Oxfam is demonstrating to the financial industry that investments in developing countries can deliver both social and financial returns.
It comes with the creation of a unique investment opportunity. The Small Enterprise Impact Investment Fund (SEIIF) will be unveiled in Edinburgh this morning (Thursday).
The fund – the first of its kind – will invest in small and medium sized enterprises (SMEs) in developing countries and aims to create 100,000 good quality jobs within five years.
Crucially, the fund will offer investors both measurable social impacts and financial returns, alongside relatively low risk.
The SEIIF – which is a joint initiative with asset management group, Symbiotics – will be unveiled at a business breakfast hosted by Standard Life.
Investors are now being sought for the fund.
Annie Lewis, of Oxfam Scotland, said: “The private sector has a critical role to play in lifting people out of poverty and has the potential to drive huge SME growth in developing countries at a scale that is simply not possible for traditional development finance institutions to achieve on their own.”
Oxfam says there are huge numbers of small businesses in Africa and Asia which are stifled by under-funding and limited access to credit – they are known as the ‘missing middle’. This comes despite these businesses being a critical engine of growth in many economies.
The SEIIF will target this financing gap by investing in a range of local financial intermediaries which focus on small enterprise development. As the fund’s ‘impact adviser’, Oxfam will use its local knowledge and development experience to offer independent intelligence on the impact of investee activities. The primary focus will be activities which build women’s empowerment, job creation and food security in low income economies.
Annie Lewis added: “Oxfam has long talked about the role the investment industry could play in poverty eradication – now we’ve decided to prove it. As well as providing much needed capital, the SEIIF’s biggest job will be demonstrating success and leading the way for a new wave of investment centred on SMEs in developing economies.”
The target size of the SEIIF is $100 million after three years, which will be invested in a portfolio of debt and equity instruments, targeting those with low risk, high impact profiles.
Roland Dominicé, chief executive of Symbiotics, said:
“The SEIIF seeks low risk through high diversification and clear exits, which offers investors both breadth and diversity in terms of models, geographies and activities.”
Gavin Stewart, previously Chief Executive of both Resolution Asset Management and Ignis Asset Management and a SEIIF investment committee member, said:
“This is an innovative and exciting way to bring together the private sector skills of a specialist player and the knowledge and experience of Oxfam in the impact space.
“The long term potential benefit from proving that you can invest successfully in this area is massive and I look forward to helping this new fund be a success.”
Stephen Acheson, Director, Standard Life Investments, said:
“One of the greatest obstacles facing entrepreneurs and small businesses anywhere in the world is access to funding. This problem is particularly acute in developing countries.
“I believe that this new fund, SEIIF, has the ability to assist many embryonic and small businesses and in doing so generate wealth, employment and economic growth in areas where business potential has historically been constrained due to a lack of affordable capital.”
Fund Manager: “A pioneer team in impact investments, Symbiotics’ mission is to reach out through investments, financing small enterprise development and the social economy.”
Impact Adviser: “Oxfam is one of the world’s most respected global development agencies. The organisation delivers local presence and knowledge, as well as strong experience and expertise in impact criteria and measurement.”