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To celebrate its 10th anniversary, Convergence will host the first ever Global Blended Finance Forum in Washington, DC at the Fairmont Georgetown Hotel from November 3-5, 2025.

This first of its kind gathering will bring together a wide spectrum of blended finance practitioners to share insights, discuss market trends, and break down silos, with an aim towards defining the next decade of blended finance.

The Forum will offer a variety of programming focused on the most urgent blended finance issues including private sector and local capital mobilization, data transparency, and standardization. Attendees will also have the opportunity to participate in multiple networking opportunities designed to foster collaboration and inspire and galvanize them to shape the future of blended finance.

Convergence members get access to preferred pricing. Early bird member tickets are $500 (compared to $750 for non-members). To get the discounted rate, reach out to your relationship manager.

*Early bird registration is currently open. Follow the [event LinkedIn page](https://www.linkedin.com/showcase/global-blended-finance-forum/) for up to date information, including newly announced speakers, agenda items, and themes.*

Global Blended Finance Forum

To celebrate its 10th anniversary, Convergence will host the first ever Global Blended Finance Forum in Washington, DC from November 3-5, 2025.

Convergence Global Blended Finance Forum

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__Tuesday, July 8, 2025, 9:30AM - 4:30PM CET, Paris, France__

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As an intermediate-level programme, the full-day training will combine blended finance and mobilization data, information and cases, insights from Convergence experts, notable speakers from major organizations, and technical experts in the field. Convergence members will participate in an inspiring, interactive, and practice-driven day of learning and knowledge sharing around blended finance as an approach to mobilize more private capital for the United Nations Sustainable Development Goals and Paris Agreement.

The agenda will feature:
- The State of Blended Finance 2025 – Market trends
- Blended Finance for Biodiversity – Deep dive
- Group exercise: Analyzing a Blended Finance Transaction
- Fundraising Deal Marketplace
 

This training is complimentary for members (one seat for Standard Membership, two seats for Market Builder Membership), USD 500 for additional member seats, and USD 750 for non-members. Please contact your relationship manager for more details or questions on your membership type.
 

*Register by June 18th to reserve your seat.*

In-Person Convergence Training for Blended Finance Practitioners in Europe (Paris, France)

Join us in Paris, France for a full-day training combining blended finance and mobilization data, information and cases, insights from Convergence experts, notable speakers from major organizations, and technical experts in the field.

Blended Finance Training in Paris, France

Inside the Deal: responsAbility Climate Smart Food Systems Fund

__Inside the Deal: responsAbility Climate Smart Food Systems Fund, June 3, 2025, 9:00AM - 10:00AM ET__

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Explore the inner workings of real blended finance transactions through Convergence's "Inside the Deal" webinar series. Each quarter, we delve into a successful deal, inviting the deal sponsor and key stakeholders to offer candid insights on structuring these intricate transactions.

In our upcoming webinar, we will feature responsAbility Climate Smart Food Systems Fund—This fund provides long-term expansion debt to innovative agribusinesses in Asia Pacific, Latin America and Africa with the goal of mitigating climate change, reducing food loss and promoting climate change resilience across the agricultural value chain.

During this hour-long webinar, responsAbility will walk us through the structure of the fund and their fundraising journey. We will also engage in, in-depth interviews with key stakeholders, uncovering valuable lessons learned along the way. The webinar will conclude with an open Q&A for all participants.

*This webinar is open to Convergence members only.*

Join us to learn about responsAbility Climate Smart Food Systems Fund.

Inside the Deal: responsAbility Climate Smart Food Systems

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Monday, May 26, 3pm – 4pm SGT (9am – 10am CET)

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Are you new to the Convergence platform? Join us for this interactive session to learn how to navigate Convergence’s blended finance data, deal flow, and events calendar. A team member will walk you through the different functions on our website using real world case examples. Together we will search the historical deals database for a particular transaction type, navigate the investor database to find the top 10 impact investors for a particular sector, and much more.

This session will use an interactive format to answer members’ frequently asked questions. Join us to discover how to use Convergence’s blended finance data in your day-to-day work.

This session is open to all Convergence members.

Member Q&A Session: How to Navigate Convergence’s Member Platform

Join us to discover how to use Convergence’s blended finance data in your day-to-day work.

Navigating Convergence’s Member Platform

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Join us for the virtual launch of our flagship State of Blended Finance report on __Wednesday, May 21 at 9:00AM ET__, where we will share updated data trends on the blended finance market from 2024. 

This year's report will also evaluate the market’s progress in overcoming key challenges, including the lack of private sector mobilization strategies amongst most donors, the need for better local capital mobilization, and the urgency of transparency and standardization. In light of the significant decline in ODA, this report will also explore how the blended finance market will be affected, and outlines calls to action for the field.

In addition to presenting highlights from the report, the virtual launch will also feature a panel discussion exploring how blended finance will fare in a landscape of reduced ODA.

The panel will include:

__Marie Aimee Boury__, Head of Impact Based Finance, Société Générale 
__Iftin Fatah__, Senior Program Officer, Development Policy & Finance, Gates Foundation 
__Sarah Marchand__, Director, Capital Solutions, British International Investment 
__Nick Darrant__, Special Advisor, Ministry of Finance, Rwanda

Explore past State of Blended Finance reports [here](https://www.convergence.finance/state-of-blended-finance). Our climate-focused State of Blended Finance report will be released in Fall 2025.

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Detailed agenda to follow.

2025 State of Blended Finance Virtual Launch

Join us virtually for the launch of the 10th edition of our flagship State of Blended Finance report on Wednesday, May 21 at 9:00AM ET, where we will share data, trends, insights, and recommendations from the report.

2025 State of Blended Finance Launch

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__Thursday, May 15, 2025 at 2:30PM - 3:30PM CET__

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Join the World Association of PPP Units & Professionals (WAPPP) for an insightful discussion on Mobilizing Local Currency Financing for PPPs, where experts will explore how local currency financing can enhance the sustainability, stability, and viability of infrastructure projects. The session will highlight key benefits such as reducing foreign exchange risk, strengthening domestic financial markets, and fostering long-term economic growth.

WAPPP 2025: Mobilizing Local Currency Financing for PPPs

Join WAPPP for this session exploring how local currency financing can enhance the sustainability, stability, and viability of infrastructure projects.

Mobilizing Local Currency Financing for PPPs

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Join us for an informative webinar that will connect you to relevant blended finance investment opportunities in emerging markets. During this interactive session, Convergence members will share details about their investment opportunities that are listed on our live deals database. This is a great opportunity to explore new and unique transactions and learn from developments in the broader blended finance ecosystem. 

Whether you're a seasoned investor or just starting, this webinar is tailored to everyone interested in discovering promising new ventures in emerging markets.

Save the date: __May 13, 2025, from 9:00 -9:45 AM ET.__ During the session, we will present two compelling deals from our live deals database:

- __Amazonia Impact Ventures Fund 1– Amazonia Impact Ventures__
Amazonia Impact Fund I (AIV) is a blended finance debt-vehicle, that lends to agricultural and forestry focused businesses with high impact potential, supporting vulnerable communities such as indigenous peoples in Colombia, Ecuador, and Peru. 

- __Cleantech Inventory Finance Facility– Offgrid.Finance__
Cleantech Inventory Finance Facility is a blended finance facility that on-lends capital to profitable solar and agricultural clean technology SMEs in East Africa. 

*This webinar series is exclusive to investors registered on the Convergence platform.*


Deal Connect: May 2025

Join us for an informative webinar that will connect you to relevant blended finance investment opportunities in emerging markets.

Blended finance solutions for Asia: Mobilizing local capital for sustainable impact

__Thursday, May 8, 2025, 9:00AM to 11:30AM SGT on the sidelines of Ecosperity Week in Singapore__

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How can blended finance help develop stable, self-sustaining projects to achieve the UN Sustainable Development Goals? In this event, we will delve into the latest blended finance insights  and discuss best practices for mobilizing local capital toward sustainable infrastructure and climate solutions across Asia.

Experts will demystify blended finance mechanisms beyond concessional capital, showcasing ways to crowd in private investment and how blended finance can serve as not only a catalyst, but also a transitional tool that supports the expansion of the broader sustainable finance ecosystem in the region.

*Due to limited capacity, this is an invite-only event. If you are interested in attending, please reach out to: asia@convergence.finance*

Mobilizing Capital for Blended Finance in Asia

Moblizing Capital for Blended Finance in Asia

Scaling the Insurance Sector’s Role in Blended Finance

__Wednesday, May 7, 2025, 3:30PM to 5:00PM SGT on the sidelines of Ecosperity Week in Singapore__

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Convergence and the Global Asia Insurance Partnership (GAIP) is currently developing a practical playbook to guide the insurance sector in engaging with blended finance to mobilize resources for sustainable development and support development of innovative products and solutions which can support business growth of the insurance sector. The playbook will focus on how the sector can support the de-risking and scaling of blended finance that can fund projects that not only enhance climate resilience but also mitigate health risks, such as building climate-resilient healthcare infrastructure and other large-scale initiatives that target health vulnerabilities caused by climate change.

In light of these findings, and as part of the process to develop the playbook, this session aims to bring together senior insurance executives to:
- Raise awareness of blended finance structures and explore possibilities of new product innovation supporting business and sustainability objectives 
- Explore challenges that have hindered insurance sector involvement.
- Brainstorm opportunities to accelerate insurance participation in blended finance in supporting the climate-health nexus objectives in the Asia region.

The event will begin with an presentation on the overview of blended finance, leading into the roundtable focused on three core areas of engagement: risk advisory, underwriting and coverage and investment, followed by a collaborative open discussion.

*Due to limited capacity, this is an invite-only event. If you are interested in attending, please reach out to: asia@convergence.finance*


Australian High Commission & Convergence Ecosperity Networking: Applying a Green and Orange Lens to Investment

__Tuesday, May 6, 2025, 6:30PM to 9:00PM SGT on the sidelines of Ecosperity Week in Singapore__

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The Australian High Commission in partnership with Convergence cordially invites you to join us for a panel discussion and networking reception at the Australian High Commission Singapore.

Expanding definitions of value and risk, in addition to fundamental shifts in the real economy have ignited considerable shifts in approaches to asset allocation. This event aims to demonstrate the commercial value of applying a green (climate) and orange (gender) lens to an investment portfolio. By drawing upon case studies from Southeast Asia, it will serve to encourage greater private capital towards climate and women led enterprise.

You will have the chance to meet with like-minded ecosystem partners across the public, private, and philanthropic sectors, and exchange ideas on advancing this agenda across this region. 

*Due to limited capacity, this is an invite-only event. If you are interested in attending, please reach out to: asia@convergence.finance*


Applying a Green and Orange Lens to Investment

__Wednesday, April 30, 2025, 5:30PM ET__

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Join the Convergence community for a networking happy hour with members and partners in Washington D.C. during DC Climate Week 2025. This event is an opportunity to engage informally with like-minded professionals and institutions in blended finance, expand your network, exchange ideas, and reconnect with fellow Convergence members. Don't miss this chance to create and build valuable connections!

*Registration is open on a first-come-first-serve basis, with a limit to 2 persons per organization.*

Member Networking Reception in Washington D.C.

Convergence Member Networking Reception in Washington D.C.

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__28 April – 2 May 2025 | Lagos, Nigeria__

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The Annual AVCA Conference was established to unite investors, entrepreneurs, policymakers, and business leaders for a common purpose: to showcase investible opportunities across the African continent. As the premier private capital gathering on the continent, the conference welcomes delegates from over 50 countries, serving as a platform for critical discussions on mobilizing
capital for sustainable growth. 

This year's theme – __Bold Moves: Powering 10x in Africa__ – reflects AVCA's mandate to catalyze transformative growth amidst complex market dynamics. It acknowledges current challenges—from consolidation and currency volatility to exit constraints—while emphasizing opportunities through innovative financing structures, dynamic value-creation strategies, and enhanced collaboration between fund managers, development finance institutions, and commercial investors.

Convergence is an industry partner of the Conference.

21st Annual AVCA Conference & VC Summit

Don’t miss the 21st Annual AVCA Conference & VC Summit in Lagos!

Africa's Green Economy Summit

Tri-Sector Associates (TSA) is an end-to-end impact firm that partners with government, private sector, and civil society organizations in Singapore and across Asia to tackle emerging societal challenges, with a focus on education/skill building, health, and climate. They do this by bringing these different sectors together through new collaboration models, including blended finance, and variations of pay for success (as a subset of blended finance), such as social impact bonds, social impact guarantees, and outcomes amplifiers. TSA utilizes a ‘for Asia, by Asia’ model to address the local nuances inherent in their work.

We spoke with Chris Glotfelter, Senior Project Leader at TSA about how they engage in blended finance, their priority sectors, challenges they have faced in the blended finance space, and more.

__How do you engage in blended finance? How has your approach evolved?__

TSA is committed to supporting the evolution of funding systems through cross-sector collaboration to ensure more (and more impactful) funding is allocated to projects that progress the Sustainable Development Goals across Asia. This requires innovative financing approaches and mechanisms, which is where blended finance comes into play. Our work focuses on three thematic areas: education/skill building, health, and climate/environment. 

As concessional capital is typically the more difficult part of the blended finance equation, especially as donor funding is being cut back, we come at it from this angle: working with foundations, family offices, and government to seed blended finance projects. This is typically the first time these organizations have waded into blended finance, so we allow them to dip a toe in by undertaking what we call a ‘sequential blended finance approach.’ Essentially, philanthropic capital goes in first to seed an opportunity and mature it to the point that it is commercial capital ready, often while structuring a mechanism to recycle the philanthropic capital into a later stage of growth or into a separate opportunity. This increases the leverage of each concessional dollar committed. Engaging with organizations in this way allows for a smoother transition into blended finance compared with the blended fund approach.

__Can you tell us about any specific blended finance projects/programs you’ve worked on?__

As a firm that began with a core focus on pay-for-success projects, later branching out to innovative and blended finance, we have quite a few examples. Two are outlined below, demonstrating how the funding models unlocked new benefits:

__A. Conservation International Recyclable Technical Assistance Facility (TAF)__ 
There is a significant pipeline of nature-based solutions (NbS) projects in the Asia Pacific region. However, many of these projects are not yet investment-ready because of knowledge gaps in the financial, operational, and technical aspects of these projects. This increases their perceived risk-level and does not fit the current preferences of NbS investors. Conservation International sought to accelerate the investment readiness of these projects and commissioned Tri-Sector to assess the landscape of potential blended finance options, taking into consideration the specific geography and nature of the issue. A technical assistance facility (TAF) was developed where capital allocated to projects would be recycled back into the TAF upon investment into the project. Through this structure, $12 million in philanthropic commitments were made, which sought to catalyze over $100 million in commercial capital for NbS projects. Due to the recyclable nature of the TAF, donors saw that their capital was highly catalytic, paying repeat dividends. Since then, 14 projects in seven countries across the region have received support from the TAF, with some being able to provide repayments back to the TAF.

__B. [Skills for Success](https://www.linkedin.com/feed/update/urn:li:activity:7247123147248816128/) Outcomes Amplifier Model__ 
Skills for Success is a pay-for-success project tackling the problem of Singaporean youth not in employment, education, or training (NEETs), by providing free-of-charge access to a skill building program with a monthly stipend to offset living cost considerations. Based on the [Outcomes Amplifier model](https://ssir.org/articles/entry/keeping_the_social_impact_going_when_a_pilot_project_ends), which was pioneered by Tri-Sector, additional funding is allocated to the program based on verified outcomes, which is then used as a pay-it-forward model to fund the next round of learners. 

In this model, Temasek Holdings (TH) and UBS Optimus Foundation (UBS-OF) provide the upfront funding to kick off the program and cover the monthly stipends. Generation Singapore, as the service provider, oversees the training program and provides soft skills training, along with placement services. Upon achieving verified outcomes, the Institute of Policy Studies (part of the Lee Kuan Yew School of Public Policy at the National University of Singapore) provides the outcomes funding to fund the next round. Capital is blended in the early stage of the program, with up to 30% of the funding coming from TH and UBS-OF, while at least 70% of the remainder of the funding comes from the government in the form of SkillsFuture funds. This cross-sector collaboration model is a key reason all the partners have bought into this project, with the view that this pilot can become replicable and scalable elsewhere in Southeast Asia.

__What innovative blended finance solutions have you recently implemented or are you currently exploring?__

Currently, we are working on a number of solutions. One of the most interesting, in relation to a key environmental challenge at present, is the use of philanthropic capital to support just transitions related to the early retirement of coal-fired power plants in Southeast Asia. The blending required here, and the additionality sought by philanthropic capital, is not straightforward and requires thinking outside the box to create a win-win-win situation for private, public, and philanthropic organizations.

__What sectors and focus areas are your priorities? Where do you see maximum potential to scale blended finance in the region?__

Recently we have seen a lot of interest in two areas: i) skill building; and ii) the intersection of climate and health. With regard to skill building, we have seen great interest in ethical income share agreements – those which do not make learners worse off than if they were able to access student loans or other educational financing – which typically requires some concessionality, rather than a pure commercial mindset. However, the area with greater potential is at the intersection of health and climate, where we are seeing an emergence of sub-themes including heat-related illnesses, water and food security, mental health impacts, and ocean-linked economic livelihoods. Although both health and climate are relatively well understood on their own, the themes at their intersection are just now coming into focus and being better understood, with new interventions being developed. Blended finance opportunities in this space will need to address how impact-first businesses can scale and become sustainable while being at the leading edge of adaptation solutions that are seen as less interesting (and commercially viable) than mitigation solutions. As a region that will be highly impacted by climate change, Southeast Asia is a strong focus in this space.

__How do you measure impact and evaluate success for your blended finance activities?__

We focus on both traditional and emerging impact indicators. On the traditional side, we track the leverage multiplier created using concessional capital to attract commercial capital. On the emerging side, we focus on the wider ecosystem impacts of blended finance, such as the new entrants to blended finance transactions and whether blended finance projects unlock wider incentives (e.g., the Monetary Authority of Singapore’s tax incentives for family offices1).

__Do you apply a gender lens in your work?__

Though we do not apply a blanket gender lens across all our work, we certainly have seen opportunities to make gender a meaningful part of the conversation. One recent example is the [Skills for Success program](https://www.linkedin.com/feed/update/urn:li:activity:7247123147248816128/) which was launched based on the Outcomes Amplifier Pay-for-Success model using funding from TH, UBS-OF, and the Institute of Policy Studies. Given females are highly underrepresented in technology-related roles in Singapore, one of the program targets was to have female participants reach parity with males over the course of the program. This has the added benefit of creating impact beyond the target beneficiaries (at-need youth), drilling down to who would benefit most from the program’s interventions.

__What are some interesting or unexpected challenges Tri-Sector Associates has faced while navigating the blended finance space?__

One of the unexpected elements that we have encountered has been large banks coming to us and wanting to do more in the blended finance space, but being faced with challenges in two areas: i) a lack of a voluminous pipeline of projects; and ii) not enough access to philanthropic capital to meaningfully support projects that are of a sufficient size to make sense for their clients. This shows us that more must be done in the ecosystem to build the components of blended finance before it can truly proliferate in the global market.

__What advice do you have for other non-profit and social enterprises interested in participating in blended finance?__

Being able to ‘speak the language’ of both commercial and concessional capital providers is critical to participating in blended finance. We find that when organizations cannot communicate efficiently, nothing gets done. If you are finding that this is the case, consider hiring an intermediary who can ‘translate’ between all the parties and create cross-sector alignment. This will naturally be an added cost, but will save time and money throughout the process, and many times is the critical factor in whether the project launches.

__Given TSA is a part of the larger Temasek Trust family, how do you collaborate with other entities internally to bring the collective experience of the Temasek group to clients and stakeholders and advance the ecosystem in Asia?__

We are so thankful to be a part of Temasek Trust’s ecosystem, which enables us to support meaningful causes across its network – both in Singapore and the wider region. Our collaborations take various forms: we introduce new ideas, they bring potential projects to us, or we co-create new initiatives. This versatile approach has been key to fostering strong partnerships, as engagement is shaped by the unique needs and opportunities of each collaboration. Likewise, our collective support for the broader ecosystem is not one-size-fits-all, as everyone requires a tailored approach to deliver meaningful impact.

The diversity of the Temasek Trust ecosystem allows us to shape projects that span commercial, concessional, and purely philanthropic capital, while drawing on deep thematic expertise. This convening capability, combined with the ability to bridge perspectives across different sectors, is one of TSA’s value-adds for our partners both within the Temasek Trust ecosystem and beyond. When like-minded partners come together with a shared purpose, the results can be truly transformative.

__How do you see TSA’s blended finance activities evolving in the future?__

As our deal sizes increase over time, we envision more engagement with multilateral development banks and development finance institutions to support the quantum of funding required to finance these projects. Naturally, this could come in the form of a fund. We are especially seeing interest from organizations regarding the management of purely philanthropic funds (e.g., technical assistance facilities), these sit outside of the typical remit of fund managers on the commercial side who are also willing to blend some concessional capital into these funds. Given our strong relationships with philanthropists, this would be a natural next step for TSA.

1. Source: [MAS](https://www.mas.gov.sg/schemes-and-initiatives/fund-tax-incentive-scheme-for-family-offices)

Learn about how Tri-Sector Associates engages in blended finance, their priority sectors, challenges they have faced in the blended finance space, and more.

Tri-Sector Associates Member Spotlight

Tri-Sector Associates Member Spotlight with Chris Glotfelter

Learn how blended finance fits into AECF's approach, how they measure and track impact, the evolution of their business model, and more.

AECF Member Spotlight

Africa Enterprise Challenge Fund Member Spotlight with Victoria Sabula

BPL is a broker specializing exclusively in credit and political risk insurance (CPRI) for financial institutions, development finance agencies, multinational corporations, and investors around the world. They work closely with their clients to structure insurance programs for those engaged in international trade, investment, and lending, primarily to protect against the risk of non-payment by borrowers but also in-country political risks. Since their founding in 1983, they have settled over 600 CPRI claims, collecting over $4 billion on behalf of their clients. 

Investing in emerging markets often comes with high real or perceived risks. In development finance, risk-mitigating instruments such as non-payment insurance and political risk insurance are crucial to help increase origination capacity and adjust the risk-return profile of transactions so that private investors can enter developing countries. In addition to private investors, more development finance institutions (DFIs) and multilateral development banks (MDBs) are benefiting from these insurance products, bolstering their balance sheets and increasing their lending appetite. 

We spoke with Harry McIndoe, Director at BPL, about how insurance is used in the development finance market, BPL’s experience in the blended finance space, advice for those interested in partnering with insurers, and more.

__Can you tell us what products you focus on and the scope of the CPRI market?__

Our core focus is Comprehensive Non-Payment Insurance. This product is similar to a silent risk participation from an A-rated or double A-rated insurer that sits behind the policyholder, thus protecting them from losses on their funded or unfunded exposures. It covers non-payment for any reason so has a very simple trigger. There are roughly 60 active insurers in this space, all of whom are rated S&P A- or higher, with a large proportion now rated AA-. By swapping the counterparty rating with that of the insurer, institutions can recognise huge benefits in terms of balance sheet management and increasing their syndication capacity. 

BPL has been at the forefront of developing the market’s capabilities in recent years, and appetite has expanded to include a wide range of underlying debt instruments and structures. Another focus area is Political Risk Insurance, whereby our clients seek to cover certain specified cross-border country risks, such as expropriation, currency inconvertibility/non-transfer, and war.

__Why did BPL decide to become involved in development finance?__

Helping mobilize finance to where it is needed most has always been a cornerstone of our work. We have been active in development finance since our inception, helping both commercial and non-commercial institutions mitigate credit and country risk exposures, enable larger ticket sizes, and manage capital/balance sheets. Increasingly, we are seeing the power of insurance in derisking development finance. It has been applied across a wide spectrum of underlying exposures and stretched tenors, in the midst of long-term and disruptive trends.

We are keenly aware that CPRI has an important, and sometimes underestimated, role to play in enabling and accelerating the flow of funds to support sustainable objectives – including the transition to a low carbon economy and the mobilization of sustainable finance to developing markets. As an insurance broker we recognize that our ability to directly influence client investments and lending decisions is limited, nevertheless our clients value our support in helping them accelerate towards sustainable objectives. Additionally, our leading market position enables us to offer incisive market intelligence and drive product innovations that support the proliferation of sustainable finance, infrastructure, investments, and ambitions.

__The use of non-payment insurance in blended finance is still niche and often provided by DFIs/MDBs themselves. How has BPL participated in the blended finance space?__

Our work with DFIs/MDBs has primarily been on projects supporting the United Nations Sustainable Development Goals (SDGs), such as financial inclusion, infrastructure, healthcare, sanitation, and utilities. While some of these institutions do issue guarantees/risk covers themselves, many work with the private insurance market to increase origination capacity and syndicate a portion of their own balance sheet exposures.

When it comes to MDBs, non-payment insurance is increasingly relevant in helping to action the recent G20 Capital Adequacy Framework recommendations, which underscores the importance of insurance for enhancing lending capacity and enabling MDBs to leverage their balance sheets. 

In addition, we are often asked to secure non-payment insurance on projects for commercial lenders where there is DFI/MDB involvement, such as project finance transactions where a DFI might be a co-insurer or lender, A/B loans, and more recently, on “repack” transactions whereby private institutional capital can be crowded in with the benefit of A/AA rated insurance coverage. 

Another area where we see engagement is on portfolio and securitization solutions, where the insurance market has considerable appetite to support DFIs/MDBs through a more programmatic approach to risk-sharing and capital management, providing significant benefits at scale.

Our insured portfolio currently stands at approximately $87 billion, with nearly 60% in developing countries. This scale gives us an accurate finger on the pulse of the market and equips us with a real-time view of market appetite across global markets and underlying project types.

__What have you learned about the role of the insurance brokers in blended finance transactions?__

MDBs/DFIs are not too different from commercial financial institution clients in terms of gleaning the best results out of the CPRI market. 

One of the challenges facing insurers in the development finance space is the risk profile of their transactions. DFIs/MDBs have a development mandate, while CPRI insurers active in the market must answer to commercial capital providers. The role of a broker is to navigate this occasional disconnect, underlining the MDB’s preferred creditor status and securing the optimal coverage at the right price, all while keeping in mind that there is a finite amount of credit risk that insurers are willing to take in certain countries.

__What advice would you give to participants in the blended finance market interested in partnering with the insurance industry?__

A potential risk factor for less experienced DFIs/MDBs when it comes to using CPRI can be a lack of understanding of the product or the insurance market. This emphasizes the importance of using a broker who understands the market and can guide them through the process – ideally one with extensive emerging market experience and a good claims track record. These factors help indicate the strength of the broker in building goodwill and relationships with the insurance market on behalf of its client. 

Another critical element when engaging with the insurance market is partnership. If participants embrace that partnership approach and transparency with the market, they can count on a long and fruitful collaboration. Indeed, we find insurers see a lot of value in projects and expertise from DFIs/MDBs and in their origination strategy. Further, insurers tend to appreciate the portfolio and market diversification that such partnerships offer them.

__How do you see BPL’s blended finance activities evolving in the future?__

The SDG funding gap is a huge area of concern that CPRI can play a vital role in bridging. According to the 2024 Financing for Sustainable Development Report, SDG financing and investment gaps are estimated at between $2.5 trillion and $4 trillion annually. At BPL, we are keen to continue building on our 40-year commitment to the development finance space and advocating for the huge value for development financiers that comes from working with the CPRI market. We expect to see much more involvement for BPL as the role of insurance in helping DFIs/MDBs meet their objectives becomes more visible and as insurer appetite becomes increasingly supportive.

Learn how insurance is used in the development finance market, BPL’s experience in the blended finance space, advice for those interested in partnering with insurers, and more.

BPL Member Spotlight

BPL Member Spotlight with Harry McIndoe

UBS Optimus Foundation (UBS OF) is an independent philanthropic foundation associated with UBS, the world’s largest wealth manager. UBS OF uses a range of grant making and investment tools, and approaches such as blended finance and outcomes-based finance, to fund scalable, evidence-based approaches.

UBS OF’s approach is based on a recognition that in order to achieve the Sustainable Development Goals (SDGs) we need a combination of more financing and better results. To raise more financing, UBS OF follows a dual approach of engaging more UBS clients to donate philanthropically, while at the same time making use of investments, through blended finance structures, to engage more commercial capital into social and environmental development. To achieve better results, UBS OF has strongly engaged in promoting outcomes-based finance, which at its core is simply a shift to paying for results, rather than paying for action. This approach puts the emphasis and ownership on the partners implementing programs, giving them flexibility to innovate, change, and focus on continuous improvement.

We spoke to Dhun Davar, Global Head of Social Finance at UBS OF about how they engage in blended finance as a foundation, how they measure impact, their focus on outcomes-based finance, and much more.

__In your own words, can you tell me about UBS OF and how it engages in blended finance?__

By being closely associated with UBS AG, a major wealth and asset manager managing over USD 5 trillion in assets, UBS Optimus Foundation is in a unique position to draw commercial capital into social and environmental programs that otherwise would not receive funding. This is made possible by approaches such as blended finance and the unique collaboration opportunities with various parts of UBS. Why is that? Because many UBS clients are seeking exposure to impact, and while UBS already has a significant offering, UBS OF engagement expands this offering to further opportunities that would have previously been impossible. These opportunities are of interest to philanthropists that are supporting UBS Optimus Foundation and keen to leverage their impact -  while also offering UBS clients - investment opportunities that did not exist previously or that they would not have had access to.

__Can you describe one or two blended finance transactions that UBS OF has been involved in? In what capacity did the foundation participate?__

UBS OF started making impact investments in 2015 and we launched the first blended finance fund in 2022. Two examples are:

The SDG Outcomes Fund, which is a Luxembourg domiciled fund that invests in outcomes contracts (outcomes-based funding program). UBS OF provides 20% first-loss capital to unlock additional capital from investors in the fund, the UBS OF investment is in turn supported by donations from over 30 UBS clients.

Investors will receive returns linked directly to verified social and environmental outcomes. As the junior/philanthropic share class investor, the Foundation takes the highest risk and lowest return, but if the fund overperforms the foundation can even catch-up to the highest return share class. This is attractive for UBS OF as a fund like this builds on our successful track record in outcomes-based financing, but at the same time raises five times more capital than would have been possible if the Foundation had done it alone.

Other investors include the United States International Development Finance Corporation, British International Investment, as well as four family offices that are leading the private investment component. The fund is being managed by Bridges Outcomes Partnerships, who have a strong track record in outcomes-based finance in the UK, and who have partnered with UBS OF to apply this experience globally in lower and middle income countries. The fund focuses on education, employment, health and the environment.

Another example is the Future of Work fund (FWF), run by Chancen International, a fund that provides financing for students in the form of income share agreements. Given the early nature of this initiative, to date we’ve supported the FWF fund with a grant and with an investment. Student financing is an area we are doubling down on. With global demographic changes currently underway, a large part of the future youth and working age population will live in Africa, the Middle East, South Asia, and Southeast Asia. Ensuring people in these regions are well educated and productive will be key for their personal growth and outcomes, the health of the communities they live in, as well as global prosperity.

__How do you measure the impact of your blended finance activities? What does that impact look like?__

We measure impact in blended finance transactions the same way we measure impact in any of the foundation’s other grants and investments. In 2023, we developed and rolled out our own industry-aligned impact rating tool that aims to assess programs against three impact categories: intentionality, additionality, and measurability. What we add or emphasize in blended transactions is the financial leverage and scale that the transaction can achieve. It is important to achieve scale, but also to leverage commercial capital, which is the main point for considering a blended finance transaction.

__What advice do you have for foundations who may be interested in entering the blended finance space?__

We see opportunities for corporate and philanthropic foundations to play a bigger role in de-risking blended finance transactions, catalyzing innovation and enterprise and achieving a much greater multiple in terms of scale than they would otherwise be able to do. Our advice would be to get experience and develop your team and knowledge on approaches, actors, and get access to opportunities. A great way to get started is partnering on a deal or transaction. Perhaps consider partnering with other experienced foundations as a route for engagement and building your capabilities. In short, get engaged!

__UBS OF has been a big supporter of outcomes-based finance transactions, especially in the education and health sectors. What have been some key learnings for supporting these transactions? What are you doing in order to scale up this approach and ensure that such transactions are more efficient/have larger deal sizes.__

The SDG Outcomes Fund is our answer to scale. It is the biggest investment fund in this space so far. In order to develop the market, we are working closely with stakeholders to continue shifting the social development and environmental space to focus on results.

The SDG Outcomes fund is also a way in which we are seeking to transition from investments with concessional capital to pure commercial investments. In early programs, UBS OF acted as the sole investor, however with the SDG Outcomes Fund, we’ve reduced this exposure to 20%, with an aim of such structures being fully funded by commercial investors in the long run.

At the same time, we are working with like-minded partners to build the market for outcomes-based finance by getting more programs into the design and scale stage. One of our key initiatives in this area is the Outcomes Accelerator, which we have launched together with the UK Foreign, Commonwealth and Development Office (FCDO) and the Swiss State Secretariat for Economic Affairs (SECO). The objective of the Outcomes Accelerator is to fund promising outcomes based programs to launch and scale. As part of this work, we support an annual conference of practitioners, the [Outcomes Finance Alliance](https://outcomesaccelerator.org/outcomes-finance-alliance/).

Finally, we work with partners such as FCDO, SECO, the Organisation for Economic Co-operation and Development, the World Economic Forum, and others to advocate for better effectiveness in development funding, with outcomes-based financing being a key lever for this. Next year’s [4th International Finance for Development conference](https://financing.desa.un.org/ffd4), in Seville, Spain, is an opportunity for the global development community to consider how the use of outcomes-based financing, with its focus on better results can help unlock better outcomes in our mission to achieve the SDGs.

__UBS OF has recently become more active in the climate finance space, especially in sectors like nature-based solutions. What has been the motivation for this and what role do you expect to play in this space?__

UBS OF has traditionally been focused on children and young peope, and as it is universally recognized that climate and climate change have a disproportionate effect on children, this is an area that is naturally of interest and importance to us. At the same time, we see significant interest from philanthropists to focus on climate and environments issues and would like to play a role in connecting the dots between well meaning funders and strong project opportunities on the ground. We have decided to focus on nature-based solutions (NbS) in particular as we see these as more sustainable in the long run with emphasis beyond carbon on biodiversity and communities.

In our first work in this space we have partnered with Mana Impact to study best practices in Monitoring, reporting and verification (MRV) in NbS and are now engaging with Terratai a “nature venture builder” that builds businesses to protect and restore some of Asia’s most at-risk land and seascapes.

As we engage more deeply we are now working on the design of a blended finance fund focused on carbon using NBS. We are developing this fund in collaboration with UBS Asset Management, with an aim of offering this to UBS clients globally.

__How do you see UBS OF’s blended finance activities evolving in the future?__

We're aiming to grow and scale the number of blended finance transactions in collaboration with UBS. Themes we are particularly interested in are employment and climate though we continue to build on healthcare and education as well. Drawing on our experience and track record we would also like to continue to innovate on the role of concessional funding and see if we can reduce the level needed in each transaction, because rather than volume it is the strategic use of this capital that is important.

Learn how UBS Optimus Foundation engages in blended finance, how they measure impact, their focus on outcomes-based finance, and more.

UBS Optimus Foundation Member Spotlight

UBS Optimus Foundation Member Spotlight with Dhun Davar

Rand Merchant Bank (RMB) is a leading African corporate and investment bank and part of FirstRand Limited, one of the largest financial services groups in Africa. RMB offers their clients innovative, value-added advisory, funding, trading, corporate banking, and principal investing solutions. RMB has a deal footprint in over 35 countries in Africa, as well as a presence in the UK, USA, India, and China. 

We spoke with Alessandro Scalco, Blended Finance Lead, at RMB about their blended finance strategies, how they measure impact, their future in the blended finance space, and more.

__What can you tell us about your approach to using blended finance?__

Although blended finance is an evolving concept in Africa, RMB is very familiar with its features, for example the blending of different risk types in a capital stack. We have identified blended finance as an important capability in delivering on our ambitions for shared prosperity in Africa. We believe that an African corporate and investment bank should be driving blended finance in the region to help find solutions and close developmental funding gaps in Africa.

RMB is currently working on several blended finance deals in South Africa. We are sector agnostic working across a variety of sectors, including healthcare, affordable housing, financial inclusion, and women-led businesses.

__Can you tell us about the partners you work with and any commonalities and differences between them?__

We work with a variety of partners, including local development finance institutions (DFIs), international DFIs, institutional investors, corporates, foundations, and other investor types. One of our focus areas is fostering relationships with local DFIs to work towards closing development financing gaps in Africa. Many of the foundations we’ve engaged with are reassessing their grant programs and are interested in using innovative finance structures to create more impact with their grants.

What is clear from our blended finance engagements is that across the spectrum of stakeholders both impact and financial return is critical. However, different stakeholders have different priorities. Grant and concessional funders prioritize impact, aiming to catalyze investors into transactions to make them bankable. While commercial investors are more focused on financial returns. However, regardless of the type of stakeholder, impact is an essential component of blended finance transactions. For us striking the right balance between both sides, impact and financial return, is critical. 

__Can you share an example of a successful transaction that has benefited from your blended finance approach?__

Blended finance is quite new to RMB in the sense that we haven't structured for the market, but I’ll tell you about a transaction where we were the social investor. 

In March 2023, RMB provided upfront funding as a social investor for the Imagine Social Impact Bond, an outcomes-based funding model aimed at improving the health outcomes of adolescent girls and young women in South Africa. The South African Medical Research Council (SAMRC), in its role as outcomes funder, made payments based on the achievement of pre-agreed impact outputs and proxy-outcomes. As the social investor, RMB only received a return on the upfront funding provided. The outcomes funder is only required to make a payment to the extent that the impact outputs and proxy-outcomes are achieved by the programme implementer, Networking AIDS Community of South Africa (NACOSA). NACOSA delivers a package of interventions targeting the prevention and management of HIV/AIDS and pregnancy within the target population. Outcomes achieved each quarter are verified by an Independent Verification Agent (IVA).

The implementation risk of the program is transferred to RMB and the efficiency of public health service funding is increased. In addition to defining a package of health services that improves health outcomes for adolescent girls and young women in 14 schools based in Moretele and Newcastle, the program seeks to test the funding model for scale to enable greater investment from the private sector and achieve both financial and social returns.

Our goal with this transaction was to deepen our understanding of blended finance. It was a key step in our journey towards establishing our blended finance capabilities and getting buy-in from relevant stakeholders, as well as a proof-of-concept that these transactions can work. After seeing the impact that the transaction had and is currently having, we decided that we are quite well suited to structure blended finance transactions and take them to market.

We're already talking to SAMRC, NACOSA, and other organizations about how we can support future funding in the space and structure for that market. 

__What are some ways that RMB measures and evaluates the success and impact of blended finance transactions?__

We currently have a pipeline of about five transactions across healthcare, student accommodation, affordable housing, financial inclusion, and conservation. Measurement and evaluation of success is different for each transaction. The critical first hurdle for us in any transaction is what is the impact? That's always the first question we ask. Then, what is the commercial investor trying to get out of this? What is the return or the impact that they're trying to get and how can we get that right for them? The second aspect is looking at the implementer or the beneficiary of the transaction. What's critical is that there is a measurable outcome, a tangible impact resulting from the measures implemented. Another important element of measuring success for us is ensuring that there's a stretch element to the impact. We want to push the institution or the beneficiary to drive impact and go above and beyond what they might normally do, while still being sustainable and achievable.

In a market like Africa and South Africa you also need to be careful in striking that balance, because if you go too far many projects will fail from an impact perspective, which could lead to the perception that blended finance is ineffective. However, on the other hand if you choose easy targets, you could get criticism that transactions are not impactful enough.

We measure our success and impact by looking at the replicability, scalability, and additionality of each transaction. For example, if we are looking at an outcomes-based funding structure in the conservation space, success for us would be: 
i. creating a transaction that results in the conservation project securing the required funding to achieve scientifically tested and agreed upon success metrics 
ii. crowding in commercial investors to take on the implementation risk (but with the potential to outperform if successful) 
iii. developing the market for these types of instruments, thereby crowding new capital into conservation and shifting the way traditional grant/donation funding is channeled into these projects.

__As a corporate and investment bank, what are some unexpected challenges or opportunities you’ve experienced navigating blended finance transactions?__

Blended finance is still new to the market and a lot of energy is expended on explaining what it is. There is also the risk that some of the deals are too highly structured or complicated and will not be replicated or taken up by traditional investors (i.e. investors other than DFIs or impact focused investors). Access to deals seems to be a common theme in this space right now. This doesn’t mean there aren’t companies who need the capital, we just haven't bridged the gaps to provide funding to those businesses yet. 

The opportunity for us as a bank is to explore how we can close those gaps and create more bankable deals. We are in a good position as RMB to close this gap in that we have a variety of capabilities and skills at our disposal. Additionally, the brand backing goes a long way in legitimizing the importance of blended finance in Africa. 

The struggle we have as a bank is getting the deal size right. We acknowledge that we'll need to look at deals that are not our usual deal size, so we can build our blended finance capabilities. Too often the knee jerk reaction in Africa is to use a debt structure because it's more palatable to investors, but there is a need to use more patient capital. That's something we need to navigate.

__How does RMB apply a gender lens?__

We haven’t reached the maturity yet where we can say we specifically apply a gender lens on investments, but we look at it on a deal-by-deal basis.

The issue facing the South African market now is that there is a lack of investable deals, this is not to say there is a lack of businesses looking to be funded, but rather the traditional sources of funding (i.e. banks) won’t fund early-stage businesses, and if those businesses do find alternative funding, it will often be at a rate that will likely cripple them. It is important that we use blended finance to bridge this gap and create an enabling environment that will result in businesses, particularly those led by women and youth, being able to access patient and enabling capital to support them so they can grow and prosper. 

That’s the key here, by creating a universe in which you can do that you will then be able to apply a gender lens and a youth lens and fund the space more actively because people will feel confident that there is access to finance.

__How do you see RMB’s blended finance activities evolving in the future?__

At RMB we like to stay one step ahead of the market, but also one step abreast with the market. Evolution will be led by the demand in the developmental space. Climate and just transition are the focus right now, but that space is starting to get crowded. We need to identify the next developmental focus area and determine the funding nuances in that space. Healthcare, affordable housing, and water in particular, are becoming very topical on the African continent. It is going to be an evolving space and each of these sectors will have different funding needs. 

More patient capital will be required going forward, so I suspect we will see more “equity like” capital instruments (i.e. convertibles being introduced to bridge the gap between the needs of the market and the developmental funding need). I also believe the use of guarantees will become more prominent as a tool in blended finance, especially to catalyze investments into early-stage projects where the risks are higher or perceived to be higher. Blended finance is going to become more mainstream in Africa, however I would caution that we often overcomplicate blended finance, we structure the structure too much and that crowds out the market. We need to create structures that are replicable, scalable, and simple enough that investors can be comfortable and allocate capital to them.

Learn about Rand Merchant Bank's blended finance strategies, how they measure impact, their future in the blended finance space, and more.

Rand Merchant Bank Member Spotlight

Rand Merchant Bank Member Spotlight with Alessandro Scalco

ResponsAbility is an impact asset manager. Since 2003, they have invested over $15 billion in impactful projects and currently manage $5 billion in assets divided into three investment themes: climate finance, financial inclusion, and sustainable food. Beyond these three core themes they also offer tailor-made and Fund of Funds investment solutions, totaling at $1 billion. 

Blended finance makes up a significant portion of their portfolio. Structured blended finance debt strategies account for over $1.3 billion of responsAbility's assets under management, a figure that’s expected to grow rapidly, especially in climate finance. Two new structured blended finance debt strategies have been launched recently: the Climate Smart Agriculture and Food Systems strategy in March 2023 and the Asia Climate Strategy in November 2023.

We spoke with Henk Nijland, Head Business Development, DFIs & Public Investors, at responsAbility, about their blended finance strategies, how they measure impact, their acquisition by M&G plc., and more.

__Can you tell me about your background and experience in blended finance?__

Blended finance has been a central theme throughout my career. I began my professional journey at the Dutch Ministry of Economic Affairs, where I worked on promoting investments from Dutch companies in Eastern Europe. These investments often required de-risking through subsidies and political risk insurance – what we now recognize as blended finance, even though the term wasn’t in use at the time. 

I later spent 20 years at FMO, the Dutch Development Bank, where I held roles as a banker and head of investment teams focused on financial inclusion, infrastructure, and renewable energy. FMO is well-known in the blended finance arena. I was involved in 2014 with a Climate strategy, which provides green lines to financial institutions and direct lending for smaller project finance transactions. This strategy is managed by responsAbility. FMO’s $20 million investment in the strategy, alongside other notable investors like KfW and IFC1, was a key milestone. Today, the strategy has grown to around $613 million, demonstrating the long-term impact and scalability of blended finance.

1. [Project detail - GLOBAL CLIMATE PARTNERSHIP](https://www.fmo.nl/project-detail/33148)

__Can you tell me more about the Asia Climate Strategy and responsAbility’s role?__

In November 2023, we launched the Asia Climate Strategy, which targets corporates in Asia that operate in sectors with high CO2 reduction potential, including renewable energy, energy efficiency, e-mobility, and circular economy. A cornerstone of this strategy is our innovative "Climate Impact Assessment and Monitoring Framework", which ensures transparency and aims to achieve direct CO2 savings of an estimated 16 million tons2 over the lifetime of the investments. 

KfW, the anchor investor in the junior tranche3, and FMO, in the senior tranche4, play critical roles in this strategy. Additionally, a German family office invested in the senior tranche. In the strategy’s second closing in August 2024, M&G plc’s Life business invested $100 million5, bringing the strategy’s size to over $200 million. This example highlights how blended finance can effectively mobilize private sector capital at scale.

2. Calculations based on USD 500 million strategy
3. [Boost for the transformation in Asia: KfW supports mobilisation of private capital with the responsAbility Asia Climate](https://www.kfw.de/About-KfW/Newsroom/Latest-News/Pressemitteilungen-Details_788544.html)
4. [Project detail - ResponsAbility Asia Climate](https://www.fmo.nl/project-detail/63058)
5. [responsAbility Asia Climate strategy surpassed USD 200 million at second closing](https://www.responsability.com/en/press-releases/responsability-asia-climate-strategy-surpassed-usd-200-million-at-second-closing/)

__How do you measure the impact of responsAbility's blended finance deals?__

We take a rigorous approach to impact measurement, which we call the “4 eyes” principle. It involves two key teams: our in-house impact team and our Climate Advisory Specialist team. The latter comprises local technical experts who work hand in hand with an Investment Officer to estimate the impact of portfolio companies’ projects before and after investment. These specialists gather and analyze climate impact data, which is then validated and reported by our impact team - the two pairs of eyes. 

We’ve also developed a carbon measurement tool that tracks and reports climate impact, ensuring our data is accurate and transparent. Typically, we engage reputable external partners to review the fund’s portfolio carbon impact at the end of its life, further ensuring the veracity of our impact reporting. 

__Last year responsAbility was acquired by M&G plc, can you talk a bit about this and what the acquisition might signal for the impact investing and blended finance space?__

In May 2022, M&G plc., a leading international savings and investment company, acquired responsAbility. This acquisition underscores the growing interest among mainstream investors in impact investing and blended finance, as well as the increasing importance of sustainability in investment decision-making. What makes this acquisition particularly noteworthy is M&G’s active involvement in our recent initiatives. For example, in January 2023, M&G committed $274 million to two sustainable food strategies6 in Latin America and Asia, and in August, M&G’s Life business invested $100 million in the Asia Climate Strategy7. 

These large private investments highlight M&G’s strong commitment to impact investing and serve as a positive signal to other large institutional investors to engage more actively in this space, particularly in our pioneering structured blended finance strategies. 

6. [responsAbility announces first closings of two Sustainable Food strategies totaling USD 274 million](https://www.responsability.com/en/press-releases/responsability-announces-first-closings-of-two-sustainable-food-strategies-totaling-usd-274-million/)
7. [responsAbility Asia Climate strategy surpassed USD 200 million at second closing](https://www.responsability.com/en/press-releases/responsability-asia-climate-strategy-surpassed-usd-200-million-at-second-closing/)

__How do you see responsAbility's blended finance activities evolving in the future?__

Since our inception in 2023, we’ve raised over $2 billion in blended finance across various strategies, including the Global Climate Partnership strategy, the Access to Clean Power strategy, and the Social Bond focussed on financial inclusion, health, water, and sanitation. The Asia Climate Strategy, our newest flagship blended finance strategy, has a target size of $500 million and has already raised over $200 million, we expect to secure the remaining $300 million within the next year. 

Looking ahead, we’re committed to developing more high impact blended finance strategies, particularly in financial inclusion and climate finance, covering both mitigation and adaptation. We’re excited about the future and look forward to collaborating with Convergence and its members to further promote blended finance as a tool to mobilize private investments at scale to reach the SDGs.

Learn about responsAbility's blended finance strategies, how they measure impact, their acquisition by M&G plc., and more.

ResponsAbility Member Spotlight

responsAbility Member Spotlight with Henk Nijland

African Guarantee Fund (AGF) is a specialized guarantee provider whose mission is to facilitate economic development and poverty reduction in Africa. To achieve this, AGF increases access to finance for small- and medium-sized enterprises (SMEs) across key economic sectors through an array of guarantee products and capacity development assistance. Since inception, AGF has unlocked $4.3 billion in SME financing, through partnerships with 250 partner financial institutions across 43 African countries.   

AGF is backed by the following shareholders and sponsors: The Government of Spain through the Spanish Agency for International Cooperation (AECID), the African Development Bank (AfDB), French Development Agency (AFD), Nordic Development Fund (NDF), Investment Fund for Developing Countries (IFU), German Development Bank (KfW), French Agency for Private Sector (PROPARCO), West African Development Bank (BOAD), Global Affairs Canada (GAC), USAID's West Africa Trade & Investment Hub (WATIH), The Norwegian Agency for Development Cooperation (Norad) and TechnoServe.  

We spoke with AGF’s Group Chief Executive Officer, Jules Ngankam, about how AGF works to achieve their mandate of facilitating access to finance for SMEs, enabling them to drive the growth of African economies.

__The total financing gap for Africa's 50 million SMEs, which form the backbone of Africa's economies, is [estimated](https://pressroom.ifc.org/all/pages/PressDetail.aspx?ID=17513) to be $330 billion. Tell us about the gaps AGF aims to bridge when it comes to SME financing in the context of Africa.__

AGF is committed to bridging the $330 billion SME financing gap by addressing several critical gaps in Africa’s budding business landscape. These gaps are related to: information, collateral, tenor, skills, product, and perception gaps. 

Below is an analysis of the gaps AGF aims to bridge.

![AGF Table Draft 1](//images.ctfassets.net/4cgqlwde6qy0/Yw9gKjCPqZX9Yha4MrvMD/34482d89f8e1511c4a0b60119cc1e20a/AGF_Table_Draft_1.png)
*Source: African Guarantee Fund*

__AGF offers intentionally designed products to bridge these gaps and address the needs of African SMEs, as well as to support financial institutions in serving these businesses. How do your products enable you to do this?__

By renewing and enhancing existing guarantee lines and targeting new prospects, AGF alleviates the challenges SMEs encounter in accessing finance.

We offer tailored guarantees that reduce the risk for financial institutions, making it easier for them to extend credit to SMEs without stringent collateral requirements.

Our products support all the funding needs of the SMEs, from debt to equity; working capital to capital expenditure; short term to longer-term financing solutions, as well as addressing the tenor gaps that hinder the growth of SMEs. We provide capacity development for financial institutions, ensuring they have the tools and knowledge to assess and manage their SME portfolio effectively. Additionally, we encourage the creation of innovative financial products that align with the unique business cycles and needs of SMEs, ensuring they receive adequate and appropriate financing.

By showcasing the success and potential of SMEs through our guarantee products, we help shift the perception of these businesses as viable and attractive financing prospects.

__Tell us about your suite of guarantee products and how you determine when to deploy them.__

AGF offers a suite of guarantee products designed to address specific financing challenges faced by SMEs, while also empowering financial institutions to extend their lending capabilities. Our Loan Portfolio Guarantees (LPGs) provide a 50-75% risk cover for on-lending to increase lending to SMEs with higher risk cover for Green SMEs and Women SMEs (WSMEs). This gives significant comfort to partner financial institutions (PFIs), encouraging them to increase their exposure to SMEs and WSMEs and take on risks they are not typically comfortable with. Below is a breakdown of our key products and how we determine their deployment:

1. __Loan Portfolio Guarantee:__ Covers multiple loans within a specified portfolio, helping PFIs scale up SME lending where collateral requirements are unmet. We use this when targeting a broader segment of SMEs, enabling PFIs to support more businesses simultaneously.

2. __Loan Individual Guarantee:__ Covers a single loan made by a PFI to a specific borrower. It is applied when a particular SME needs support, allowing PFIs to provide targeted assistance.

3. __Equity Guarantee:__ Covers the risk associated with equity investments by private equity or venture capital funds in SMEs, and it strengthens SMEs’ capital base by mitigating investment risks.

4. __Bank Fundraising Guarantees:__ Enables financial institutions to raise funds for scaling up credit facilities to eligible SMEs. This assists PFIs in securing long-term resources and facilitating the funding of long-term SME needs.

5. __Capacity Development:__ Here we provide PFIs with training sessions on financial product development, diversity, equity, and inclusion, market research, and customer service. This enhances PFIs’ understanding and willingness to revamp their processes and product offerings to cater to a broader spectrum of SMEs. 

Each product deployment begins with a thorough assessment of the specific needs and challenges faced by the SME or financial institution. Products are customized to address identified gaps, ensuring they provide maximum support and impact. There are also continuous monitoring and feedback loops to ensure the effectiveness of the deployed products and allow for adjustments as needed.

We also have structured guarantee products for specific sectors or unprecedented occurrences:

__Green Guarantee Facility__

With support from the Nordic Development Fund (NDF) and the Danish Investment Fund for Developing Countries (IFU), AGF has designed an innovative pan-African financing program, the Green Guarantee Facility (GGF) to support sustainable private-sector led economic growth in Africa. The GGF is a platform which combines a guarantee facility with a capacity development program to unlock greater financing for SMEs advancing climate change mitigation and adaptation efforts, as well as those working in climate-smart industries. The GGF is a market leader in green financing that crowds-in other financial institutions (FIs) to provide greater financial and/or capacity development supports.

__AFAWA Guarantee for Growth__

With support from the Group of Seven (G7) countries, the Netherlands and Sweden, and the African Development Bank (AfDB), AGF has created an innovative pan-African financing program, Affirmative Finance Action for Women in Africa (AFAWA) Guarantee for Growth (G4G), to encourage financial institutions to bridge the continent’s $49 billion gendered financing gap. AFAWA G4G is a gender-lens investing platform which combines a risk sharing mechanism with a capacity development program to unlock up to $2 billion in financing for African WSMEs and develop specialized WSME products. 

__You have a blended capital structure with a tranche for concessional capital providers such as donor agencies as well as private commercial capital. Why was this structure necessary and how does it enable AGF to achieve its mandate of scaling SME financing?__

AGF’s blended capital structure is essential for scaling SME financing effectively. It features a waterfall structure with tranches for concessional and private capital providers. This accommodates the diverse risk and impact profiles of various investors, offering flexibility to meet their unique needs and requirements. In terms of why this structure is necessary, summarily, it allows for diverse investor needs and risk mitigation. The waterfall structure allows us to tailor investment options, making it attractive to a wide range of investors, based on their varying risk tolerance and impact goals. By structuring investments in tranches, AGF also offers preferred positions to meet investor needs and address their constraints. 

This layered approach distributes risk appropriately, making it feasible to secure significant capital from diverse sources. This is how AGF attracts investments to achieve its mandate of scaling SME financing across Africa, driving inclusive economic growth and sustainable development.

__What about your work with donor agencies outside of your capital structure? You have partnered with Global Affairs Canada (GAC) on the Affirmative Finance Action for Women in Africa (AFAWA) program and with the Nordic Development Fund (NDF) on the Green Guarantee Facility. Tell us more about these programs and how these donor agencies are supporting in order to reduce the effective cost of the guarantees issued.__

Partnerships with organizations such as GAC and NDF enhance AGF’s ability to provide cost-effective guarantees and drive sustainable development across Africa.

Under the Green Guarantee Facility, for example, our partnership with NDF launched in 2016. This climate-focused initiative supports SMEs engaged in sustainable energy, cleaner production, climate-smart agriculture, natural resource management, and green services. By aligning with the Paris Agreement’s Nationally Determined Contributions (NDCs), AGF and NDF work together to enhance sustainability, stimulate green job growth, increase income, and improve the quality of life for low-income communities across Africa. Since then, other partners, such as IFU have joined AGF to contribute to the program.

With the AFAWA program, originally supported by the G7 nations and the African Development Bank, our aim is to improve women’s access to financing through innovative financial instruments and risk-sharing mechanisms. GAC contributed capital to support AFAWA, which aims to unlock up to $3 billion in financing for women-owned SMEs. The program also includes a risk-sharing instrument and a capacity development grant. AFAWA focuses on gender equality and financial inclusion, helping women entrepreneurs access the funding they need to grow their businesses and contribute to economic development.

Through strategic partnerships and collaboration like these, AGF’s capacity to issue guarantees increases, making financing more accessible and affordable for SMEs.

__An important feature of a guarantee is to reduce the difference between the perception and reality of risk. Can you give us a success story of an institution that you worked with that increased provision of credit to an asset class/segment?__

One of our success stories is our collaboration with a financial institution in East Africa that has been able to increase its women customer base from 28% to 40% through a tailormade product that addressed the specific needs of women entrepreneurs. 

The bank utilized AGF's guarantees and capacity development to mitigate risk concerns and confidently offer loans to this underserved segment. Over time, as the institution witnessed the robust performance and repayment rates of these loans, it gained a deeper understanding and appreciation of the true risk profile of women-owned SMEs. The success and positive impact of the program transformed the bank's perception as women accessing loans from this lender increased from 10% to 38%.

Our partnership has so far enabled the bank to:
- Grow its loan portfolio by supporting financing of businesses that lack required collateral who are mostly women SMEs.
- Improve the quality of the business portfolio for both the bank and customer through capacity development support especially for women entrepreneurs resulting in improved business operations.
- Grow its customer base as customer financing needs are adequately addressed through structured financing based on the facilities under the partnership.
 
Through the AGF guarantee and capacity development program the institution has developed enough confidence and expertise to sustainably provide credit to women entrepreneurs. Today, it has expanded its lending portfolio to include a significant share of women-owned SMEs, driving growth and empowerment in its community. This success story exemplifies how AGF's guarantees not only bridge financing gaps but also create lasting change in the financial landscape. 

__AGF applies a stringent Monitoring and Evaluation (M&E) framework to measure impact across strategic, beneficiary, and operational levels. Tell us about this framework and what are some key indicators to this end? Has your M&E approach evolved since inception?__

Our comprehensive approach to measuring impact allows us to gauge the effectiveness of our interventions in enhancing SME financing in Africa.

The purpose of our macro-level impact indicators is to assess long-term effects on financial markets and SME-targeted products. Some key metrics include: loan tenor, cost of loans, collateral requirements, and the share of loan portfolios favoring SMEs in countries of exposure. We take this measure every 3-5 years through surveys. Our goal is to demonstrate how sustained support triggers broader adoption of similar initiatives, contributing to economic growth and poverty reduction, aligning with the SDGs.

We also have outcome indicators at the beneficiary/SME Level. The purpose is to track direct effects on PFIs’ behavior and socioeconomic impacts on SMEs benefiting from guaranteed loans. This is measured by the number of SMEs accessing financing, effects of capacity development support, the share of PFIs’ loan portfolios to SMEs, non-performing loans among trained PFIs, SME revenue growth, job creation, gender distribution in SME ownership, and other socioeconomic changes. We do this using annual surveys and case studies focusing on primary data collection at the SME level, supplemented by data from AGF systems and field visits.

To monitor the direct activities and inputs from PFIs and AGFs output and input indicators, data on PFIs’ activities is reported monthly and quarterly to AGF, and the input data is retrievable from AGF’s database. 

Since its inception, AGF’s M&E approach has evolved to become more comprehensive and data-driven. Initially focused on basic output tracking, we now include sophisticated impact assessments and outcome measurements, ensuring a holistic view of our interventions' effectiveness. This evolution has enabled us to fine-tune our strategies and better support the SMEs we serve, ultimately driving more meaningful and sustainable economic development. By continuously refining our M&E framework, AGF ensures that our initiatives not only provide immediate financial support but also contribute to long-lasting positive changes in the African SME landscape.

__AGF now has a presence across 43 countries in Africa and has cumulatively unlocked $4.3 billion in SME financing since inception. Where does the organization go from here in terms of achieving scale and how can blended finance help you get there?__

AGF's journey to scale is ambitious and inspiring. We aim to grow our capital to $500 million by 2028, unlocking an additional $5 billion financing for SMEs across Africa. In achieving scale, we’ve sought to expand our reach with plans to deepen our presence in existing markets while exploring new ones, ensuring that more SMEs across Africa have access to financing. We are also developing and introducing new financial products tailored to the unique needs of African SMEs, so we can continue to address critical financing gaps. 

On the role of blended finance in catalyzing investments, blended finance combines concessional capital from donors with private capital to mitigate risks and attract more investors. We leverage resources to maximize the impact of each dollar invested, enabling AGF to significantly unlock more funding for SMEs. Ultimately, blended finance encourages collaboration between the public and private sectors, fostering partnerships, and aligning interests and resources to achieve optimal impact and support sustainable economic growth.

*By Karolyn Xie, Interim Head of Communications*

Learn how the African Guarantee Fund works to achieve their mandate of facilitating access to finance for SMEs, enabling them to drive the growth of African economies.

African Guarantee Fund Member Spotlight

African Guarantee Fund Member Spotlight with Jules Ngankam

Established in 1898, Bechtel is a global engineering, procurement, construction, and project management company. Bechtel has helped customers complete more than 25,000 projects in 160 countries on all seven continents.

Housed within Bechtel Infrastructure, bechtel.org is the corporation’s social enterprise. Structured as a breakeven business, their mission is to help build resilient and sustainable communities in frontier and emerging markets through technical advisory and project management. bechtel.org originates its own projects, partnerships, and financing and measures impact. Their focus is execution and delivery; however, they have also been involved in project development.

__Tell us about the interaction between Bechtel and bechtel.org?__

bechtel.org was formed as a part of Bechtel’s sustainability journey. While exploring ways to leverage Bechtel’s core capabilities to support underserved communities in developing countries, we tested the concept with various friends in the non-profit sector and launched the Building Resilient Communities corporate initiative. We deployed technical experts into projects in Kenya, Nigeria, Philippines, and Peru and found our expertise in helping local teams manage and deliver projects was a demand driver. We also sought feedback from other corporate social enterprises and found Bechtel’s global reach and depth of experience was a key value proposition. Hence, we kept the Bechtel name and simply added .org instead of creating a separate organization with a new name. This early work informed our executive leadership and shaped bechtel.org’s business model and impact framework, which is distinct from Bechtel Foundation, Bechtel’s CSR initiatives, and Bechtel’s Sustainability and ESG. 

Our integration and interaction with Bechtel Corporation is intentional and synergistic. We’re governed by a Board of Advisors, an Impact Committee that assesses and evaluates our projects, and an executive sponsor that keeps us connected to the broader enterprise. We are challenged by our Board to demonstrate *why this project* and *what impact we leave behind*. We apply Bechtel’s business process and procedures to develop and deliver projects. And while we leverage Bechtel’s global resources, we do not use bechtel.org to bring commercial advantage to Bechtel. Once there’s a project scope and financing, we recruit and onboard talent from Bechtel’s global projects into bechtel.org (we do not outsource) and then integrate them into local implementing organizations. We benefit from accessing a global pool of Bechtel colleagues with a diverse set of experiences, competencies, and skills. This means we can form integrated teams that can transfer Bechtel’s knowledge and technical know-how to local organizations so they can build their own capacities to deliver projects. 

We’re also sector agnostic. For example, if logistics or infrastructure (e.g., storage and process facilities) is part of a solution to boost food security in the agriculture sector, we’ll get involved. We’ll collaborate with any organization – non-profit, for-profit, government – that share our values and interests and complement our capabilities. 

Increasingly, we see this synergistic integration with Bechtel Corporation as a value proposition for blended finance and impact investors as we can help de-risk investments to local firms, improve their project’s certainty of outcome, and help ensure the additionality of social impact is delivered.

__What is your approach to impact infrastructure? How does blended finance support this?__

For bechtel.org, the infrastructure’s value to the community is not the asset itself but the services it provides and the additionality it creates – that’s impact infrastructure. We focus on the overlooked elements like operations and maintenance (O&M), which, if neglected or addressed downstream in the project, put the intended impact at risk. For example, if the aim is to expand access to healthcare for women by solarizing health facilities in rural communities, and then a technical component of the solar energy system fails in a year because there is no O&M or sustainable financing, there’s no impact.    

Issues arising from O&M or the lack of an enabling environment to sustain a project mean we spend a lot of time on engaging and supporting the ecosystem of local actors who have a stake in the durability of the project. This is very time-consuming and often requires bechtel.org becoming political athletes, but it’s important and necessary if we are focusing on the long-term. 

We also measure. We want to demonstrate the correlation between infrastructure and social impact. Because we could not find an external framework that was fit for purpose, we developed our own and are road-testing it on our projects. Our intent is to build a body of knowledge and share how we’re measuring infrastructure with a community of interest. We have a full-time impact analyst devoted to this. 

These experiences have been part of an ongoing rethinking and reorientation of bechtel.org and blended finance is a key part of this evolution. Catalytic capital and long-term investment from a mix of partners (e.g., foundations, banks, DFIs, aid agencies, communities, corporates) is critical to covering the costs associated with project development, capital expenditures, operating expenses, and ensuring impact. Blended finance structures discipline partners to focus on the durability of the project to achieve the intended impact.

__What are the advantages of leveraging a blended finance approach? Can you give us some examples of specific transactions that illustrate this?__

Blended finance helps bechtel.org in two ways:

One of the strategic pivots we’re taking is to become technical assistance facilities or accelerators to blended finance or impact funds that want to de-risk their investments, build local capacity, and deliver impact. In addition to our technical expertise in project delivery, we bring a ready-made facility with a structure, governance, and transaction model that can bolt onto these funds. This blended approach offers several advantages: risk mitigation, access to capital, mobilizing private investment, and additionality. We’re currently working with a financial intermediary to develop a climate adaptation fund and accelerator targeting Southeast Asia. We hope to replicate this for Africa and Latin America. Blended finance allows us to align stakeholder interests to deliver a project that meets the unique needs and priorities of communities. We can solve complex problems from a position of strength and often that strength is the partnership. 

Second, a few of our current projects use a pilot-test-scale approach. Blended finance plays an important role particularly in seed funding, de-risking, capacity building, and demonstration effect. In Peru, seed capital from mining companies enabled us to pilot an innovative thermal harvesting system that can futureproof thousands of indigenous homes in the remote Peruvian Andes from extreme frost. In India, seed capital from an insurance company facilitated an early assessment of a nature-based solution that regenerates polluted canals for productive use and flood mitigation. In Zambia, catalytic capital from a public aid agency enabled us to pilot a project to increase transactions between smallholder farmers and commodity buyers to reduce post-harvest loss and bolster food security. Blended finance allows us to align incentives and explore innovative financing structures to scale these projects. 

__How does bechtel.org apply a gender lens to its blended finance transactions?__

In all our projects, we measure specific metrics around access to services (e.g., health, education, jobs) that contribute to impact on women and other marginalized demographics (e.g., migrants, youths). For example, we are developing an accelerator targeting Ukraine migrant-owned/operated SMEs and developed a vulnerability lens to identify and assess women-led SMEs that can be suppliers or service providers for energy transition projects in Europe and/or Ukraine’s future reconstruction. 

Women are also part of the design thinking process for our current projects. In Peru, the thermal harvesting system mentioned earlier was based on the input of women as to what is a living temperature inside the home when temperatures drop below -10 degrees Celsius at night. Similarly in India, women were among the 350 consultations to help us identify the appropriate technology for a nature-based infrastructure solution. Our approach is to be intentional and upstream on the inclusion of women as part of the solution.

__Have you faced any interesting or unexpected challenges in your blended finance journey?__

Blended finance has many positives for bechtel.org. With multiple partners the amount of time to align interests and the due diligence required on each of the investors was somewhat unexpected. Despite these time challenges it's the right thing to do. I also did not expect to spend a year studying blended finance models. We knew the market was moving in this direction and it was critical to learn how it works and more importantly how we fit. It was one of the reasons we became a member of Convergence.

__What are some lessons you have learned so far about measuring the impact and evaluating the success of blended finance transactions?__

We’ve learned that because of our business model and the nature of our projects, bechtel.org may never participate on a project long enough to contribute to its full impact, but we can be there long enough to position the project to achieve it. We also learned that we need to measure attribution and contribution separately. Our measurement framework is implemented in two parts: attribution to bechtel.org and the project’s overall contribution to impact. By separating the two we can distinguish between the level of control we have on the project and, alongside with our partners, capture the project’s overall contribution to impact. 

__What have the different types of stakeholders that you’ve worked with looked for in blended finance deals?__

Our stakeholders have diverse objectives, preferences, and expectations. In our projects, public sector investors are focused on policy alignment and impact measurement while private investors prioritize financial returns and risk mitigation. Philanthropic organizations tend to emphasize innovation, scalability, and partnerships while DFIs are interested in alignment with their development mandate and crowding-in private capital. I would say all of them support blended finance deals that increase local capacity building and technical assistance.

__How do you see bechtel.org’s blended finance activities evolving in the future? What is next for the organization?__

As I highlighted earlier, we’re positioning bechtel.org to be a technical assistance facility or accelerator to blended finance or impact investment funds. For us these financing models generate the kind of scale, durability, and impact that Bechtel is known for.

*By Karolyn Xie, Interim Head of Communications*

Hear from Tam Nguyen of bechtel.org on their approach to impact infrastructure, blended finance, gender, and more.

bechtel.org Member Spotlight

bechtel.org Member Spotlight with Tam Nguyen

FOUNT is a leading impact investment firm, providing strategic advisory and investment management services focused on driving social and environmental impact alongside financial returns in emerging markets. 

Building upon earlier experiences in their previous roles, Bernadette Blom and Bob Assenberg established FOUNT in 2013 as a strategic advisory firm, specializing in impact investing within emerging markets. As FOUNT advised and supported its numerous clients to achieve substantial impact, the firm expanded their involvement to encompass fund and investment management activities, leveraging their existing networks and expertise in setting up and managing impact investment funds. This evolution started with the management, restructuring, and eventual divestment of an affordable housing portfolio in emerging markets.

We spoke with co-founder Bernadette Blom about FOUNT’s portfolio, blended finance insights and learnings, integrating a gender lens, and more.

__Can you tell us about FOUNT’s portfolio of impact funds?__

FOUNT currently oversees a diversified portfolio of four impact funds that span various sectors, geographies, and instruments, all characterized by innovative and sustainable business models.

Since 2017, we manage __BIX Capital__, focusing on pre-financing impact receivables (mainly carbon credits) in Sub-Saharan Africa. Additionally, since 2019 we are Fund Manager for the __Good Fashion Fund__, contributing to systemic change within the textile and apparel industry and as of 2020, we serve as the Investment Advisor for the __AGRI3 Fund__, collaborating with Cardano Development, to provide guarantees for sustainable agriculture, forest protection, and improved rural livelihoods.  FOUNT recently added the __Organic Development Finance__ to its portfolio, dedicated to providing affordable finance for organic agricultural producers in developing countries.

Our commitment revolves around innovative, unique, and impact-focused initiatives, with blended finance constituting a central role in all our endeavours.

__What is FOUNT’s approach to blended finance? What have you observed in your practice of blended finance?__

The impact funds under our current management exhibit a blended capital structure comprising distinct risk/return tranches. This structural composition is imperative for innovative impact funds without a proven investment thesis. In instances where risks are indeterminate, investors frequently perceive them as high, underscoring the indispensability of a blended capital structure to stimulate private investor participation. The strategic allocation of varying risk/return profiles across diverse investors within a unified capital structure facilitates the attainment of substantial impact.

As a prudent practice, ascertained from experience, we observe that upon establishing a robust track record, the concessional tranche can be strategically diminished. Simultaneously, leverage can be augmented for subsequent funds, capitalizing on the diminished risk perception among investors. This nuanced approach aligns with industry best practices and enhances the overall viability and attractiveness of subsequent investment vehicles.

__FOUNT has an array of blended transactions, ranging from fashion, to clean cooking to agriculture. What lessons have you learned working with different instruments and across sectors?__

When establishing an innovative fund, particularly one entering a new sector or featuring a novel investment instrument, as exemplified by our experience with all our mandates being first-of-its kind impact funds, the primary objective is to showcase the financial, environmental, and social viability of the investments. In the context of such a ‘demonstration fund’, the inclusion of junior equity/first-loss is imperative to attract private investors. 

The distinctive innovation introduced by BIX Capital (investors include Shell foundation, International Finance Corporation (IFC), FMO: Dutch Entrepreneurial Development Bank (FMO), and U.S. International Development Finance Corporation (DFC)) lies in its unique investment instrument, impact receivable finance. Under this mechanism, carbon credits generated through the utilization of cookstoves or other impact products are pre-sold to reputable offtakers, based on a pre-agreed volume and price . The underlying agreement serves as collateral, mitigating the need for recourse to the balance sheet of the financed SME. Since its inception BIX Capital has successfully demonstrated the efficacy and scalability of this business model, and is now fully invested prompting the initiation of a follow-on fund, BIX2, characterized by increased leverage, a larger fund size, and a broader investment mandate.

AGRI3 (investors include the Dutch Government, Rabobank, and Global Environment Facility (GEF)) , on the other hand, specializes in providing risk mitigation, employing various types of guarantees to empower financial partners in developing countries to collaborate with their clients towards greater sustainability, encompassing areas such as sustainable agriculture, deforestation avoidance, and support for rural livelihoods. AGRI3 facilitates transactions that might be beyond the capacity of individual partners, ensuring scalability through collaborative efforts. 

__Tell us about a past transaction that benefitted from using a blended finance approach.__

The strategic utilization of blended finance empowers FOUNT to foster innovation and engender positive environmental and social impact, aligning seamlessly with our commitment to maintaining an impact-focused and innovative approach in managing our funds.

A notable illustration of the successful implementation of blended finance is the establishment of the Good Fashion Fund in 2019.The fund strategically targets apparel manufacturers. Investments are directed towards impactful equipment that results in a substantial (>50%) reduction in the utilization of energy, water, or chemicals in the production process, concurrently improving workers' conditions and rights.

The textile sector is known for its environmental impact, challenging labor conditions, and reputational challenges. Laudes Foundation initiated the fund, acknowledging the pressing need for investments and the considerable potential for positive impact within the sector. The junior equity investments from Laudes Foundation and the Mills Fabrica catalyzed senior debt funding from Rabobank. This collaborative approach not only validated the viability of the business model but also exemplified the indispensability of the blended finance strategy in overcoming inherent challenges and propelling the success of such initiatives.

__How does FOUNT integrate a gender lens into its investment decisions?__

Gender inequality remains a formidable global challenge, and FOUNT is unwaveringly committed to the rights of women and contributing significantly to the realization of gender equality. Within our funds, women, whether as customers, company proprietors or employees, play pivotal roles. A comprehensive gender lens is meticulously integrated into the investment decisions of AGRI3, Good Fashion Fund, and BIX. Each fund adheres to an individualized gender policy, incorporates leading industry standards and best practices, and tailors to address specific gender challenges within the targeted sectors.

In the case of BIX2, the fund has undertaken multifaceted adaptations to the 2X Challenge criteria, aiming to yield tangible gender outcomes from its investments. The primary focus is on the percentage of investments targeting products specifically designed to enhance the livelihoods of underserved female populations. Our steadfast commitment involves dedicating 80% of investment capital, via SME finance, to such products and services. We are committed to quantifying the number of women reached and calculating time saved by women, utilizing a proprietary model. Where feasible, we intend to pre-finance companies based on monetized time savings, denoted as "Gender Credits." 

Beyond our core focus, we actively engage with portfolio companies to promote gender-positive workforce and supply chain policies and. Additionally, we consciously exhibit a positive bias towards investing in female-led or owned businesses.

__What are some key challenges FOUNT has faced in your blended finance journey?__

Securing risk capital, particularly for the first-loss/concessional tranche, poses a considerable challenge, yet is pivotal for mobilizing private funding, especially for innovative impact funds. 

Our track record has become instrumental in facilitating the expansion of our funds. Given our focus on establishing high-impact, pioneering funds with innovative approaches, operational in developing countries, the associated perceived risks are often elevated. Over the years, we have systematically instituted standards and policies that can be applied across various initiatives, encompassing investment, environmental, and social impact considerations.

__We are seeing lots of interest in the potential for blended finance to enable scaled opportunities and impact. Could you share some insights and advice based on your experience managing funds of a significant size?__

We see many opportunities for blended finance and foresee substantial prospects in its future application. It is often imperative to initiate a first fund to establish the proof of concept. Drawing from the insights gained in this initial endeavor, a considerably larger second fund can be formulated. The second fund typically necessitates a reduced reliance on junior or concessional capital, given that the viability of the business case has been substantiated, resulting in a commensurate reduction in perceived risk.

__How do you see FOUNT’s blended finance activities evolving in the future?__

As we focus on the continued management and investment of existing funds in our portfolio, a logical progression for FOUNT is to leverage the insights garnered, sector networks, knowledge, methodologies, and processes from our current funds. These valuable assets will be strategically channeled into the creation of larger follow-up funds, including a first close of BIX2 in 2024 and our imminent plans for GFF 2.0.

Moreover, we are dedicated to exploring new, innovative initiatives capable of generating substantial impact and that have not yet achieved widespread implementation.

__Thinking about your time at FOUNT to date, what has stood out to you?__

FOUNT was founded in 2013 by two visionary entrepreneurs committed to enhancing livelihoods and ecosystems in emerging markets. Presently, FOUNT is strengthened by a dedicated team of international professionals. Over the years, FOUNT has successfully established multiple impact investment funds, disseminated knowledge, and facilitated financial flows to impact investment initiatives. Through the creation of innovative and scalable projects in emerging markets, FOUNT actively contributes to advancing the Sustainable Development Goals.

Our commitment is to persist in this journey alongside our stakeholders, with a focus on expanding FOUNT's influence as an innovator in the sector. Simultaneously, we aspire to maintain our status as an inspiring workplace dedicated to making a meaningful impact.

*By Karolyn Xie, Interim Head of Communications*

Hear from Bernadette Blom of FOUNT on their portfolio of impact funds, their approach to blended finance, how they are integrating a gender lens in their work and more.

FOUNT Member Spotlight

FOUNT Member Spotlight with Bernadette Blom

I&P is a pioneering impact investment group with a proven track record of over two decades investing and supporting small and medium-sized enterprises (SMEs) in Africa.  

With a team of approximately 180 dedicated professionals operating from ten locations across Africa, (including Burkina Faso, Cameroon, Côte d'Ivoire, Ghana, Kenya, Madagascar, Mali, Niger, Senegal, and Uganda), and in France and the United States, I&P and its partners have invested in over 250 SMEs across roughly twenty Sub-Saharan African countries, with a primary focus on frontier markets and fragile states within Francophone Africa, where access to finance is most limited. 

We spoke with Sébastien Boyé, Co-CEO of I&P about their comprehensive approach to blended finance to support African SMEs, how they measure their impact, the gaps and opportunities they see in the blended finance market, and more.

__Can you tell us about I&P’s mandate and how it engages in blended finance?__

Our mission is rooted in the belief that small and medium-sized enterprises (SMEs) are catalysts for sustainable and inclusive growth across the African continent. These enterprises create local added value, provide formal and high-quality employment opportunities, deliver essential products and services, and foster significant social, environmental, and governance impacts. 

I&P takes an innovative investment approach, providing directly or indirectly through local African Impact funds, seed financing to emerging small businesses and taking minority equity stakes in startups and growing SMEs, with financing ticket sizes ranging from $30,000 to $5 million. This approach involves nurturing long-term partnerships with entrepreneurs, offering management expertise, networks, and knowledge to enhance business strategies, formalization, and overall performance. We also contribute to strengthening the broader ecosystem supporting African entrepreneurship, including local African investment team, investors, accelerators, incubators, and other critical stakeholders.

I&P covers a wide range of investment stages within the SME spectrum and takes a comprehensive approach to blended finance. From providing repayable grant funding to early-stage small companies, to anchoring local African impact funds, to making relatively large investments (up to $5 million per transaction) in commercially viable growth companies or to invest as a LP in emerging Impact Funds, I&P uses catalytic capital in different forms and for different project stages to tailor to the needs of African entrepreneurs. 

In its programs and funds, I&P strategically combines diverse financial products to tailor optimized funding and technical support for portfolio companies. We offer various financing instruments, including seed and equity financing, along with an extensive range of ecosystem support services, including consulting, training, fundraising, and more. Our diverse expertise enables us to cater to the specific needs of the "missing middle" within the SME sector, thus amplifying our impact.  

As an illustration, [I&P Afrique Entrepreneurs](https://www.ietp.com/en/content/ipae-closes-investment-phase) (IPAE3), the third I&P Impact Fund, is structured as a conventional growth equity model with an added layer of risk mitigation through a first loss tranche. This first loss tranche will be secured through contributions from Development Finance Institution (DFI) investors. 

In addition, IPDEV, I&P’s second investment vehicle which aims at anchoring local African impact funds will be structured as an evergreen fund with a first loss tranche sourced mainly from a large institutional Donor. It is expected that this first loss tranche will allow private investors to support this high impact initiative. This support in blended finance will also provide Technical Assistance for the anchored funds and their investees, as well as high impact seed finance.

__Tell us about one or two blended finance transactions I&P has engaged in.__ 

Agroserv, led by Burkinabe entrepreneur Siaka Sanon, stands out as a prominent grains manufacturer in the land-locked country of Burkina Faso. Siaka started his company by aggregating the supply of grains in the country and adding value through a small processing plant. Sinergi Burkina, one of the single-country funds sponsored by I&P, initially invested in Agroserv, providing an equity ticket of less than half a million dollars. 

Over the following six years, Agroserv experienced remarkable revenue growth, driven by increased demand from a rapidly urbanizing population and beverage manufacturers. Agroserv was able to graduate to a private equity fundraise of $12 million. I&P led this fundraise, which included additional investors as well as a matching grant from USAID (part of the US Government’s DFI). The combined impact of the concessionary grant and the substantial capital raise proved highly beneficial for Agroserv, facilitating operational enhancements and the establishment of a new milling factory.  

__How does I&P measure the impact and evaluate the success of its blended finance transactions?__ 

By the end of 2023, I&P's portfolio companies had directly and indirectly impacted 3.7 million people in over 20 African countries, including employees, their families, suppliers, and clients.

To evaluate impact and chart success, we measure investee company performance with a comprehensive in-house impact management tool based on global impact performance metrics. Close to one hundred impact indicators are collected on a declarative basis and analyzed every year to assess partner companies’ impacts on their local stakeholders (entrepreneurs, sub-contractors, employees, clients). I&P tracks its portfolio on a consistent and clearly quantifiable basis.

This tracking and reporting system enables I&P to gauge the progress of blended investments and support programs. Comprehensive reports inform future decisions regarding the optimal mix of financial and concessionary capital. A summary of our impacts can be found in our [Annual Impact Report](https://www.ietp.com/en/content/annual-impact-report-2023).

The impact of technical assistance is also carefully weighed and assessed in seeking the right balance to support the growth and development of portfolio companies. 

In response to the increasing global focus on climate finance mandates, I&P conducted an in-depth examination of climate adaptation and mitigation strategies implemented across portfolio companies. This evaluation served as the foundation for a defined climate policy, emphasizing more tailored and cost-effective climate adaptation measures.

__How does I&P apply a gender lens to its blended finance transactions?__  

Our gender-lens strategy encompasses a comprehensive approach, addressing various aspects for all stakeholders. This includes fostering women's leadership and access to corporate governance, promoting access to quality jobs and training opportunities, meeting specific needs for basic goods and services, and enhancing activity for women suppliers and distributors. This approach has been consistently implemented and monitored since the release of our gender policy in 2018, [Opportunities to Address the African Gender Gap](https://www.ietp.com/sites/default/files/Gender-strategy-IP-March-2018.pdf).

Furthermore, I&P is strongly committed to the 2X Challenge and the second I&P impact fund, which is fully invested, is 92% 2X Challenge compliant.  

I&P’s track record includes nearly 30% of women-led or owned portfolio companies. One example is DELTA S.A., a Senegalese sanitation company, established by a female entrepreneur who transitioned from her role in local banking to establish a water and sanitation contracting firm specializing in outsourced municipal contracts. 

__What are some interesting or unexpected challenges I&P has had to navigate in the blended finance space thus far?__  

I&P’s experience as an impact investor providing blended finance to SMEs has revealed some key learnings and challenges, namely: 

__The challenge of sustainability, liquidity, and profitability__ — The positive economic performance of portfolio companies does not necessarily translate into maximized financial value. Financing African SMEs often involves higher costs and longer investment periods than in other geographies because of high levels of human capital and financial investment, associated with significant risk. 

__The challenge of optimal structuring__ — Structuring innovative blended finance vehicles poses several challenges. For instance, defining first-loss tranches among DFI investors can be complex, as fund managers need to reconcile varying investor goals and loss thresholds. 

__What gaps or opportunities do you see in the larger blended finance market in Africa?__  

Blended finance often does not reach frontier markets (mostly fragile countries) SME funds, and is still not sufficiently widespread on the African continent. This is due to the lack of flexibility of financing options, including investment horizon, management fees, return expectations, and fund size. Fund durations are often too short and the main performance indicator, the IRR, pushes investment teams to exit in a premature manner from portfolio companies, even though a longer investment period would maximize impact creation and financial returns, as I&P demonstrates in its last report, [Unlocking Catalytic Capital for African SMEs](https://www.ietp.com/en/content/IP-C3-report-catalytic-capital). 

With the growing emphasis on climate finance and gender-lens investment, there is a need for specialized funding providers to support these initiatives. For example, the funding can be in either concessionary–early-stage support that matches the early build up—or in project capital execution or based on commercial capital rates and tenors. 

__How do you see I&P’s blended finance activities evolving in the future?__ 

I&P will carefully assess trends in blended finance and incorporate the concepts that align with the small and medium-sized company segment.  

The blended finance trends I&P aims to emulate are those facilitating the acceleration of early-stage companies, propelling them into significant contributors to job creation and catalysts for economic growth.  

In the meantime, I&P continuously explores opportunities to collaborate with investors and funders across its diverse business lines:  

__(1) Impact Investment through growth equity models__ — I&P is currently raising about $80 million to finance its third impact fund, “I&P Afrique Entrepreneurs 3”.  This Pan-African impact fund will build on the track record of two previous I&P impact funds and will invest equity and quasi-equity in local African -founded and African-managed champions aiming at scaling-up or having projects to expand regionally and continent-wide.

__(2) Anchor positioning for African impact funds__ — I&P has developed an innovative LP anchor fund initiative (IPDEV). Under this program, I&P sponsors small, single country funds with a target capital of approximately $5 million, acting as a catalyst for local investors. 7 country funds are operational under this program so far—in Burkina Faso, Cote d’Ivoire, Madagascar, Mali, Niger, Senegal, and Uganda. Two additional funds are currently in the fundraising phase—in Guinea and Cameroon.  These local investment vehicles are targeting early-stage SMEs which have almost no access to funding. IPDEV will also commence fundraising in the latter part of 2024 to launch a second generation of country funds.

__(3) Driving acceleration programs__ — I&P oversees incubation, acceleration and seed-funding programs through grants obtained mostly from Donors and Foundations and is exploring additional opportunities and funding sources.

__(4) Supporting local Ecosystem__ — I&P provides Training and Advisory services targeting local Ecosystem players (Accelerators, Incubators or Governments) and is developing a unique expertise of Impact Fund of Funds management and advisory services.

*By Karolyn Xie, Interim Head of Communications*

Hear from Sébastien Boyé from Investisseurs et Partenaires (I&P) on their comprehensive approach to blended finance to support African SMEs, how they measure their impact, the gaps, and opportunities they see in the blended finance market, and more.

Investisseurs et Partenaires (I&P) Member Spotlight

Investisseurs et Partenaires (I&P) Member Spotlight with Sébastien Boyé

Renew Capital has a vision to become Africa’s largest investment firm. Since 2005, Renew Capital has helped to accelerate Africa’s private sector growth by facilitating investments in early-stage enterprises with high growth potential across the continent. 

We spoke with Renew Capital Co-Founder and Managing Partner, Laura Davis, about how Renew Capital leverages blended finance to facilitate investments in Africa while building the ecosystems and infrastructure needed to make these investments possible.

__Please tell us about Renew Capital’s model and approach and your various offerings.__

Our model includes collaborating with Western governments and foundations to redirect a segment of the close to $30B USD allocated as aid to Africa towards kickstarting private investment across the continent. These stakeholders typically look for both financial and social impact returns (such as job creation). Our approach aims to enhance the functionality of the ecosystem, refine operations and foster the growth and capacity building of businesses, and position better pipelines for investors.

To support for-purpose angel investors, foundations and family offices seeking sustainable social impact in Africa alongside financial returns, Renew Capital founded and manages the [Renew Capital Angels](https://www.renewcapital.com/investing). Renew Capital Angels invest through mini venture capital funds and their risk/return expectations vary greatly by investors, though all are committed to using their capital to build Africa’s private sector. 

Top-performing companies may receive an additional growth round and management support. If successful, they may exit to larger funds. 

Through the Renew Capital Exchange, we organize capital, train executives and support investments. With staff in 14 African countries, our hubs help to pioneer new markets across the continent, build private-sector ecosystems and develop investments. We aim to be in half of the continent by 2025.

__Renew Capital's investment model has gained recognition and has been funded by Global Affairs Canada and USAID, among others. What is Renew Capital’s investment strategy and how does blended finance fit into this construct?__ 

Renew Capital’s investment strategy is:
1. Partner with international development organizations to accelerate the formation of entrepreneurial ecosystems and pipelines across Africa.
2. Use blended finance to enable investment in smaller deals than typical in Africa—creating a pipeline for investors and potential exit routes to larger funds.
3. Invest in asset-light, growth-oriented tech and tech-enabled businesses through Renew Capital Angels; the best-performing portfolio companies may be considered for investment through a Renew Capital growth fund.
4. Deliver executive and management training for pipeline and portfolio companies;  Train portfolio companies on becoming gender and climate-smart and building their middle management. 

This innovative approach serves as a blended finance solution, aimed at unlocking fresh sources of private capital specifically for African startups. The primary goal is to diminish the impact of the 'missing middle', ultimately fostering a more inclusive financial landscape across the region.

Renew Capital and Renew Capital Angels have emerged as one of the most active foreign equity investors in the region.

__Can you tell us more about your portfolio in terms of investments made and development impact created? Please highlight 1-2 deals that have gone on to raise additional private capital after having received support from Renew Capital.__ 

Our portfolio includes companies in different sectors including technology, tech-enabled, agriculture, light manufacturing, fast-moving consumer goods (FMCG) and services.

Many of our companies have gone on to raise further financing, including [ROAM](https://www.roam-electric.com/) and Badili. As part of our portfolio support program, we assist companies in their cross-border expansion efforts. We aim to contribute to their growth as they venture into new territories. 

__How does Renew Capital integrate gender and climate considerations into its work and investment strategy?__ 

Renew Capital is fully committed to incentivizing our portfolio companies to institute best practices for gender equality and climate considerations. Our approach is to build it into our term sheet and provide related training. We are interested in learning more about what others are doing, so please reach out if you’d like to share related information. 

Our core training programs include [The Gender-Smart Exec’s Program](https://www.renewcapital.com/newsroom/what-is-the-sg2x-playbook). This is customized for executives and managers who are ready to help their companies scale. The program is available through a partnership with 2X Global and USAID.

__What are some lessons that Renew Capital has learned after a decade of operating as a blended finance practitioner? How are you integrating these learnings into your current work?__

- __FIND A BALANCE BETWEEN MONITORING AND EVALUATION AND REPORTING__: Implementers of many blended finance projects face the ongoing challenge of serving two masters which both require robust and specific reporting. Additionally, obtaining timely and accurate financial statements from portfolio companies and other non-investee companies required for reporting can become a challenge.  
*__Tip__: *During the planning stage of a blended finance project, be intentional in what you agree to in terms of reporting. Creating alignment and overlap of reporting requirements for your different stakeholders will lessen the burden of monitoring and evaluation during implementation.**

- __PERSIST ON THE OUTCOMES, BE FLEXIBLE ON THE ACTIVITIES AND OUTPUT:__ Investing in blended finance projects in Africa is a relatively new initiative for government and donor partners. Some approaches that work well in one country may be unsuccessful in another. It’s important to stay focused on the outcomes, remain nimble in the activities and apply lessons learned as you go.  
*__Tip__: *Make sure your donor partner and your investors are flexible and allow you to adjust activities and pivot plans as you begin implementation and apply lessons learned. Be diligent in documenting your failures and reviewing them to extract lessons learned.**

- __DON’T BE AFRAID TO TRY SOMETHING RADICALLY NEW:__ Be willing to try something totally radical. One component of our blended finance project in Ethiopia was to expand our reach to “investment hubs” in larger cities outside of Addis Ababa and to educate SMEs on investing, sourcing deals and creating valuable business networks. Due to unrest, logistics and a lack of local partners in these cities, our efforts had little traction. Instead of continuing down a failed path, we pivoted to a new, radical idea to reach the masses— an edutainment show customized for Ethiopian culture and aired during prime time on Friday evenings. We soon went from minimal touchpoints in four cities outside of Addis with only a few stakeholders, to millions of viewers. By trying something new we were able to raise excitement for entrepreneurship and the formation of local angel networks.  
*__Tip__: *Be open to trying something radical if the status quo is not working. You may end up unlocking impact at a larger scale than you ever thought possible.**

- __80/20 RULE: FOCUS ON A FEW GROWTH COMPANIES, VERSUS TRYING TO HELP EVERYONE:__ Not everyone is meant to be an entrepreneur, and blended finance interventions need to realize this. You’ll figure out quickly which entrepreneurs have the capacity to take on financing and scale.  
*__TIP__: *Be aware that 80% of the impact and results will come from 20% of the SMEs you support under a blended finance model. Focus on the 20% and those who are equipped to grow and create impact at scale.**

For a few more tips, visit our [blog](https://www.renewcapital.com/newsroom/blended-finance-a-key-mechanism-for-mobilizing-private-capital-for-public-good).

__Can you tell us how Renew Capital develops the investment and entrepreneurial ecosystem in the various countries in which it operates? How does this in turn benefit the direct deals side of your work?__

In partnership with Global Affairs Canada, Renew Capital has developed and is testing a framework to regularly measure African investment and entrepreneurial ecosystems based on five critical indicators - Capital, Culture, Connectivity, Conditions and Cohort. We then aim to design our interventions based on our assessment of these indicators in order to have a measurable approach to activating the entrepreneurial ecosystems. Please let us know if you are interested in learning more. We’d love to explore partnerships to regularly measure and report on useful metrics to the wider community of blended finance practitioners.   

__Renew Capital has been a member of the Convergence network for several years, indeed you were present at our inception at the Addis Ababa Action Agenda meeting in 2015. How has your membership with Convergence supported your work and effort to help deliver on the SDGs and scale financing in developing countries?__

We were in Addis Ababa when the Canadian government and other stakeholders announced their commitment to Convergence and it’s been an honor to follow along with the journey. Convergence plays a key role in convening related partners and stakeholders and Renew Capital has benefited from the connections and the wealth of knowledge Convergence collates and reports on to push blended finance forward.  

__Where do you see Renew Capital 10 years from now and how does blended finance fit into these plans?__

Renew Capital is currently pursuing an ambitious growth trajectory. Our plan involves expanding our presence to cover half of the continent within the next two years. We currently have a small and growing presence in 14 countries on the continent. We are cultivating ecosystems that foster entrepreneurship to help expand the pipeline of investible projects that can benefit from blended finance. 

*By Karolyn Xie, Interim Head of Communications*

Hear from Laura Davis on how Renew Capital leverages blended finance to facilitate investments in Africa while building the ecosystems and infrastructure needed to make these investments possible.

Renew Capital Member Spotlight with Laura Davis

MEDA has a 70-year history of market-driven development and deploying impact investing globally. Grounded in their mission to bring business solutions to address poverty, their mandate is to create decent jobs in the agri-food system.

Through a market systems approach to business and technical value creation and access to capital for entrepreneurs, MEDA works across the entire agri-food ecosystem with ’farmpreneurs’ and ‘agripreneurs’ especially women and youth, with a focus on environmental sustainability, gender equality, use of technology, inclusive financial services, and impact investment. MEDA’s goal is to create or sustain decent jobs (direct, indirect, and induced) that allow women and youth to sustainably take care of their needs and build resilient communities.

We spoke with Dorothy Nyambi, President and CEO of MEDA about MEDA’s role in the Mastercard Foundation African Growth Fund, what they hope to achieve, how they apply a gender lens theory of change, how the Fund’s design will catalyze additional investment, and more.

__Can you tell us about MEDA’s mandate and how blended finance fits into that?__

From 1953 to date, blended finance has been crucial to MEDA’s success. We have invested our MEDA Risk Capital Fund in impact-focused funds, financial institutions, and small businesses in agriculture. This catalytic evergreen fund has $24.8 million invested in 26 different investments, both direct debt equity and via investment funds. In 2021, investments under the MEDA Risk Capital Fund contributed to 83,000 decent work opportunities.

As an early leader, MEDA partnered with the Government of Canada in 2013 to pilot the use of concessionary finance, raising private capital for development-related investments in private equity and trade finance. These partnerships also involved providing technical assistance to funds and SMEs, supporting the achievement of the Sustainable Development Goals.

Uniquely, MEDA makes program-linked fund investments to maximize impact. We know attracting commercial capital and leveraging patient capital, such as investments from the Mastercard Foundation, enables us to achieve sustainable development through ecosystem building while delivering attractive returns.

__The [Mastercard Foundation African Growth Fund](https://africagrowthfund.org/) is a unique initiative. Can you tell us about it and what it is that you are looking to achieve? What does present and future success look like?__

The Mastercard Foundation Africa Growth Fund (the Fund) is a unique and catalytic initiative. It offers capital and technical assistance to African fund managers and other forms of intermediary vehicles, some of whom are perceived as risky by the investment community. This fund focuses on creating 15,000 decent jobs with an overall job effect of 250,000 through a very intentional, flexible, and adaptable ecosystem-building approach.

By taking an ecosystem-building approach, the Fund will crowd in additional capital by strengthening African investment vehicles (venture capital funds, small and medium sized enterprise (SME) debt funds, permanent capital vehicles etc.) and de-risk them. The goal is to create and/or sustain dignified and fulfilling work for young people, especially young women, in Africa. The Fund’s investment vehicles (IVs) are working with portfolio companies — a majority of which are high growth SMEs.

To achieve the Fund’s goals and deliver on ecosystem-building and jobs, MEDA was brought into a consortium with specific expertise. MEDA leads the Fund with Investisseurs & Partenaires (I&P) as the Fund Advisor, ESPartners (ESP) as the Business Development Services (BDS) provider, Genesis Analytics as the learning partner, Africa Communications Media Group (ACG) leading communications, and the Criterion Institute as the Fund’s gender diversity equity and inclusion partner. The Fund will invest in 20 IVs based in Africa during the next five years.

__How will the Mastercard Foundation Africa Growth Fund mobilize additional private capital into the various investment vehicles (IVs) that you invest in?__

The Fund's investment policy is designed to enable investment approvals that will catalyze and provide comfort in mobilizing additional investors.

1. The Fund’s investments may be structured as a blend of instruments to de-risk IVs, including straight equity, quasi-equity, concessional debt, and to some extent, risk sharing or first loss capital.  
2. The Fund may anchor an IV to reach its first close ahead of other investors by committing significant capital and dialing back our portion of the funding structure of the IV as other investors commit. 
3. The Fund has the ability to support early-stage IVs with working and warehousing capital facilities to enable fund managers to establish their operations, teams and demonstrate an investing track record.
4. The Fund’s offerings include significant value creation resources that can be applied at the IV or portfolio SME levels – pre and post investment. Accelerator cohorts will support select early-stage fund managers to improve “*investment shortcomings*”, who will then be showcased to like minded investors to consider the opportunities.
5. The Fund works to enhance the ecosystem by collaborating with associations and other stakeholders to convene networking sessions, industry events, knowledge-sharing platforms, and investor education sessions that champion the cause of first time female and early-stage fund managers, demonstrating their viability and mobilizing other investors through our investment decisions.

__How does the Fund apply a gender lens approach to its theory of change?__

We recognize that financial systems are rooted in patriarchal and colonial norms and assumptions that uphold unequal power, privilege, and bias. Traditional Gender Lens Investing (GLI) approaches — that don’t shift investing assumptions and address power dynamics — won’t impact equity and risk being exploitative. Unequal power dynamics that exclude women and youth access to, and benefit from, investments must be dealt with, starting within the consortium and at every stage of investment. We are committed to ending gender and intersectional power imbalances (i.e. gender, diversity, equity, and inclusion) in investment. 

The Fund has embraced 2X Global’s criteria for financing women. It aims for women founders, or 51 per cent ownership; 30 per cent leadership in senior management, boards and investment committees; and between 30 to 50 per cent share of women in the portfolio companies’ workplaces.

Thus, we require that IVs must satisfy one gender-lens criteria within their teams by the time they reach their first close, or, if prior to the first close, in the year following the Fund’s disbursement of IV investment capital:

- For multiple partner teams, at least one female partner (a founding partner with a shareholding in the General Partnership, Chief Investment Officer, or Investment Director) who is part of the decision-making, and women representing at least 30 per cent of the overall team beyond marketing, human resources or investor relations roles; 
- For single partner teams (male or female), at least 30 per cent of the team must be female, beyond marketing, human resources, or investor relations roles. 

Collaborative knowledge gained informs the deepening of Gender Diversity, Equity, and Inclusion (GDEI) and Environmental, Social, and Governance (ESG) capacities and strategies over the life of the program.

__Can you share details of the two GLI funds that you have invested to date?__

Our first investment is with [Aruwa Capital Management](https://aruwacapital.com/), a Lagos-based, female-founded and female-led, early-stage growth equity and gender lens fund, focused on investing equity and equity-linked capital into established and fast-growing companies in Nigeria and Ghana. The company is led by Adesuwa Okunbo Rhodes, the Founder and Managing Partner. Aruwa Capital only invests in businesses that align with its gender lens criteria.

Our second investment is [Inua Capital](https://inuacapital.com/), a gender-lens, ESG-lens, and impact-focused investor managing fund that provides patient growth capital to Ugandan SMEs. Inua was founded in 2021 with a local investment team. It pioneers private equity investment and will accelerate the growth of 30 to 40 local companies into sustainable, responsible, and profitable titans of Uganda. The company is led by [Kim Kamarebe](https://inuacapital.com/about-us/our-team/), Founder and Managing Director. Stay tuned for more investments soon.

__Domiciliation of IVs on the African continent is a big area of focus for the Fund. Can you tell us why this is important? What are some of the obstacles/bottlenecks faced by IVs in domiciling on the continent?__

In addition to the Fund’s objective to catalyze capital into 20 Africa-based IVs and ultimately sustain decent jobs through SME growth, an equally important vision of the Fund is to build the ecosystem of risk capital investing in sub–Saharan Africa, making it easier for local and foreign investors alike to commit to African IVs. Opening up Africa domiciliation is key in attracting local investors including pension funds. 

The Fund believes that, by urging and supporting fund managers to domicile in Africa, either on a parallel, feeder or other basis, other investors will come alongside, mobilizing investor confidence on the continent.

The obstacles and bottlenecks faced by IVs in domiciling in Africa include the complex and varied regulatory environments across different African countries. For the most part, rules and regulations cover the broad financial sector and very few are customized to the needs of investment vehicles — fewer still have established support institutions and specialized services providers (such as legal and accounting firms and management companies) with expertise specific to fund structures in place. Each jurisdiction has unique rules, licensing requirements, and reporting obligations, making it cumbersome for IVs and unpredictable for investors. Another obstacle is the relatively underdeveloped capital markets and limited availability of local investors, which has reinforced reliance on foreign capital. Further, the perception of political and economic risks in Africa can deter potential investors and create additional hurdles for IVs trying to fundraise. 

To improve this ecosystem constraint, the Mastercard Foundation in conjunction with the Fund team has commissioned a study on the various domiciliation options available to IVs on and off the continent to establish characteristics, pathways, and recommendations to support jurisdictions, IVs and investors with guidance on domiciliation options in Africa.  

__What are some interesting or unexpected challenges MEDA has had to navigate in the blended finance space thus far?__

MEDA has had several blended finance challenges. Attracting commercial capital remains difficult due to lingering risk perceptions from in-grained biases. Overcoming these biases is crucial to scaling up investments to the level needed. We’re confident the Fund can change that for more risk averse investors. 

Also, these complex deals require specialized expertise. With complicated regulatory environments, the Fund needs local knowledge. Thus, access to local financial and legal expertise is crucial to success. Finally, like many blended finance initiatives, measuring impact and additionality remains a challenge. For this Fund, we partnered with Genesis Analytics, a learning partner who leads on measuring impact and assessing value.

__Based on MEDA’s involvement in blended finance, what gaps or opportunities do you see in the larger blended finance market?__

Presently, blended finance levels remain stagnant while the Sustainable Development Goals (SDG) funding gap grows. There is opportunity for more blended deals and funds to support SDGs and we need them more rapidly.

One significant opportunity is to bridge the gap between impact investing and traditional donor-led development. The challenge lies in uniting impact investment with existing technical assistance programs, as these two functions operate separately. Bringing them together is vital.

To increase blended finance impact in gender equity, investors can play a large role by expanding Gender Lens Investment capital, improving representation, and demanding robust gender analysis. Building in criteria for GLI for blended finance activities is important to concretely determine investment impact.

__How do you see MEDA's blended finance activities evolving in the future?__

MEDA’s blended finance activities are evolving. We are exploring more funds we want to develop in other parts of the world. We will continue to employ blended finance. We see impact when we match investments with development programs – program linked investments. Our vision for a prosperous, equitable, and sustainable future for Africa, and the world, relies on using blended finance to accelerate economic development, foster market systems that generate sustainable jobs at decent income levels, and ensure food security.

*By Karolyn Xie, Interim Head of Communications*

Hear from Dorothy Nyambi on MEDA’s role in the Mastercard Foundation African Growth Fund, what they hope to achieve, how they apply a gender lens theory of change, how the Fund’s design will catalyze additional investment, and more.