Convergence has awarded a scale-up/expansion grant under the Indo-Pacific NGO Blended Finance Accelerator to Good Return to support the expansion of the Good Return Impact Investment Fund II, an evergreen USD 6.9 million blended finance vehicle designed to expand access to finance for underserved micro and small enterprises (MSMEs) across Southeast Asia and the Pacific. The facility uses partial credit guarantees to enable partner financial service providers (FSPs) to increase lending to women-led businesses, smallholder farmers, and micro-entrepreneurs who typically lack collateral and remain underserved by traditional financial institutions.
Across Southeast Asia and the Pacific, MSMEs face persistent barriers to accessing finance due to high perceived risk, limited collateral, and underdeveloped financial systems, particularly in Pacific Island markets. These constraints disproportionately affect women entrepreneurs and rural enterprises, limiting inclusive economic growth and resilience. By sharing credit risk with partner FSPs, the facility aims to unlock lending into underserved segments and sectors such as agriculture and microenterprise development.
The Good Return Impact Investment Fund II builds on a prior pilot guarantee facility that demonstrated the effectiveness of risk-sharing mechanisms in enabling financial institutions to expand lending to underserved borrowers, including women-led enterprises and businesses operating in emerging sectors such as aquaculture. The new fund seeks to scale this model through a structured investment vehicle that can mobilize catalytic and impact-oriented capital while maintaining prudent underwriting standards among partner lenders.
The facility uses a blended finance structure combining catalytic first-loss capital with senior investor capital, alongside a technical assistance facility to support partner FSPs and borrowers. Guarantees are designed to share risk while ensuring that financial institutions retain meaningful exposure, thereby encouraging responsible lending practices. Over time, the model aims to support over 5,000 MSMEs, with a minimum target of ~70% women-led or women owned enterprises, introduce new products and drive behavioural change among partner institutions by demonstrating the commercial viability of underserved borrower segments.
Design question and learning potential from the market: How can a blended finance guarantee facility be structured to effectively mobilize private capital and drive behavioural change among financial institutions while expanding access to finance for women-led and underserved SMEs in frontier Indo-Pacific markets?
Good Return’s approach responds to the challenges of operating in frontier markets by combining risk-sharing guarantees with targeted technical assistance and strong partnerships with local financial institutions. The evergreen structure of the facility is designed to support sustained engagement with FSPs and reinforce shifts in lending practices over time. By embedding gender considerations into guarantee agreements and monitoring frameworks, the facility aims to ensure that increased capital flows translate into meaningful and lasting impact.
The Accelerator will support the General Partner’s first-loss commitment to the fund to help catalyze additional investors, while also strengthening fund management, impact and gender monitoring systems, and the responsible scale-up of the facility across Southeast Asia and the Pacific. Support will further enable the development of new guarantee and lending products and the responsible scale-up of the vehicle. Together, these activities will position the facility to mobilize additional capital while delivering measurable gender and development outcomes.
1 Definition of MSMEs as per IFC
