BII, Ecobank Sierra Leone sign $25mn deal for private sector growth

British International Investment has recently sealed a $25 million risk-sharing agreement with Ecobank Sierra Leone to propel growth in the private sector. Samir Abhyankar, the Managing Director and Head of the financial services group at British International Investment, shed light on the deal during an exclusive interview with CNBC Africa. The agreement, which marks the latest move by BII to stimulate economic development in Sierra Leone, is set to have a significant impact on high-impact sectors of the country's economy. Abhyankar emphasized the pivotal role of micro, small, and medium enterprises (MSMEs) in Sierra Leone's economy, highlighting that they account for about 70% of employment within the nation. This new $25 million facility, aimed at facilitating local currency lending, showcases BII's agility in engaging with frontier markets and implementing innovative risk navigation strategies to drive positive outcomes. The risk-sharing facility, established under the ARIA program, represents a strategic initiative devised by BII two years ago. This program seeks to channel more developmental finance institution (DFI) investment into frontier markets by dispelling misconceptions about the investment landscape in these regions. Abhyankar explained that ARIA operates in collaboration with FMO and focuses on five frontier markets to cultivate conducive environments for increased DFI and commercial capital inflows. BII's partnership with Ecobank in Sierra Leone addresses the challenge of limited collateral faced by SMEs when seeking loans, as the local banks may have constrained risk appetites. By leveraging BII's balance sheet to share credit risks, Ecobank can extend financial support to SMEs in critical sectors such as agriculture, agro-processing, infrastructure, manufacturing, and services, which collectively dominate the country's employment sector. In light of Sierra Leone's economic challenges, including high inflation, currency depreciation, and a substantial trade deficit, the targeted sectors under the new facility are strategically aligned to bolster the real economy and foster growth. Abhyankar underscored the importance of investments in sectors that drive tangible economic development and job creation. Furthermore, the $25 million deal with Ecobank builds upon a previous $15 million trade finance agreement between BII and the bank, signaling a sustained commitment to supporting economic advancement in frontier markets like Togo, Burkina Faso, and Chad. Looking ahead, BII envisions expanding similar impactful projects across the ARIA pilot countries, including Liberia, Benin, DRC, and Ethiopia. Abhyankar revealed that BII allocates a substantial portion of its annual funding, amounting to nearly $2 billion, to frontier markets, with approximately 40% of the total investments directed to these regions. Beyond the ARIA program, BII remains actively engaged in various frontier markets across Sub-Saharan Africa through diverse financial instruments and interventions. As British International Investment continues to champion private sector growth and economic resilience in Sierra Leone and beyond, the collaborative efforts with partners like Ecobank underscore a shared commitment to fostering sustainable development and prosperity in emerging economies.