promoter – Financial Intermediary

ALTERFIN CV,SOLIDARITE INTERNATIONALE POUR LE DEVELOPPEMENT ET L'INVESTISSEMENT SCA

Location

• Africa, Caribbean and Pacific

Description

Equity participation in a successor microfinance investment fund operating throughout Africa with the objective of providing debt to rural microfinance institutions (MFIs) and small agricultural entities

Additionality and Impact

A large proportion of the unbanked population worldwide lives in developing countries in Sub-Saharan Africa. Many of them are poor, live in rural areas and are smallholder farmers. An EIB investment in the Fonds Européen de Financement Solidaire II (FEFISOL II, Fund) provides an important opportunity to support rural development in Africa and thereby reduce poverty, by addressing the market failure of lack of access to finance for small rural enterprises and agricultural organisations, which has led to under-investment in rural development. The Fund is an ideal match for the goals of the EU in the region, for example as expressed in the Cotonou Agreement, and of the EU's ambition to support private sector development. FEFISOL II will mainly finance MFIs and agricultural entities and expects to support microloans to 5.6m final beneficiaries over the life of the loan. It is proposed to have the EIB commit EUR 5m to FEFISOL II. As an investor in the predecessor fund, FEFISOL I, EIB was involved very early in the conceptualisation of FEFISOL II, supported the investment advisors in the governance set-up of the Fund, and key areas of its risk management framework.

Objectives

The EIB's investment in the FEFISOL II fund will support MFIs and agricultural producer organisations in Africa. In line with the first fund FEFISOL I, FEFISOL II seeks to improve access to finance in Africa by financing and supporting MFIs in rural areas. In addition, the fund plans to finance producer organisations supporting farmers who represent an important segment of the working poor. Via both target groups, FEFISOL II will contribute to social and economic development in rural Africa.

Sector(s)

• Services - Financial and insurance activities

Proposed EIB finance (Approximate amount)

EUR 5 million

Total cost (Approximate amount)

EUR 35 million

Environmental aspects

By supporting the implementation of socially and environmentally sustainable practices, FEFISOL II aims at improving living standards, reducing inequalities and achieving sustainable development.

Procurement

N/A

Status

Signed - 23/12/2021