Investments in fragile countries do offer returns

Interview with Hann Verheijen, Managing Director at Cordaid Investment Management

Investing for impact in West Africa. Part 4

3 February, 2022

CIM's Managing Director, Hann Verheijen, talks about the development of impact investing, challenges of SME financing, and the refinement of CIM's approach to creating impact.

You have been involved in the area of sustainable development for quite some time. How did the industry change?

The approach of international development is shifting towards giving people more responsibility. We can't underestimate the role donor aid plays when we have an emergency. In times like this, you provide immediate relief funds. But will it result in systematic societal change? A growing body of evidence suggests that if our end goal is sustainable economic growth, we need to promote job creation, human capital development, and good governance. And that's where impact investing comes in. I believe that people in a difficult situation should be allowed to solve their problems themselves in the longer term. It enables them to stand up and take the consequences for their own life.

Is the industry getting better at creating a positive impact?

When I joined the field of ethical banking in 2002, impact investing was relatively new. Around that time, Muhammad Yunus won a Noble Peace Prize for pioneering microcredit, and princess Maxima joined the United Nations as Special Advocate for Inclusive Finance for Development. At that moment, microfinance was hot. Since then, one of the most important lessons we've learned is that we have to emphasize inclusive finance rather than microfinance itself.

When it comes to SMEs, we are still finding our way around creating, measuring, and calibrating impact. Pioneering in this field is challenging but exciting. If microfinance is a successful model that offers attractive returns, investing in SMEs is still small because it's difficult to make money from it. Investors generally prefer to finance more mature enterprises.

Why and when did CIM first start to invest in SMEs?

Initially, it was driven by the identity of the parent company Cordaid Foundation and its involvement in private sector development. They have witnessed how limited access to finance prevents the private sector from growing. Having identified this bottleneck, we started testing SME investments in 2015. Gradually we found out that we are unique in financing small SMEs in fragile contexts. It is a niche where we can genuinely add value.

How did the approach change over the years?

Pioneering in SME investing, we were learning from experience. There was no research available at the time. We wanted to test it by financing different sectors and countries. Over the years, we have learned better to identify investable companies and those not ready for investments.

We also noticed that by being sector agnostic, we couldn't help our investees other than providing capital. It works best if we can bring network and expertise into that equation. The Research Project has helped identify sectors where we were (and have the potential to) creating the most social impact: agriculture, clean energy, and waste management. Focusing on those sectors for WABFF also means we can advise our partners and have a better grip on risks.

Other than the sector of operation, what qualifies SME as investible?

For us, investible means that we believe that the entrepreneur has enough creativity and entrepreneurial spirit to overcome difficult situations. Because one thing is certain, things always turn out to be different than expected. In the end, it comes down to one thing, if the entrepreneur has the creativity to work around the problem and find a new solution. For me, it is the most crucial ingredient.

That is next to look at cash flows, collaterals, and assessment if the enterprise can pay back the loan and interest. By providing a loan, you give the entrepreneur a considerable risk. Thus, it is our responsibility to make sure entrepreneurs can handle it.


“Pioneer” effect of mobilizing further funding requires proving investments can offer financial returns. With the WABFF, we aim to do that.
Hann Verheijen, Managing Director

What is the key to succeeding in SME investing?

We learned from experience that you can only be successful in our niche if you have feet on the ground. Big investors like Triodos Investment Management and FMO are hardly active in SMEs for the most part because they operate from the Netherlands. We can build real partnerships with our investees with people on the ground. For example, our investment managers based in Mali and Sierra Leone regularly meet investees. Not handholding; we trust our partners. But being there for them is essential.

What is the main takeaway from the Research Project?

The Research Project has confirmed a niche for CIM in West Africa. SME finance in fragile countries is just beginning. Most international investors operating there do not achieve financial sustainability and rely on grants to cover their operating costs. “Pioneer” effect of mobilizing further funding requires proving investments can offer financial returns. With the WABFF, we aim to do that.

The Research Project has also shown our ability to impact many levels. For example, the capital we provided to Macrowaste, the first modern waste management company in Mali, played a vital role in its growth, allowing it to expand operation geography and start recycling. We hope to play such a catalytic role with every investment. We intend to crowd in other international lenders so these highly impactful sectors can develop and provide jobs, clean, affordable energy, a healthier environment, and ultimately a brighter future for West Africa.


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

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