Stitching Cordiad secures investment to increase access to finance by SMEs

WEST AFRICA – Stichting Cordaid (Cordaid), managed by Cordaid Investment Management B.V. (CIM), has secured a co-investment project by West Africa Trade & Investment Hub (Trade Hub), an USAID-funded program, to increase access to finance by small and medium sized enterprises (SMEs) and microfinance institutions (MFIs) in Burkina Faso, Guinea, Mali, and Sierra Leone.

DFC’s has also provided US$14.75 million loan portfolio, a credit enhancement behind the Trade Hub’s grant to attract investment into CIM’s fund.

Trade Hub has provided a US$2 million first loss grants to Cordaid, which will serve as a risk-mitigation tool and open up a pipeline of private capital managed by CIM.

This collaboration also aims to promote two-way trade and investment between the United States and West Africa in accordance with the Prosper Africa initiative promoted by the U.S. government.

It aims to combat high rates of poverty, unemployment, conflict, and desertification through private sector investments, targeting both women and youth.

“This project will reach thousands of entrepreneurs in several fragile countries that are facing significant economic challenges, including from the impacts of the COVID-19 pandemic,” said Acting DFC Chief Executive Officer, Dev Jagadesan.

“This project advances our commitment to focus on the regions where investment is needed most.”

Because of this public-private partnership, the co-investment will generate up to US$37 million of new private investment into these countries to support local economies, create over 20,000 direct and indirect jobs, and increase the value of exports over the duration of the activity by US$30 million.

“We are enthusiastic about this partnership, which is the first of many in our grants pipeline, as we look forward to their catalytic effect on the economies of these countries by attracting private capital and providing jobs, specifically for and within SMEs struggling to survive in some of West Africa’s most fragile economies for whom there is very limited access to affordable credit,” said Michael Clements, Chief of Party of the Trade Hub.

With economies in the Sahel region of West Africa among the most fragile in the world, CIM, the Trade Hub, and DFC are united in the drive to combat high rates of poverty, unemployment, conflict, and desertification through private sector investments.

In addition to US$1 million being provided by Dutch Postcode Lottery, also as a first loss grant, these sources of funding create a low-risk framework that encourages private capital to invest in conjunction with other impact investors despite the risks to investing in the Sahel region and the economic effects of the COVID-19 pandemic.

“Fragility in the Sahel is widespread and multifaceted. We do not pretend that our investments will be the silver bullet. We are certain, however, that some of our intervention will help build resiliency, as we focus on opportunities that create access to finance and job creation, while catalyzing additional investments into these most underserved economies.,” said Brenda Pennell, who manages Cordaid’s portfolio in West Africa.

The project aligns to DFC’s 2X Women’s Initiative, as at least 30% of CIM’s lending will be targeted at women owned/led businesses or those offering products or services that deliver tangible benefits to women. CIM has also heightened its focus on youth markets to better integrate them into local economies.

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