Financed by the investment arm of UK aid-funded FSD Africa and international partners CDC (the UK’s development finance institution), DFC (the US government’s development finance institution) and JICA (Japan International Co-operation Agency), the BlueOrchard COVID-19 Emerging and Frontier Markets MSME Support Fund is the first facility of its kind to provide support to financial institutions across emerging markets. The fund is expected to finance 20 institutions, serve 3 million micro-entrepreneurs and maintain 60 million jobs for every USD 100 million invested in emerging markets.
Government support for smaller financial institutions has largely been absent in emerging and frontier markets, and this has meant that entrepreneurs have often been overlooked in economic recovery programmes.
This pioneering fund will help to ensure that micro, small and medium sized enterprises (MSMEs), the backbone of economic growth and employment in developing countries, are not left behind.
Although many financial institutions have weathered the current crisis well, there are others in need of help to keep financing MSMEs. The fund will be equipped with a dedicated Technical Assistance Facility, to ensure that the liquidity provided allows MSMEs to fast track their recovery – even in the most vulnerable sectors and geographies.
The first close of the fund marks an unprecedented moment in which investors have come together to support the MSME sector in light of COVID-19, underlining the power of bringing together like-minded public and private capital to tackle the unique challenges of the pandemic. FSD Africa’s contribution, through a high-risk capital layer, was critical not only in securing investors’ commitment to the fund but also in ensuring that Africa would receive a fair share of investment by the fund.
FSD Africa’s CEO, Mark Napier, said:
“As 2020 comes to an end, it is clear that the economic damage wrought by COVID-19 will be with us for some years to come. So, we are pleased to have been able to play an important part in bringing this fund to a first close and helping to create a sustainable financing vehicle that will provide liquidity to smaller financial institutions which are mostly not able to benefit from governmental support. We are committed to ensuring an inclusive recovery from COVID-19 in Africa.
“The UK government has stated that its development budget should be used to the fullest extent possible in mitigating the worst effects of COVID-19. This new fund should be seen as an important demonstration of the UK’s, and FSD Africa’s, commitment to go the extra mile in using its funds to make a vital difference to businesses which are providing key support to these economies.”
FSD Africa Investment’s Chief Investment Officer, Anne-Marie Chidzero, said:
“As FSD Africa works to deliver a financially inclusive recovery from COVID-19 across the continent, we find a lot of merit in partnering with BlueOrchard to establish this fund. It is one in a number of starting points in our efforts to use inclusive finance as a means of impacting the COVID-19 recovery program.
“FSD Africa’s commitment will allow for BlueOrchard to underwrite liquidity financing to financial institutions on the African continent. By providing necessary support to MSMEs, we are, in turn, fuelling the engine for Africa’s post-COVID-19 recovery.”
Philipp Mueller, Chief Executive Officer, BlueOrchard Finance Ltd, said:
“The BlueOrchard’s Covid-19 Emerging and Frontier Markets MSME Support Fund is a key facility that will help mitigating some of the challenges of the pandemic. We thank the FSD Africa team for supporting our efforts to provide vital financing to micro, small and medium-sized enterprises in Africa. We are proud that we have successfully brought together a renowned group of public and private actors to pave the way for recovery and preserve vital jobs across sectors.”