Proparco, a private sector financing arm of the French Development Agency, has provided a guarantee to a mutual fund on the BRVM to promote the development of financial markets in West Africa.

Proparco has authorized the allocation of a guarantee on invested capital and the return on investment for subscribers to a mutual fund on the regional stock exchange (BRVM) of countries from the West African Economic and Monetary Union (WAEMU).

Through this guarantee, for XOF5bn of capital ($8.5m) and a return of XOF1.33bn ($2.3m), Proparco’s objective is to boost the BRVM for this asset class, improve its liquidity, and promote the mobilization of long-term savings with institutional investors.

“This operation could consequently facilitate fundraising for large regional companies in order to finance their investment programs. It also aims to promote the diversification of the sources of incomes of social security funds and regional pension funds and increase them,” Proparco said.

The mutual fund, set up by Eco Bank Development Corporation Asset Management (EDC Asset Management), will mainly be invested in through shares (60%) and bonds (30%).

It targets institutional investors, and pension funds in particular, which are seeking to diversify their investments without additional risks.

The potential for the increase in the asset value and capital guarantee at the maturity of the mutual fund (6 years) makes it an attractive product which is in demand.

More generally, this project aims to promote the modernization and development of financial markets in West Africa, which are held back by the lack of “sophisticated” products.

“Indeed, to date, the BRVM only offers a limited range of long-term resources and remains a marginal instrument for private sector financing,” Proparco said.

Ecobank Group was set up in 1988 in Togo and is one of the leading Pan-African banks, present in 35 countries on the continent.

Based in Abidjan, EDC Asset Management is the asset management company of Ecobank Group.

Its activity mainly involves promoting and managing UCITS and, more specifically, four mutual funds.

It ranks second among the management companies operating on the BRVM of WAEMU.