SANAD accelerates impact investments to support MSMEs in mitigating effects of COVID-19 crisis
Impact fund exceeds USD 590 million in cumulative disbursements and partners with 33 financial institutions providing financial and technical resources
Luxembourg and Frankfurt, February 1, 2021 – In response to the COVID-19 pandemic, the SANAD Fund for MSME (SANAD) strengthened its financing activities and closed the 2020 business year with a record volume of impactful investments. The fund continued to support employment and access to finance for micro, small and medium enterprises (MSMEs) in the Middle East, North Africa, and selected countries in sub-Saharan Africa. SANAD disbursed a total of USD 110 million in loans to financial institutions that specialize in serving MSMEs, channeling much-needed liquidity to this crucial segment as it grapples with the economic ramifications of the COVID-19 crisis. The financing was supplemented by more than 50 new business support initiatives led by the SANAD Technical Assistance Facility (TAF), another all-time high.
SANAD has focused exclusively on impact investments to promote entrepreneurship in the Middle East and North Africa (MENA) since 2011. As MSMEs form the backbone of the region’s economy, the fund provides both debt and equity financing to institutions dedicated to equipping local businesses with the resources they need to succeed. Financial inclusion for the underfunded, especially women and young entrepreneurs, is a particular focus. In 2020, the fund moved swiftly to approve an unprecedented volume of new investments to support its investees in helping small businesses confront the financial difficulties brought about by the coronavirus outbreak. These included several loans in local currency and the fund’s first subordinated loan in Egypt to strengthen the capital base of an important financier of MSMEs.
This was also the year in which SANAD expanded southward, extending its impact to selected countries in sub-Saharan Africa (SSA). By leveraging on the links between SSA and the fund’s core region, MENA, the fund aims to transfer valuable knowledge and innovations that can help strengthen MENA’s entrepreneurship environment. In 2020, the fund provided its first loans to three new partners in sub-Saharan Africa: Bank of Africa Group, Cofina Senegal, and KCB Bank.
In addition to the fund’s financial activities, the SANAD TAF enacted a COVID-19 response advisory program for institutions and individuals alike. Projects ranged from a comprehensive emergency consultation package to help microfinance institutions tackle the crisis, to an online business training curriculum that reached 18,000 entrepreneurs across the Middle East and North Africa.
Performance highlights in 2020:
- The SANAD Debt Sub-Fund closed the year with an outstanding portfolio of USD 328 million, distributed across 33 local financial institutions in nine countries;
- New financing of USD 17 million was agreed in local currency for investees in Jordan, Morocco, and Senegal, increasing opportunities for borrowers to avoid the risk of exchange rate fluctuations;
- SANAD’s activities facilitated over 20,000 new sub-loans to individuals and small businesses;
- The newly launched SANAD Equity Sub-Fund II provided equity funding to Jordan-based SME equity investment vehicle Badia Impact Fund Squared and signed an agreement for equity funding to promising fintech company POS Rocket, supporting SANAD’s aim to further boost financial inclusion through digital innovations;
- The SANAD TAF launched a brand-new initiative providing grants to both financial institutions and small business owners to strengthen their ability to overcome the challenges of COVID-19, especially by implementing new digital systems and solutions;
- In order to enhance the fund’s COVID-19 resilience and response capacities for its target region, SANAD raised an additional USD 93 million in funding from BMZ while fresh funding from the European Union is expected to be finalised in early 2021. The increased funding helped to strengthen the fund’s capital base in thesethese turbulent times and to allow SANAD to continue pursuing its impact objectives in MENA and SSA.
SANAD Board Chairperson Dr. Daniela Beckmann said: “SANAD is unwavering in its commitment to the hardworking entrepreneurs of our target region. And while 2020 may have been uniquely turbulent, rising to the most urgent challenges of our society is precisely what impact investing is for. We would like to especially thank our investors and international partners in enabling SANAD to serve as a bulwark to its partners and MSME end-borrowers throughout the year. Together, we will continue to build a resilient, robust infrastructure that enables small businesses to weather hard times, sustain jobs, and recover from the COVID-19 crisis. The pandemic is not over; the reverberations are sure to be felt for years to come. But now as always, the fund is taking a long-term view, working closely together with public and private investors as well as local financial institutions to identify needs, manage risks, and lay a path for recovery for MSMEs, supporting employment and economic growth in the region.”
The SANAD Fund for MSME finances micro, small, and medium enterprises and low-income households in the Middle East and North Africa and selected countries in sub-Saharan Africa via qualified local lenders. SANAD thereby fosters economic development and job creation – including youth employment – agriculture, affordable housing, and innovations in finance and financial technologies. SANAD strives to meet these goals by providing debt and equity financing to its local partners. The SANAD Technical Assistance Facility multiplies the fund’s development impact and outreach through capacity-building with partner institutions, developing financial infrastructures according to the principles of responsible finance and conducting much required R&D.
An impact investment fund advised by Finance in Motion, SANAD’s investors include the KfW Development Bank, which initiated the fund; the German Federal Ministry for Economic Cooperation and Development (BMZ); the European Union; Switzerland’s State Secretariat for Economic Affairs (SECO); OeEB, the Development Bank of Austria; Germany’s GLS Bank and GLS Treuhand; the Dutch development bank FMO; and Calvert Impact Capital.
For more information on the SANAD Fund for MSME, please visit: www.sanad.lu
For more information on Finance in Motion, please visit: www.finance-in-motion.com
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