Financial Institutions

Key achievements in 2021

Highlights of 2021

Arise

In 2021 the biggest single investment was through Arise, Norfund’s main vehicle for large scale equity investments in banks in Africa. Arise is a unique specialized investment company with a growing portfolio of leading financial institutions across sub-Saharan Africa, established in August 2016 when its four founding owners – Norfund, Rabobank, FMO and NorFinance – agreed to transfer their various equity holdings in financial institutions in sub-Saharan Africa. 

The aim of Arise is to contribute to the building of economic growth and poverty reduction by developing strong and stable financial service providers. 

In 2021 Arise completed a USD 75 million investment in Alternative Tier 1 (AT1) capital into ETI, the holding company of Ecobank. This was a ground-breaking deal and the first AT1 investment ever in Sub-Saharan Africa outside of South Africa.  

ETI was founded in 1985 and progressively expanded its presence across 33 sub-Saharan Africa countries. Ecobank has a strong brand recognition through a substantial network of over 24 million customers served by some 14,000 employees and 690 branches across the continent. 

FinTech

Access to high quality, affordable financial services is essential for social and economic development, gender equality, resilience, and livelihoods. Unfortunately, globally around 1.7 billion people are unbanked. It is also a gender issue: women are disproportionately affected, with around 1 billion lacking access to financial institutions. Additionally, lack of financial access is an issue for businesses: 70% of SMEs cite lack of access to finance as a barrier to growth. 

While many individuals may not have access to financial services, two out of three of them have mobile phone access, making this a useful tool to bridge this gap. FinTech can increase the breadth of available financial services. Our mandate is to increase financial inclusion, making FinTech a natural area of interest for Norfund.  

In 2021 several commitments were made in this area: 

• Norfund committed 65.4 million NOK to Amartha, a peer-to-peer lending platform in Indonesia with a focus on funding rural women. Amartha has disbursed more than USD 250 mill and empowered 678,502 women across more than 18,900 villages in Jawa, Sumatra, and Sulawesi. Norfund’s senior loan to the company is an initiative to help them provide microcredit to many more female micropreneurs in the bottom of the pyramid and to promote financial inclusion of the unbanked in Indonesia. In addition to providing capital, Norfund will provide technical assistance and global expertise assisting Amartha to promote global environmental and social standards. 

• Quona Capital, a venture firm focused on financial inclusion in emerging markets, announced the Accion Quona Inclusion Fund in 2019 which Norfund then invested into. The fund invests in financial technology companies to increase access to financial services for businesses and consumers in developing countries. Norfund committed an additional 15 million NOK to a new fund, Quona III, in 2021 with the same investment focus. 
• 41.3 million NOK was committed in a loan to Lula Lend, a technology driven financial institution with a credit scoring model that enables them to more efficiently assess the risk of SMEs in South Africa. Lula Lend is able to offer credit to underserved and financially excluded SMEs, many of them accessing credit for the first time. Accion Quona is a shareholder in Lula Lend. 

Increasing SME’s access to capital in Sri Lanka 

In early 2021, Norfund announced an agreement with the National Development Bank in Sri Lanka, for Norfund to invest new equity for up to 9.9% ownership in the bank. This is the first foreign equity placement agreement for NDB bank, and the investment increased its foreign shareholding percentage to around 21%. 

National Development Bank PLC (NDB) is a premier bank with 113 branches and over 150 ATMs and CRMs across the island, serving millions of Sri Lankans through a host of financial services. 

In addition to investing equity capital, Norfund will provide technical assistance and global expertise assisting the bank to promote global environmental and social standards, and to achieve best in class corporate governance. 

This was Norfund’s first equity investment in Sri Lanka, and the second investment in the country. 

By investing in The National Development Bank in Sri Lanka, Norfund aims to contribute to increased access to capital for SMEs and the unbanked in a country hard hit by COVID-19. 

First investments for Colombia, Indonesia, Senegal 

In line with the 2019 updated strategy, three new countries were invested in during 2021. 

• The first investment in Indonesia was Amartha (see above), followed by Bina Artha, a fast-growing microfinance institution. Bina Artha provides its services through an extensive network of almost 346 branches reaching over 382,412 clients in Java and Sulawesi islands and plans to gradually expand to other islands of Indonesia. Norfund committed 43.5 million NOK in 2021. 
• In Colombia, a 131.7 million NOK commitment was made to Kandeo, a private debt fund targeting mid-sized companies in Colombia and Peru. The fund will focus on providing USD 4-10m in debt to companies in various economic sectors. 
• In Senegal, Norfund committed 131.7 million NOK to Cofina Senegal, a microfinance institution focusing on meso-finance, meaning the missing middle of SMEs that are too large for traditional micro lending, but still too small or informal to source funding from ordinary banks. The loan from Norfund will promote access to financial services for entrepreneurs and MSMEs in Senegal.