DFID’s Impact Programme Builds an Investment System for Small Businesses

SGBs providing poor communities with critical services need investment capital. Yet potential investors tend to evaluate impact business using the same financial metrics they have for more traditional for-profit ventures, with the result that impact ventures lose out on funding.

The UK’s Department for International Development (DFID) launched the DFID Impact Programme in 2012 to address this gap in Sub-Saharan Africa and South Asia. The programme has two investment funds, managed by CDC, which invest in enterprises that benefit poor and low income people. It also partners with organizations to support a range of market building activities.  

The DFID Impact Fund is a ‘Fund of Funds’ that aims to provide finance, via fund managers, to SGBs in Sub-Saharan Africa and South Asia. The businesses may include, but are not limited to, businesses providing access to food, housing, energy, water, sanitation, health, education and financial services to people living at the base of the pyramid.

To date, the DFID Impact Fund has awarded over $47 million to three investment funds: Novastar Ventures, Injaro Agricultural Capital Holdings Ltd and the Energy Access Ventures Fund.

  • Novastar’s investments include Bridge International Academies, an SGB in Kenya that builds and operates private schools, Paradigm, the leading supplier of clean-burning cook stoves in Kenya, and Sanergy who offer hygienic sanitation through franchised sanitation centers in slums and collect waste which is processed into fertilizer, electricity and other by-products.
  • Injaro is making sustainable investments in small and medium enterprises (SMEs) operating along the agricultural value chain in West Africa in order to alleviate poverty and improve food security.
  • Energy Access Ventures will mainly invest in small and medium size enterprises active in the generation and/or distribution of electricity in East Africa.

Useful links:

The Impact Programme: http://www.theimpactprogramme.org.uk/
Resources and helpful links: http://www.theimpactprogramme.org.uk/resources/
The Global Impact Investing Network: http://www.thegiin.org/cgi-bin/iowa/home/index.html
CDC: http://www.cdcgroup.com/