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Financing of VSEs and the Informal Sector: something new in the “Informal Bonds” Project renamed “Inclusive Bonds”

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In accordance with the will of the regulators, the “Informal Bonds” Project is changing its name. Indeed, a vote was held in the presence of the Members of the Work group and Members of theAdvisory Board who renamed the Project “ Inclusive Bonds “.

The Inclusive Bond consists of a bond issue specifically intended to finance Very Small Enterprises and the Informal Sector. This issue has the particularity of being oriented according to a certain number of sectors (Crafts, Agriculture, Transport, etc.) but above all of being guaranteed by 3 stakeholders: The State (between 20% and 50%), the Institutions of International Funding (between 20% and 50%) and Informal Beneficiaries (up to 30%).

On March 17 and April 7, the presentations of the results of the Feasibility Study of this Project took place respectively with the Financial Market Regulators of Central Africa and West Africa. It was in the presence of the Presidents of the said institutions, namely Mr.Ambassador Nagoum YAMASSOUM for COSUMAF and Mr Badanam PATOKI for CREPMF.

During these exchanges, the Regulators encouraged the setting up of Pilot Operations while specifying their wishes to see the Interest Rate for the Beneficiaries (or borrowers) reduced as much as possible. Indeed, if the Pilots are successful, a volume effect on these operations would benefit the main stakeholders (Guarantors, Issuers, Arrangers, Structurers, Rating Agencies, Groups, FinTech, etc.) who would reduce their costs/remuneration accordingly.

As for the BCEAO, during the presentation of the Study, while encouraging the Project, it specified its wish to see a selection process that is as “Inclusive” as possible, including more new beneficiaries.

It is also planned within the framework of this Project, the Establishment of a Informal Sector Information Officewhich would bring together a set of financial and extra-financial data on micro-entrepreneurs.

The Working Group, henceforth coordinated by theUNECA (Commission EUnited Nations Economic Forum for Africa) has therefore set itself the objective of carrying out the Pilot Operations during this second half of 2022 with, among the first targeted sectors, that of intra-border trade, which has suffered greatly from the COVID-19 pandemic.

The Working Group is made up of the Public Administrations of the 3 Pilot Countries (Ivory Coast, Senegal and Cameroon) as well as the following International Institutions: UNECA, AFREXIMBANK, African Guarantee Fund, African Solidarity Fund, BOAD, BOAD Securitization, BVMAC, BRVM,PROPARCO, UNDP, BPI France, BADEA, BIO-INVEST, GIM-UEMOA, GGGI, BOPAO – WAACE, AOCTAH-WACTAF.

This Working Group is moderated by the Cabinet EndAfrica (Initiator of the Inclusive Bond Project) and LB Global Consulting.

As a reminder, within the framework of this Concept, the State and the Financing Institutions are responsible for selecting a credible Microfinance Structure to play the role of issuer. It is then the responsibility of this Microfinance, “designated issuer”, to select for a given sector, Groups/Cooperatives that have demonstrated good operational and financial governance because it is the latter who make the designation within their members. , of the “designated beneficiary” Borrowers of this operation.

For a large issue and which would thus attract large investors, it is an FCTC (Fonds Commun de Securitisation de Créances) which would play the role of issuer and which would then enter into contracts with the Microfinances (previously selected) of the various countries concerned by the broadcast.

1er Last June, at the invitation of BVMAC and ASEA (Association of African Stock Exchanges), the Inclusive Bond Concept was presented at the 10thEdition of the BAFM – Building African Financial Markets Seminar.



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