CDC plays an anchor investor role in the fund, joining other public and private investors in the launch of the fund, including Schroders, DFC (U.S. International Development Finance Corporation), and JICA (Japan International Cooperation Agency), who jointly supported its launch with around $140 million. The fund has a target size of $350 million.
Direct: The fund will extend US dollar and local currency debt to financial institutions with loan books allocated significantly to MSMEs and low-income individuals. This financing will enable the financial institutions to maintain and extend greater credit to their customers namely entrepreneurs of micro-businesses (70 per cent of pipeline), enabling them to better manage cashflow and maintain or grow their business. Only a relatively small proportion will be likely used for personal purposes (21 per cent of current pipeline), mortgage/housing (2 per cent of current pipeline), allowing borrowers to save or invest, smooth consumption and manage risk better.
Pan-Africa and South Asia. The AfrAsia sub-fund has a 40 per cent cap on exposure to India and a minimum of the lower of 15 per cent of the global fund or $30 million will be invested in Africa. CDC has committed to senior shares in the AfrAsia sub-fund which can only invest in CDC geographies.
The majority of the lending will go to underbanked entrepreneurs and low-income borrowers in both the formal and informal economy. Based on current pipeline, 70-80 per cent of borrowers are expected to be women and 60-70 per cent located in rural areas (this facility will qualify for the 2x Challenge). The range has been provided to account for variations in pipeline.
This investment is made under an approved Catalyst Strategy, and therefore does not require a grid score.
Market context: Commercial lending to this segment is not available in sufficient quantity or on the same terms in the COVID-19 context.
To help us direct our investments, we use a tool called the Development Impact Grid. The Grid scores every investment we plan out of a score of four, based on two factors: the difficulty of investing in the country and whether investment in that sector will lead to jobs.
Environmental and social aspects
We are working closely with the fund manager to enhance its internal environmental, social and governance processes, which in turn will support financial institutions to integrate a responsible investor approach across their operations.
Since 2012, we’ve only invested in Africa and South Asia. Investments outside these regions are from our pre-2012 portfolio.
- Africa, South Asia
- Investment type
We provide capital in three broad ways: direct equity, debt, and intermediated equity (principally through investment funds).
- Intermediated investment
- Fund manager:
- Blue Orchard Finance SA
- Start date
For direct investments, this is the date CDC committed capital to the business or project.
For funds, this is the date that CDC committed capital to the fund.
For underlying fund investments, this is the date that the fund invested capital into the business.e
- November 2020
For direct investments, this is the total amount that CDC has committed to the business or project (it may be a combination of equity and debt).
For funds, this is the total amount that CDC has committed to the fund.
This is the investee company’s place of incorporation; or a fund’s jurisdiction.