MICROCAPITAL STORY: AfriCap Microfinance Fund (AfriCap) of Mauritius Makes a $1.1m Equity Investment in Société de Financement de la Petite Entreprise (SOFIPE) of Burkina Faso

The Consultative Group to Assist the Poor (CGAP) reports in its list of recent transactions that AfriCap Microfinance Fund (AfriCap) made a USD 1.1 million equity investment in the newly established Société de Financement de la Petite Entreprise (SOFIPE), a microfinance institution (MFI) in Burkina Faso, on March 1st, 2008.

The private equity fund, AfriCap, which is incorporated in Mauritius but works out of Johannesburg, South Africa, was founded by Martin Connell and Stefan Harpe of Calmeadow in 2002. In April 2003, the fund finalized its first microfinance investment deal, worth USD 1.6 million, in Equity Bank of Kenya. With capital of USD 50 million, AfriCap provides technical assistance to its 11 portfolio companies in conducting market research, improving governance structures, creating effective management information systems (MIS), and enhancing strategic management ability, among other areas. As reported by the MIX Market, the microfinance information clearinghouse, all of AfriCap’s investments are in Africa and are comprised of the following firms as listed on AfriCap’s web site: AccèsBanque Madagascar (ABM), CAP Microfinance of Senegal, Equity Bank of Kenya, Ferlo of Senegal, Opportunity International Bank of Malawi (OIBM), Quality Finance International (QFI) of Egypt, SOCREMO Socremo Banco de Microfinanças de Moçambique (SOCREMO), Susu Microfinance Bank (SMB) of Nigeria, Union Trust Bank (UTB) of Sierra Leone, Wizzit Payments of South Africa, and Women’s World Banking Ghana (WWBG). MicroCapital recently reported on AfriCap here.

Mr. Connell is listed as a member of the Board of Directors of Calmeadow, a Canadian non-governmental organization (NGO) founded in 1987 which began microcredit lending initiatives in Vancouver, Nova Scotia, and Toronto, yet failed to develop commercially viable operations. Since then, Calmeadow has helped to establish several microfinance funds and Banco Solidario (BancoSol) of Bolivia, a microfinance bank, by making significant equity investments. Financial information regarding the organization, whose work is concentrated in Latin America and Africa, may be obtained by request from Alex Silva (asilva@omtrixinc.com) or Martin Connell (martinconnell@haycon.ca). A press release posted by MicroCapital reports on Calmeadow’s recent investment in a risk management facility for Latin America and the Caribbean.

SOFIPE is a new joint venture between AfriCap, Banque Agricole et Commerciale du Burkina (BACB), and Oikocredit. The MFI will take over BACB’s current microfinance operations and QFI has been contracted for the amount of USD 84,000 through the International Finance Corporation’s (IFC) Africa Micro, Small, and Medium Enterprise (MSME) Finance Program, to conduct a consultation “aimed at determing BACB future strategy, including clientele segmentation and the relationship with SOFIPE,” according to QFI’s web site.

BACB, which does not report to the MIX Market, was established in 1980 under the name Caisse Nationale de Credit Agricole du Burkina (CNCA-B) and was later renamed in 2002, according to a 2007 MicroCapital article. Financial information was not available.

Established in 1975, Oikocredit is a Dutch ecumenical cooperative investment fund which reports 2007 total assets of EUR 386.6 million (page 26). Oikocredit has 419 active MFI projects comprising 63 percent of the organization’s total portfolio. According to the MIX Market, 50.7 percent of Oikocredit’s investments are located in Latin America and the Caribbean and the remainder are spread across Africa, East Asia and the Pacific, Eastern Europe and Central Asia, and North America. Recent MicroCapital articles report on Oikocredits investments: (1), (2).

A limited liability company (LLC), QFI offers advisory services in a wide array of business functions to MFIs and other organizations engaged in, or planning to enter, the microfinance market. Incorporated in Mauritius and operating a branch office in Cairo, Egypt, QFI operates in the Middle East and Africa. To date, the institution has engaged in 130 NGO consulting projects in Egypt, Bahrain, and Yemen, helped to downscale the financial services of two large Egyptian banks, and advised 12 Egyptian NGOs specifically servicing all-female group lending programs, according to its web site.

The IFC, founded in 1956 and a member of The World Bank Group, utilizes the Africa MSME Finance Program to offer loans to eligible banks on terms of five to seven years with standard investment covenants and a cost-sharing scheme for on-site advisory services. The program is explained in more detail through this brochure. The Washington, DC-based institution reported total assets of USD 40.6 trillion and a loan portfolio of over USD 12.7 trillion as of June 30, 2007, according to financial statements audited by Deloitte and Touche (page 2).

By Anthony Busch, Research Assistant

Additional Resources:

Africa MSME Finance Program: Home, Brochure

AfriCap Microfinance Fund: Home, MIX Market Profile, History, Technical Services Facility, Current Portfolio

Banco Solidario: Home

Banque Agricole et Commerciale du Burkina: Home

Calmeadow: Home, Board of Directors, Microfinance Experience

Consultative Group to Assist the Poor: Home, List of Recent Transactions

Deloitte and Touche: Home

International Finance Corporation: Home, AccèsBanque Madagascar, Wizzit Payments, History, Financial Statements

MicroCapital article, November 19, 2007: “ACCION Gateway Microfinance Investment Vehicles Fund (GMIV) Invests in Lok Capital, AfriCap”

MicroCapital article, April 4, 2007: “IFC sign partnership with Crédit Agricole in France and Environmental Quality International in Egypt to support financial and microfinance institutions (MFIs) in Africa”