Cordaid Investment Management wins the Africa Global Funds Awards for outstanding efforts to support the Small and Medium Enterprises (SME) in fragile contexts.
This acknowledgement of our work in West Africa, from the only international awards in African Fund Services, reflects the difference that we made in the Region during a year hindered by the COVID pandemic and socio-political challenges. We are proud to be following the 2019 and 2020 award winner GroFin.
For a quarter of a century, Cordaid Investment Management (CIM) has invested in people and organizations excluded from traditional financing schemes. The track record built from working with entrepreneurs in fragile contexts is the basis of CIM’s SME investment strategy.
SME investment in West Africa began in 2016 with small investments in Sierra Leone. Since then the portfolio has experienced phenomenal growth. The outstanding portfolio today comprises 20 SMEs in Sierra Leone and nine SMEs in Mali, with investments spanning across 5 sectors, including agriculture, energy access, health, waste management, hospitality, transportation, and manufacturing. Despite the challenges of the global pandemic our portfolio outstanding in West Africa has grown from €10.5 million to €12.5 million since March 2020, with investments in 8 new promising businesses.
Our rapidly growing Malian portfolio testifies to Cordaid Investment Management's growing significance in the SME finance sector. At the beginning of 2020, Cordaid Investment Management had three Malian SMEs in the portfolio – by now there are nine. Despite the difficulties of a COVID-19 year and two military coups happening only nine months apart from each other, we financed six businesses, investing in recycling, off-grid solar solutions and agriculture. These investments are catalysing much-needed job creation for women and youth in the country.
SME financing is considered highly risky, even more so in the contexts in which CIM invests. However, for truly impact-driven investors there is a real need for investment to address the financing gap in these markets. Cordaid Investment Management is able to catalyse private sector investment through risk mitigation products that can reduce financial risk for investors. These instruments allow Cordaid Investment Management to preserve investor capital while delivering significant social impact returns.
“Cordaid Investment Management deploys investment capital that is both additional and catalytic. We offer SME financing in some of the most fragile markets in West Africa. We are delighted that this has been recognised by the AGF SME Financier of the Year award. All of us hope that this award will encourage other investors to join us in addressing the SME financing gap to support job creation for women and youth, and positive environmental outcomes in the Region,” says Brenda Pennell, Senior Investment Manager at Cordaid Investment Management.
SMEs play a vital role in mitigating poverty and inequality and creating jobs in rural areas, not least because they are an important source of employment for women and youth. According to World Bank estimates 600 million jobs will be needed by 2030 to absorb the changing global demographic. Growing SMEs have the potential to absorb the growing working population, especially in low-income countries. Further, addressing some of the causes of fragility.
Indicative of CIM’s ambition to support well-performing, resilient enterprises in Mali, Sierra Leone, Burkina Faso, and Guinea, Cordaid Investment Management is launching a €30 million impact-first investment fund – West Africa Bright Future Fund (WABFF). The Fund, which will close in Q2 2022, aims to meet the SME financing gap in West Africa through offering “missing middle” loans with ticket sizes ranging from €500,000 to €2 million.
By investing in enterprises active in agriculture, clean energy, and waste management, we aim to support employment, entrepreneurship, and inclusive market systems. The West Africa portfolio has already supported 2098 jobs as at June 2021, but with WABFF our goals go far beyond that. We aim to create and support over 40,000 direct and indirect job opportunities in West Africa in the upcoming 5 years. The fund has a particular focus on economic opportunities for the most vulnerable, prioritizing enterprises owned by or creating jobs for women and youth. WABFF favours organizations that contribute to the fight against climate change and environmental degradation, such as renewable energy and waste management enterprises.
With three investment managers in Mali and Sierra Leone and external local advisors helping with due diligence and monitoring, CIM has a significant footprint in Africa, with support from our Headquarters in The Hague, Netherlands. With our team’s dedication, knowledge and experience we will continue to contribute to the sustainable economic development of West Africa through investing in growing SMEs. Winning the AGF award for Best SME Financier is an encouragement for the important work we are doing – helping to create resilient communities in fragile economies in partnership with our investees.