First close for FEFISOL II fund, managed by Inpulse

Following the success of the first FEFISOL fund, which closed in July 2021, its promoters, the social investors SIDI (Solidarité Internationale pour le Développement et l’Investissement) and Alterfin, have structured a new fund dedicated to financing African rural microfinance institutions and agricultural entities sourcing from smallholder farmers in Africa.

FEFISOL II’s first close is at €22.5 million, with a technical assistance package of €1 million from Proparco via FISEA+.

The European Investment Bank, Proparco via FISEA+ (the AFD Group’s facility implemented by Proparco as part of the Choose Africa initiative), the Belgian investment company BIO, the Alternative Swiss Bank, Crédit Coopératif, Banca Etica and SOS Faim Luxembourg have recently signed up for a stake in the fund.

The FEFISOL II Fund is designed to respond to the crucial issues of financing vulnerable populations in rural areas in Africa, and more particularly the financing of the agricultural sector. Today, the penetration rate of microfinance in rural areas in Africa remains very low: less than 5% of the loans disbursed by traditional financial institutions are intended for the agricultural sector and less than 10% of farmers have access to formal sources of credit. Nevertheless, the agricultural sector accounts for 23% of the continent’s GDP and 55% of employment. Despite increasing urbanisation, almost 60% of the population of sub-Saharan Africa, lives in rural areas.

Managed by Inpulse (a Brussels-based investment manager), FEFISOL II is structured to financially and technically support locally designed solutions to these challenges.

The new fund will offer diversified and adapted financial products, in 12 to 15 local currencies in order to avoid exposing partners to exchange rate risk and will implement specific assessment and monitoring tools for agro-ecological performance. Finally, FEFISOL II will propose a new technical assistance facility with a more in-depth scope and upgraded procedures. Its aim will be to support its partners in strengthening their institutions and their resilience to climate change.

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