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Green Impact Investing Network – Taking the Pulse in Europe

We have talked to European financing institutions to assess their interest in alternative financing in North Africa. Here is what we have found.
Published on Mar 31, 2016

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As part of the Green Impact Investing Network (GIIN) activities, we have started with our missions in Europe. The core objective of the missions is to assess the interest of financing institutions located in Europe regarding investments in eco-innovative businesses or initiatives of green entrepreneurs in the SwitchMed target countries.

For these missions, the SwitchMed Networking Facility is collaborating with the European Federation of Ethical and Alternative Banks (FEBEA), which is one of the International Investment Networks that has a strategic interest in promoting ethical finance. Until 2018, towards the vision of establishing a SwitchMed Green Impact Investing Network, we will work to identify and attract international investment networks as well as the international and national financing institutions in four pilot countries: Egypt, Lebanon, Tunisia and Morocco.

Till now, in Europe, we talked to a wide range of financing actors including Banca Etica, Alterfin, Fefisol, COOPMed, Credit Cooperatif, ResponsAbility, Le Comptoir de l’Innovation, Anima Investment Network and Etimos Foundation.

The main barriers that European financing actors often mention are the difficulty of getting more directly involved in the North African countries and the costs related to analysing the local context from all the necessary points of view. That is why the typical pattern observed is the provision of resources to projects that are already in place and in investment funds that operate in the region (such as CoopMed).

They have also reconfirmed the problem of missing middle i.e. finance is not reaching small and medium sized enterprises in an effective way is common in the region and said there are country specific issues around this overarching problem. For example, for Egypt, Mr. Couderé - Senior Advisor and Head of Portfolio for Africa & Asia at Alterfin - pointed at the need for improving the regulatory framework. He said that the situation in Morocco is more favourable for micro-financing as there is a long tradition of this type of financing. He added that it is relatively easy to approach microfinances institutions in Tunisia. His statement confirmed the findings of the mission in Cairo that access to finance is overall a significant barrier, and that there is a massive profit opportunity for those who are able to successfully finance small and medium sized socially and environmentally conscious enterprises.

We have also gathered suggestions for improving the framework conditions to make the region more attractive for European financing institutions. For example, Mr. Dunkel, CoopMed fund manager summarized the challenges faced in the region as follows:

  • Lack of a legal framework allowing the development of the social economy (CoopMed’s target). For example, in Tunisia the “cooperative? legal form gained a bad reputation and its application is therefore limited;
  • Lack of an efficient coordination between Ministries to provide adequate support to the social economy sector, hence the initiatives are few and far between;
  • Local banks being incapable of (and often are not interested in) managing small (loans of 5-10k €) and medium (loans of 30-50k €) projects;
  • Microfinancing institutions (MFIs) in the region needing technical assistance to develop the competencies needed to better support the social and green economy.

CoopMed is currently starting its operations in two target countries, Tunisia and Morocco.

Our next GIIN mission will be in Morocco from 11th April till 16th April. We are looking for local experts to support us in our missions to Tunisia and Lebanon. If you are interested, please see the Terms of Reference for application.