Spring 2021

Macrowaste’s services are in demand and it now has several major contracts in Mali.

Blended finance and risk But creating partnerships that reach the most fragile markets in the world with much needed capital requires a specific kind of investor. For instance, Burkina Faso and Mali — plagued by drought, poverty, high unemployment and insecurity in a climate-fragile zone — represent a high risk for investors. Through the Trade Hub, small- and medium- sized enterprises (SMEs) in these two neighboring countries were some of the first to receive financing from a uniquely structured deal between the Trade Hub, the U.S. International Development Finance Corporation (DFC), the U.S.’s development bank, and Cordaid, an impact investor. In a blended finance model, the Trade Hub provided a $2 million investible first-loss grant, combined with a 50 percent guarantee by the DFC to unlock an estimated $37 million in private investment. The DFC’s guarantee, combined with the Trade Hub’s grant, reduced the organization’s risk and allowed Cordaid Foundation and its impact investment management partner, Cordaid Investment Management, to expand its portfolio in the region. Cordaid will lend an estimated $30 million to 50 companies and eight microfinance institutions in the Sahel, generating an estimated 2,100 new jobs and supporting 8,000 micro-entrepreneurs. “The timing of the Trade Hub’s grant has en- abled us to continue with themomentumwe’ve been building to grow our portfolio in the region even during the COVID crisis,” says Brenda Pennell, Senior Investment Manager at Cordaid Investment Management. “What the process has highlighted for me is the very positive and productive partnerships that can be forged with USAID and the Trade Hub to identify where the need for our investment capital is and howwe can deploy it tomaximize impact.” Pennell says that entrepreneurs and local busi- nesses are the lifeblood of the Sahel economy.

Bolstering them is critical to bringing stability and prosperity to the region. “We really do want to serve the missing middle, so those investees whose financing needs fall between what can be offered by a local bank and what can be provided by a large interna- tional investor,” says Pennell. One member of this “missing middle” is Macrowaste, an SME inMali that works to transform the country’s broken waste management system. Founded by two Malians, Macrowaste’s mission is to provide sanitary, efficient and humane waste management services. “The trash industry is connected to so many things,” says Abdoulaye Tangara, Co-Founder of Macrowaste and Chief Operating Officer. “It’s a humanitarian issue.” Tangara and Co-Founder Lamine Dembele openedMacrowaste in 2011, and the company quickly grew to service four municipalities. But once they reached a growth plateau, they faced what Tangara calls a common “Catch-22” for African entrepreneurs. To access credit, they needed to have credit. Because they had no cred- it, they had trouble attractingmore investment. Despite these obstacles, Macrowaste became Cordaid’s first loan recipient inMali. The financing allowed it to buy better trucks and open the first waste transit station in the coun- try. With the Trade Hub’s support to Cordaid, Macrowaste expects to receive further funds to set up recycling centers and add composting operations. “Our long-term goal is to be a leader not just in Mali, but in the whole region,” says Dembele, President and CEO of Macrowaste. Though the reality of risk is inescapable when investing in regions like the Sahel, partnerships designed to share the burden while working towards solutions to critical issues can allow firms to push into vulnerable areas, reaching segments of the population they otherwise would not.

The Trade Hub and PROSPER AFRICA :

Boosting trade can be an effective way to spur sustainable economic growth and development in under-served communities. To increase trade between Africa and the United States, Prosper Africa – which unites 17 U.S. departments and agencies, including USAID – leverages the full suite of U.S. government services to connect African and U.S. businesses with new buyers, suppliers and investment opportunities. As the primary mechanism for Prosper Africa in West Africa, the Trade Hub offers technical assistance to firms navigating the Africa Growth and Opportunity Act and to get firms “investor ready,” in addition to co-investment grants to de-risk investments.

Photos courtesy Macrowaste (top); Janey Fugate (top right); iStock.com (center & bottom right)

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