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Design of Blooming Roots Fund to invest in nature-based solution businesses across Latin America

Convergence awarded a feasibility study grant to AMPLO impact investing (Amplo) for the creation of the "Blooming Roots Fund." This fund, with a target size of USD 50 million, is designed to invest in for-profit nature-based solution (NbS) businesses in Latin America, with the goal of empowering rural communities and creating gender-inclusive economic opportunities through the sustainable utilization of natural resources.

In Latin America, significant social and economic strides have occurred in recent decades. However, the region grapples with ongoing development challenges that impede the realization of its full natural potential. Both job creation and consumer spending on goods and services are slowing, and consumer and business confidence are weakening. The consequences of climate change exacerbate the effects of unsustainable livestock practices, extractive industries, and rapid urbanization. The ongoing pandemic further exacerbates the consequences of climate change, escalating food insecurity and intensifying the percentage of people living below the poverty line, with disproportionate effects on women and girls.

To combat these problems, Amplo’s Blooming Roots Fund will collaborate with the Grassroots Business Fund (GBF), to invest in Nature-based solutions (NbS) enterprises across Latin America. The fund will target three productive models including agroforestry systems, silvopastoral systems, and natural forest profiting, to foster sustainable use of natural resources.

Convergence’s grant will support Amplo and GBF in assessing the feasibility of a scaled-up blended fund, building on an initial pilot conducted in response to Hurricane Iota's impact in Colombia. The enhanced strategy builds on the pilot and increases from the original geographic reach to target Nature-based Solutions (NbS) sectors in Colombia, Peru, and Central America, with a focus on gender-inclusive economic opportunities.

Design Question and learning potential for the market: How does the fund use blended finance to empower rural communities and create gender-inclusive economic opportunities by promoting sustainable utilization of natural resources?

Amplo’s blended finance strategy combines innovative financing and technical assistance to generate gender-inclusive economic opportunities for rural communities, improve income opportunities for local community members, encourage sustainable use of natural resources and restore a significant area of natural habitat.

The fund is expected to consist of 100% equity, with the exception of taking short-term loans when an investor fails to complete a capital call. Instead of traditional equity or debt, the fund generates added value by deploying hybrid instruments, which better align with potential investees' needs. A combination of revenue-based financing instruments and supply-chain financing instruments are used to increase liquidity for investors and to reduce risks. Moreover, the financing model does not require companies to provide liquid guarantees, which is a requirement that frequently excludes high-potential businesses.

The investment vehicle emphasizes delivering personalized technical assistance, supporting the carbon certification process, and ensuring impact. Concessional capital will be deployed to provide targeted technical assistance in five dimensions: investment readiness, management capacities, environmental strengthening, corporate strengthening, and Gender-Smart Technical assistance. The Gender-Smart Technical assistance aims to reduce information and capacity gaps between men and women, in order to achieve parity in decision-making over natural resources and build climate adaptation capacities for women who lead vulnerable communities. Beyond technical support, these resources will be utilized for a comprehensive measurement of social and environmental impact, involving field visits, soil studies, and drone image capture and analysis.

    In progress
    Year and Quarter
    Gender Responsive Climate Finance Design Funding Window, 2023, Cycle 3
    Design Activity
    Feasibility Study
    Region Focus
    Latin America & the Caribbean
    Sector Focus
    Agriculture, Other