GOVERNMENT OF GHANA RESTORES LOSSES TO CUSTOMERS OF FAILED MICROFINANCE INSTITUTIONS (MFIS), BUT $150 OF SAVINGS REMAIN ‘IN JEOPARDY’ IN ADVANCE OF DEPOSIT-INSURANCE ROLLOUT
After the collapse of approximately 100 licensed microbanks in Ghana over four years, the country’s central bank, the Bank of Ghana, has announced it will refund deposits of up to GHS 10,000 (USD 2,000) per retail customer affected. Estimates of the total losses exceed GHS 1 billion (USD 200 million), including GHS 522 million (USD 105 million) in claims resulting from the collapse of DKM Diamond Microfinance in 2015. As of December 2018, the government has repaid 80 percent of the DKM Diamond deposits. The total number of customers impacted by all of the failures is in the tens of thousands.
The data is new, but it tells a familiar story. A recent FINCA survey of clients in DR Congo shows that women entrepreneurs are confined to the smallest, least profitable businesses. This finding reflects the burden of unpaid work and other social factors that put women at a competitive disadvantage. While many organizations, including FINCA, are working to shift the ground in women’s favor, seeing the facts in hard numbers gives us a realistic picture of the task ahead.
Unpaid Labor Puts Women Behind
Before venturing out of the house and into business, a woman has other tasks to accomplish. Standing between her and the door is a daunting pile of unpaid domestic obligations, including childcare, cleaning, gardening, fetching water, gathering wood and cooking. These activities, which have been valued between 10 to 40 percent of GDP, occupy more than four hours of a woman’s day, compared with 1.5 hours for men. In effect, by the time women get a chance to compete in business, men’s greater freedom of time and movement has given them a three-hour head-start.
Once they get past these family obligations, a woman will find that men already occupy the most lucrative business segments. Our survey in the DR Congo found that men dominate sectors like wholesale trade and manufacturing, while women compete among themselves in small trading businesses, where the profits and growth prospects are low.
A resounding cry heard across many impact investing reports, articles and blogs is that one of the biggest challenges facing the impact investing community is deal flow. The Global Impact Investing Network’s (GIIN) annual report for 2018 noted a key barrier facing the impact investing community is the “limited number of investment ready businesses.” A recent article in Entrepreneurmagazine noted “since impact investing, as an industry, is relatively ‘new’, the supply of investment opportunities offering impact, scale, and financial return often falls short of demand.” And the list goes on.
While now a commonly accepted diagnosis, this perceived lack of deal flow is actually the result of a very narrow definition of impact. The issue is not that there is a lack of investible companies, but rather the industry’s detrimentally narrow definition blinds investors to companies that are creating impact in other industries and geographies. We need to broaden this definition by closely analyzing the effects that companies’ products and services have in relation to the eradication of a given social/environmental problem.
Though faulty, this perception is a natural byproduct of the history and rise of impact investment.
Capital 4 Development Partners, a Dutch fund manager, announced today the first closing of the USD 30 million Capital 4 Development Asia Fund (C4D Asia Fund). The Fund invests in innovative growth stage SMEs in India, Indonesia and the Philippines which aim to bring positive social, environmental and economic change in the lives of marginalized communities and targets a final closing at USD 50 million by end of 2019. The Fund will contribute to inclusive local economies by supporting SME companies that address and solve for local challenges and / or industry inefficiencies. Based upon a strong belief in the advancing effects of diversity, the Fund integrates a gender lens in its investment strategy and aims to invest at least 30 percent of its capital in SMEs owned or led by women. A variety of financing instruments, including private equity and mezzanine financing, will be used. The Fund benefits from a launching portfolio of 21 investments as well as an Investee Support Facility.
ICCO Cooperation, a leading Dutch NGO, is the sponsor investor of the Fund, providing de-risking features, such as a USD 10 million first loss facility and a preferred return rate for other investors. Besides ICCO, the first closing investors are the Dutch Good Growth Fund, FCA Investments and Investing in Women, an initiative of the Australian Government.
What do classic rock and investing have in common? In the case of Bono, the lead singer of 80s rock juggernaut U2, they both depend on sustainability to grow and thrive.
Bono, also a well-known activist, has teamed up with middle market investment firm TPG Growth to launch a new analytics company, which he and his private equity partners say will broaden the financial industry’s commitment to sustainable development.
The independent research organization, Y Analytics, will help investors gauge the effectiveness of their sustainability goals. It’s an effort to “persuade the biggest institutional investors to commit their funds to tackling some of the world’s most urgent challenges,” Bono said in a statement.
Access Bank Plc announced that it has signed a Subordinated Syndicated Loan Agreement totaling USD 162.5 million.
The facility has been arranged by FMO, the Dutch development bank, and is provided together with BIO (Belgian Investment Company for Developing Countries SA/NV), Blue Orchard Microfinance Fund, CDC Group plc, DEG (Deutsche Investitions- und Entwicklungsgesellschaft mbH), Finnfund (Finnish Fund for Industrial Cooperation Ltd), Oikocredit (Ecumenical Development Cooperative Society U.A.) and European Financing Partners S.A, funded by the European Investment Bank acting on behalf of the European Community and Norfund (Norwegian Investment Fund for Developing Countries). FMO acted as the Mandated Lead Arranger and will be the Facility Agent.
The facility will qualify as Tier-II capital, which will enable Access Bank to roll out its 5-year strategy of becoming Africa’s gateway to the world. Part of that strategy is also to deepen the footprint in the retail segment as well as increasingly support local Micro, Small, and Medium-size Enterprises, thereby supporting job creation in the Nigerian economy.
Historically, the Nicaraguan Autonomous Region of the north Caribbean coast has been perceived as a distant social, cultural, political and geographical area. Still, it represents the biggest surface with 27% of the national land and the third territory with the most population. Youth between 15 and 29 years old compose 30% population and 57% of the economically active population.
In this context, ICCO Cooperation, Kerk in Actie, and the network of Afro-Latin American, Afro-Caribbean and Diaspora Women (Red Afro) executes a project to promote entrepreneurship and economic rights among afro youth, where community networks and youth participation have been lynchpins aspects for the success of business interventions.
New business
Since 2017, Red Afro has been building capacities among 150 youth to strengthen knowledge and attitudes for entrepreneurship in the Caribbean coast, where most of the economic activity in the area entitles the primary sector including agricultural and fishing activities. To date, youth have been able to start small businesses, including an aluminum and glass workshop, tuno´s crafts, fruit smoothies, artisanal fruit jelly, cassava and plantain chips, and variety stores. Young afro entrepreneurs also had the chance to share best practices with other business owners, which have been longer in the market and that know the Nicaraguan Caribbean area.
The data snapshots generated here come from the 2017 CGAP Funder Survey (see publication and methodology), and they may be browsed online or downloaded for sharing and for use in your own presentations. Data snapshots are available at the global and regional levels. The 2017 CGAP Funder Survey reports funding commitments from 54 international funders, both public and private, as of the end of 2017.
How do you convince Kenyan farmers that investing in higher-quality seeds and organic pesticides boosts yields, resulting in higher income? The answer: by helping them to experience it firsthand.
Of the ten fastest growing economies in the world, six are in Africa. Against this backdrop, international companies are finding opportunities to enter the African market and contribute at a local level to issues such as sustainability and food security. In 2016, two Netherlands-based companies teamed up with Dutch development organization SNV to instruct Kenyan farmers on how to grow vegetables. The farmers received training and demonstrations in twelve locations.
“Our seeds are higher-priced than those that Kenyan farmers are accustomed to using,” says Heleen Bos, a project manager at seed production company Rijk Zwaan. “That’s why we consider demonstrations and training essential. Telling people your seeds are superior is one thing; you need to actually be able to back up your claim as well.
“We do this by sowing two fields: one with our own seeds and one with the seeds currently used by the farmers. That way, they see that our seeds not only improve yield but also that some plants start sprouting earlier. It means you can take your products to market before your competitors.”
Smallholder farmers in Uganda are increasingly vulnerable to risks associated with changing weather patterns. The SUM-Africa project, supported by the G4AW program of Netherlands Space Office (NSO), provides satellite based drought index insurance to protect these smallholders. This week the Ugandan Agro Insurance Consortium (AIC) and the Dutch company EARS) signed a long-term contract to continue the delivery of this service. The AIC provides the insurance and EARS, lead partner in the Sum-Africa project, provides the satellite-based drought index.
Agricultural index insurance products are linked to an index, such as temperature, rainfall, crop yield or evapotranspiration, rather than actual loss. Daily information from satellites, enables independent and continuous monitoring of climatic conditions for crop growth. This information is used by insurance companies for risk assessment, insurance pricing, and for pay-out calculation. Because insurance companies no longer need to visit the farmer to assess their loss and determine payout, transaction costs are much lower. Insured farmers are more likely to get a loan, enabling them to invest in improved input that boost their resilience to climate change and increase their food production and income.
The Sum-Africa consortium consisting of eight African and Dutch partners, now rolls into its fifth year and starts operating on a commercial basis. An increasing number of farmers are being insured, with some 75,000 farmers insured in 2018. Sales numbers are expected to double over the next 2 years.
