Claiming impact? Research is key

Interview with Brenda Pennell, Head of West Africa Bright Future Fund


Investing for impact in West Africa. Part 1

13 January, 2022

Head of West Africa Bright Future Fund (WABFF), Brenda Pennell, talks about the impact research project, the importance of looking at downstream outcomes, and the challenges of measuring impact in fragile environments.

Why did CIM get involved with the impact research project?

With the encouragement of our shareholder Cordaid Foundation, we wanted to gather evidence that our investments are contributing to systemic change in fragile countries. A substantial body of research exists regarding the impact that microfinance institutions have on fragile markets’ development, yet there is less information on the effectiveness of investments in SMEs in West Africa.

Knowing what our impact has been so far with SME investments in West Africa, we then hoped to apply this knowledge to develop an investment strategy for WABFF. The research was done by independent researchers from CrossBoundary Advisory who have a lot of experience in the impact investing sphere, particularly in fragile frontier markets. They analyzed the historic performance of our portfolio, including 21 loans to SMEs in Sierra Leone and Mali. They conducted interviews with our investees and reached out to other investors active in the region to compare the scope of impact created. In the end, this research project turned out to be more than figures and numbers. It helped us refine our measurement framework and guided us on social impact outcomes that could be realistically achieved and measured, and allowed us to compare our approaches with other investors.

In the end, this research project turned out to be more than figures and numbers. It helped us refine our measurement framework and guided us on social impact outcomes that could be realistically achieved and measured...
Brenda Pennell, WABFF Fund Manager

How does CIM look at impact?

We started with an impact mission that was aligned with Coraid Foundation’s: investing in fragile markets to create jobs. Through this research project, we’ve confirmed that we’re able to create a much broader impact. At the same time, it showed us the benefits of systematic analysis of social outcomes.

A good example of this is our investment in Macrowaste, an SME offering waste collection services in Mali. Our loan helped to expand their services across Bamako and Gao, not only creating and sustaining 126 direct jobs but also resulting in a boost in social welfare. As well as monitoring revenue growth and financial KPIs, we have started to track the volume of waste that the company is collecting. The company’s growth also allowed them to start diverting recyclable materials from the waste stream – we now calculate how much of the collected waste can then be processed by recycling companies and put to new use in a circular economy. We see that it has an environmental impact: organic matter is composted responsibly rather than put into landfills or dumped in the river, and solid waste is not irresponsibly dumped and burnt in the open air, both of which help to avoid greenhouse gases emissions.  Further, greenhouse gas emission reduction can also be estimated.  

Is it difficult to collect impact data in fragile countries?

Measuring impact is challenging in fragile markets; it can be difficult to get comprehensive data. Collecting impact information is not always a priority for our investees as it is not always clear to them that their own business could benefit from it. That’s why we’re trying to develop a metrics bank of data items that can be collected during the course of daily business operations – trying not to add to the investee’s workload.  We hope that this data might also provide investees with useful feedback regarding their operations.

We're also planning a pilot to reach out directly to the clients of our investees, so we can better understand the indirect effect their products and services have. For example, it’s quite intuitive that access to home solar systems changes the lives of households and helps small businesses grow but without actually asking people, we can’t quantify how their lives are truly improving.

Conducting interviews helps us see that lives of families and communities are changing on many levels. For clean energy, homes free of smoke and fumes improve health outcomes in the households. Solar home systems are priced in such a way that users make financial savings by not having to buy charcoal and candles, or pay to charge their phones at a kiosk. Moreover, affordable and reliable power supports micro-entrepreneurship, providing power for sewing machines or refrigerators in a local café, which in turn supports livelihoods and catalyses job creation. Being able to contact the clients directly helps us to verify impact and also aggregate data to estimate the scale of household-level savings.

What are industry standards for measuring impact?

The industry recognises the importance of measuring impact, and there are many initiatives to standardize impact metrics so that an investor can easily identify funds whose impact aligns with their own priorities and ambitions. Differing reporting formats for impact can make it hard for an external party to make it a judgment call about what that impact means.

In a follow-on project together with Innovest Advisory, we have developed an impact management framework that includes a list of core KPIs and underlying metrics. We have adopted IMP 5 Impact Assessment reporting, which is considered best practice in the industry to monitor and manage ESG risks and positive impacts.  Impact indicators are referenced against IRIS+, a widely used system for measuring, managing and optimizing impact. Besides core portfolio metrics covering job creation and gender outcomes, we also monitor sector-specific KPIs in agriculture, waste management, clean energy, and financial inclusion.

A well-developed theory of change frames our investment strategy, mapping a logical and visible pathway from investment to outcomes to measurable impact. Then we aggregate that impact to show investors what difference their capital has made.

General metrics:
- Women ownership
- Youth employment
- Investees with first-time access to funding from an international lender

Agriculture metrics: 
- Number of smallholder farmers reached
- Units/volume purchased from farmers

Clean Energy metrics: 
- Products/systems sold or installed
- GHG emissions avoided

Waste Management metrics: 
- Kg waste collected/recycled

Financial Inclusion metrics: 
- Average loan size

How are the results of the Research Project guiding the WABFF strategy?

We wanted to ensure that cross-cutting impact themes – job creation, women and youth empowerment, climate change mitigation, and adaptation – are taken into account with every future investment we make. Cross-Boundary Research Project helped us to assess the whole value chains for our portfolio companies and compare results, based on our impact targets. The Research Project guided us in identifying value chains and sectors that could benefit women and youth, preserve the environment, but were not on the radar for DFIs and mainstream investors.

Furthermore, the overview of peer investors’ activity in West Africa helped us identify the financing gaps geography and narrow down our focus to Mali, Sierra Leone, Burkina Faso, and Guinea. We have also found a “missing middle” ticket size, ranging from EUR 0.5 to 2M, ensuring that the support that we are able to offer transformational local entrepreneurs and enterprises is truly additional. Research has helped us to find the niche where we will continue gaining experience and expertise. As well as, maximize social impact.

What CIM is doing is at the cutting edge of impact measurement and management, showing that impact can be measured even in a very fragile and challenging environment, creating a benchmark for social return we can offer.


Cordaid Investment Management’s (CIM) has been investing in small and medium-sized businesses (SMEs) in West Africa since 2016. Our first investments in Sierra Leone demonstrated the great potential of SMEs in the region and the transformative role that entrepreneurship has for the local economy and lives of individuals. In the past year, despite the challenges of a global pandemic, CIM’s portfolio in West Africa has shown significant growth. We now have 20 SMEs in Sierra Leone and 9 SMEs in Mali with a total portfolio size of €12.5 million.

Knowing there are sustainable businesses lacking finance to expand and flourish, CIM is launching a new West Africa Bright Future Fund (WABFF), contributing to economic development and building sustainable livelihoods in Mali, Sierra Leone, Burkina Faso, and Guinea. The Fund aims to fill the SME financing gap in West Africa, offering the “missing middle” loans from €250,000 to €3 million. The fund focuses on three sectors – agriculture, clean energy, and waste management – which have proven to be transformational for the region.

CIM aspires to contribute to job creation for women and youth in West Africa, combining loans with technical assistance and environmental, social and governance (ESG) development. To develop an investment strategy that will maximize social impact, CIM engaged an independent research team to assess the performance of the West African portfolio and the outcomes of our investments to date. Sponsored by Dutch Postcode Lottery, this project allowed CIM to gain valuable insights on how to maximize social impact in a fragile context.

More info about WABFF

Latest news

See all news