Financing Strategy for attracting Foreign Direct investment for Financial Inclusion Project

1. Financing Strategy
for Financial
Service Kiosk
Financial Inclusion for Rural Sierra
Leone
This Photo by Unknown Author is licensed under CC BY-NC-ND

2. Background

3. • Sierra Leone has seen a dramatic rise in
connectivity over the last decade from 10% in
2007 to 73.4% in 2017, despite this, only 20% of
the economically active population
(769,829) have access to basic banking and
financial services.
• Access to reliable financial solutions for the
economically underprivileged sections of the
society without any form of discrimination,
inequality and in an ethical manner is low and
disproportionate.
*Sierra Leone National Financial Inclusion Strategy 2017-2020

4. Economically
active population
per Region and
Access Point to
Population Ration

5. Access Point
by Chiefdom

6. Problem

7. Dr. Kaifala Marah, Sierra Leone National Financial Inclusion Strategy 2017-2020
• Today, most people and small
businesses in Sierra Leone do
not fully participate in the
formal financial system. They
transact exclusively in cash,
have no safe way to save or
invest money, and do not have
access to credit beyond
informal lenders and personal
networks. Even those with
financial accounts may have
only limited product choice
and are financially illiterate.

8. Project Objective

9. • The project will tackle the Access in the
Financial Inclusion circle
• The project will increase access to useful and
affordable financial products and services that
meet the needs of our beneficiaries and
empower users of financial services to make
informed decisions about their personal
finances. We aim to facilitate reliable financial
solutions locally accessable to the economically
underprivileged sections of the society without
any form of discrimination, inequality and in an
ethical manner.

10. Financial Service
Kiosk

11. • Set up Kiosk in Rural areas where it is not
profitable for a single Financial Service
Provider to set up an exclusive access point.
• This kiosk would aggregate several Financial
services. They would provide interested
Financial service providers access/channel
to the geographical location where they
would normally singularly can’t reach.
• These kiosk would be agents for Banks,
Mobile money providers, MFI’s,
Remittances providers, Insurance, Credit
Ass. etc. and income would be derived from
commissions on transactions, Sales etc.

12. Financing Options

13. • Given the fragile of the country and the weak
Capital Market in Sierra Leone the options to
attract diverse financing for such a project are
limited.
• Current project Financing is through Donor
Grant funding. Although this is a suitable fund
for risk capital and to pilot ideas, it is not
sustainable and enough for scaling the project.
• Attracting Private Sector financing is critical in
the project as the model is build for private
sector ownership and management. The allure
of profit would guarantee the efficient and
sustainable participation of the Private actor
and continual stable provision of Financial
Services in the location.

14. Financing
Options
available in
Sierra Leone
Capital Markets
Grants
Foreign Direct Investment
Commercial Loans
Equity investment
Portfolio Investors (Insurance company)

15. • Attract Regional firms that have track record in
setting up and managing distribution network,
agents and specifically Financial agent
network.
• The Project could use it current grant funding
to fund large part of the inception stage
(research, business case, design and pilot).
• Depending on the size of scaling the project
nationwide, other investors such as IFC, local
Portfolio investors etc. can be approached as
co-investors in an equity capacity. This would
reduce the risk of the FDI initial investment.
• If they would like a greenfield investment, we
can approach the WBG especially MIGA to
provide the appropriate risk guarantees to
manage their investments
Foreign Direct
Investment-
Attracting Regional
Firms

16. • The project would also approach
regional Banks to give local currency
loans backed by collaterals in the home
country of the company and the
guarantee funds transfer to their home
country. This is to reduce Foreign
exchange risk.

17. • This project uses a Market systems
development approach, this means that as
with the World Banks’ Maximizing Finance
for Development approach, we are also
looking to leverage mainly Private sector
finance, expertise, and solutions to invest in
new markets or increase investment in
existing markets and increase efficiency,
introduce technology transfer etc. for
sustainable growth of markets.
Project
Approach

18. Conclusion

20. • Market- only 20% or 3.8 million
economically active population
currently served
• Business Model- aggregate through
agency different financial products.
• Product Options- diversify income
source and expand beneficiaries'
access to financial services/ products
• Grant, Financing and Risk products
available for Private partner to invest in
the Kiosks.
All the above factors should open up FDI
as an extra source of financing.