MICROCAPITAL BRIEF: EU Donates $8.9m to Huruma Fund for Technical Assistance Facility Promoting Agricultural Microfinance, Market Development

Huruma Fund, a Spain-based vehicle supporting rural financial services providers in low- and moderate-income countries, recently received a donation of EUR 7.7 million (USD 8.9 million) from the EU for a technical assistance facility (TAF) set up by the two primary entities behind Huruma, Gawa Capital Partners and Compañia Española de Financiación del Desarrollo (COFIDES), both of Spain. The TAF will support companies, such as microfinance institutions, in which Huruma has invested with activities such as improving back-office technology, developing financial products for farmers, training on “sustainable farming practices,” supporting value chains, promoting access to tailored savings and insurance products, and projects intended to “improve a country’s investment climate.” The funding is budgeted to last 10 years.

The goal of Huruma is to improve financial access for small-scale farmers in Africa, Asia, Latin America and the Caribbean. The fund is led by COFIDES, a government-backed development finance institution. Gawa, a private firm, serves as the fund’s investment advisor. Huruma has a volume of EUR 120 million (USD 140 million), of which three quarters is from private investors. The private tranche of the fund projects an internal rate of return around 8 percent per year.

Gawa is a Spain-based impact investing fund manager. Founded in 2009 by Agustin Victoria and Luca Torre, the firm aims to “improve the life of low-income communities by promoting investment in social enterprises.” As of 2021, Gawa advises four impact investment funds with a total value of EUR 196 million (USD 226 million). Gawa launched three of those funds, Gawa Microfinance Fund, Global Financial Inclusion Fund and Huruma Fund.

COFIDES is controlled by three entities of the Spanish government. Its other shareholders are three Spanish banks and the CAF Development Bank of Latin America, which is based in Venezuela and was formerly known as Corporacion Andina de Fomento. COFIDES manages funding from the EU, the UN Green Climate Fund and the following entities owned by the government of Spain: Fondo para Inversiones en el Exterior (FIEX), Fondo para Operaciones de Inversión en el Exterior de la Pequeña y Mediana Empresa (FONPYME) and Fondo para la Promoción del Desarrollo (FONPRODE). As of the close of its 2020 fiscal year, COFIDES managed assets totaling EUR 1.1 billion (USD 1.3 billion).

By Zachary DeLuca, Research Associate

Sources and Additional Resources

Huruma Fund press release
https://fondohuruma.com/en/cofides-and-gawa-capital-set-up-the-technical-assistance-facility-for-the-huruma-fund-financed-by-the-european-commission/

Huruma Fund homepage
https://fondohuruma.com/

Gawa homepage
https://www.gawacapital.com/

COFIDES homepage
https://www.cofides.es/

COFIDES 2020 activity report
https://www.cofides.es/sites/default/files/biblioteca/2021-07/2020%20Activity%20%26amp%3B%20Sustainability%20Report.pdf

Previous MicroCapital article on Huruma
https://www.microcapital.org/microcapital-brief-allianz-commits-24m-to-final-close-of-huruma-fund-investor-in-rural-microfinance/

Previous MicroCapital article on COFIDES
https://www.microcapital.org/microcapital-brief-aecid-cofides-launch-71m-tif-program-targeting-financial-inclusion-sustainability-in-latin-america/

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