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FMO, the Dutch entrepreneurial development bank, has partnered with Northern Arc Capital, a platform in the financial services sector, on an innovative financial program to support women, youth and migrant led businesses in Sub-Saharan Africa and countries neighbouring Europe.
NASIRA is a risk sharing facility provided by FMO for local financial institutions lending to underserved segments. The mission under the NASIRA program is to allow local financial institutions to provide loans to young women and COVID-19 affected and migrant entrepreneurs, who they normally would perceive as too risky. Thus, ‘risk-sharing’ NASIRA is an attempt to reduce the perceived and real risks of lending to vulnerable and underserved parts of the population, allowing local financial institutions to meet financing needs of microenterprises and SMEs who want to grow their business.
Under this partnership, Northern Arc Capital will support FMO by way of services including research on macro trends, assessment of financial landscape, transaction monitoring, performance reporting and modelling support for securitisation transactions in Sub-Saharan Africa and countries neighbouring Europe, for all transactions guaranteed by FMO under the NASIRA program.
Commenting on the arrangement, Marnix Monsfort, Director Financial Institutions at FMO said: “We are very pleased to have found a partner in Norther Arc Capital, just as committed to increasing financial inclusion as we are and with exactly the right expertise to do so. Reporting and modelling is an essential part of the NASIRA guarantee program, as it provides the data needed to show financial institutions the real risks of lending to underserved parts of the populations, allowing them to continue serving these groups, also after the guarantee program has ended.’’
Bama Balakrishnan, Chief Operating Office at Northern Arc Capital, said: “This exciting partnership with FMO marks our first step towards our global advisory footprint. We are pleased that our expertise on structuring, due diligence, and data modelling under the flagship NASIRA program will facilitate financial access to small businesses and women, helping them uplift their livelihoods, households and communities in Africa and the Sub-Saharan European neighbourhood. We are certain that, being selected as a trusted partner by FMO will attract similar partnerships on the advisory front with other domestic and overseas investors, in the future.”
Northern Arc Capital has a decade plus of experience in the financial services sector. As of March 31, 2021, our proprietary technology system Nimbus has enabled disbursements of over 2.5 Mn retail loan accounts involving an aggregate sum of over INR 17 Bn, in partnership with our retail lending partners. Northern Arc Capital has impacted over 54.21 Mn lives across India, of which more than 42 Mn were women across 228 originator partners.
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About Northern Arc Capital
Northern Arc Capital Limited (formerly IFMR Capital Finance Limited) is a platform in the financial services sector in India set up primarily with the mission of catering to the diverse credit requirements of under-served households and businesses. As a leading player among India’s diversified NBFCs, its business model is diversified across offerings, sectors, products, geographies and borrower segments. It’s proprietary integrated technology system called Nimbus and its risk management framework enable it to offer a diversified product suite efficiently at scale.
Northern Arc has cumulatively raised over INR One Trillion in funds for its clients since the inception of its platform in 2009. Northern Arc’s exposure is spread across 657 districts in 28 states and 7 Union Territories in India, as on March 31, 2021.
It is backed by marquee private equity players like LeapFrog, IIFL, Accion, Augusta Investments (known as Affirma Capital), Dvara Trust, Eight Roads and Sumitomo Mitsui Banking Corporation.