BII, DFI to invest $75 mn to fund MSME projects in Africa, Asia

British International Investment (BII) and the UK's Development Finance Institution (DFI) have subscribed to a $75 million Green Basket Bond to finance micro, small and medium-sized enterprise (MSME) projects in African continents, South and Southeast Asia via local banks.

BII will allocate around 25% or $18.7 million of the capital to India.

The company said the green lending programme would direct financing to small-scale green projects across Africa, South and Southeast Asia through local MSME banks.

The Green Basket Bond is a first of its kind in BII’s markets, including Africa, India, Pakistan, Bangladesh, Sri Lanka, Nepal, Indonesia, Philippines, Vietnam, Cambodia and Laos.

The financing will support 10-15 MSME local banks, which require smaller investment capital than BII is generally able to fund directly.

The program will facilitate loans to fund small-scale green projects like rooftop solar panels, sustainable agriculture, energy-efficient appliances such as clean cookstoves, energy efficiency improvements to buildings, electric vehicles and more.

Moreover, BII is providing an additional $520,000 through its technical assistance (TA) facility, which will be managed by Symbiotics Association for Sustainable Development (SASD). The facility will help banks in developing their green financing capabilities by enhancing their ability to identify and manage green assets.

Investment Director & Head of Intermediated Credit of BII, Jo Fry, said that this investment would increase access to climate finance for small-scale businesses that are developing green projects. It will also increase MSME local banks' capabilities to identify and manage climate change assets. BII aims that this new, innovative funding structure will enable other investors to replicate and invest in this space.

The investment company has added Southeast Asia and the Indo-Pacific region as its new focus areas for business expansion.

Recently, BII had committed $89 million to scale clean energy capacity in India, with an existing portfolio of over $2 billion. It has invested nearly $8.49 billion globally in the past five years.

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Also read: Union Bank of India and Ambit Finvest tie-up for co-lending to MSMEs

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