By Nana Akua Mensah, Communications Specialist
In West Africa, where socio-political conditions and heavy reliance on agriculture and extractive industries make private-sector financing difficult to attract, governments and donors must invent innovative approaches to secure the investments needed for social impact projects. One such approach is blended finance, which uses catalytic capital from public or philanthropic sources to de-risk private sector investment in sustainable development. This is the primary tool of the USAID West Africa Trade & Investment Hub (Trade Hub).
On June 20th, the Trade Hub held a virtual Learning Event, “Blended Finance: Capitalizing on Lessons Learned,” featuring ten Financial Institutions & Advisors (FIAs) co-investment partners. The event provided an interactive opportunity for government agencies and fund investors to gain insights into the Trade Hub’s blended finance model with banks and non-bank financial institutions, impact funds, and advisors.
The Learning Event attracted more than 50 participants from across West Africa, East Africa, Europe, and the United States. It focused on the Trade Hub’s structured grant products, such as investible first loss and cash collateral, which launched four new investment funds, unlocked SME lending through commercial banks, and raised capital through advisory services. Over its lifetime, the Trade Hub committed $17.3 million to twelve diverse FIAs to catalyze private sector investments in Small and Midsize Enterprises (SMEs) and Monetary Financial Institutions (MFIs). By March 2024, 10 FIAs had impacted over 60 SMEs, startups, and Micro Finance Institutions involved in food security, access to finance, climate adaptation, inclusive job creation, value-added manufacturing, exports, and health.
The event was moderated by Charles Polet, Deputy Director of Public-Private Partnerships for the Trade Hub. It featured three panels with presentations and Q&A sessions, it. The panels were:
- Launching New Investment Funds Using Investible First Loss: Representatives from Cordaid Investment Management, Organic Development Fund, ShEquity, and Injaro Cabo Verde discussed their experiences.
- Mobilizing SME Lending Using Cash Collateral: Representatives from Injaro Côte d’Ivoire, LoftyInc, La Banque Agricole/Nadjib.i, and Sinergi Burkina shared insights.
- Data Collection Challenges Among Non-Investment Funds: Representatives from the African Guarantee Fund, CrossBoundary, and Open Capital Advisors explored the challenges and solutions.
Opening the event with Welcome Notes was Kevin McGlothlin, Director of the Offcie of Regional Economic Growth, USAID/West Africa, who remarked, “It is exciting to see how USAID’s finance partners, financial institutions and advisory firms, rose to the challenge and made more than $17 million available to small businesses in a very difficult time. Together, we’ve been able to unlock the true potential of these businesses.”
The panelists spoke on their experiences, lessons, and wins against the backdrop of regulations, sponsor risks, and market challenges; the viability of cash collateral grants to unlock bank lending for SMEs and startups against unprecedented market challenges; and the difficulties associated with data collection from SMEs by a bank or non-bank financial institution in compliance with the requirements of the co-investment partnership.
Closing the event, Kafui Djonou, Trade Team Lead, USAID/West Africa emphasized USAID’s appreciation to the Trade Hub’s co-investment partners for their commitment to improving financing for the private sector in West Africa.
Watch the webinar recording and continue the discussion on any of our social media platforms: FIA Learning Event