Bringing Impact Investment to the Masses-

Investing on Inclusion

October 16, 2013

Aldaba Theater, University of the Philippines

Quezon City, Philippines

WHAT IS IMPACT INVESTING?

- Simple: Investments in companies, organizations, funds with two

objectives:

- Financial returns

- Social and/or environmental measurable returns

- It is not about good intentions, but about measurable impact by defining

clear objectives upfront and measure it during the investment period.

- Not in it for profit maximization but looking for return optimization

- It is not the new mantra in development world but a sensible instrument

for supporting private sector initiatives

WHERE DOES IMPACT INVESTING FIT

WHO ARE IMPACT INVESTORS

Source: Accelerating Impact

THEY ALL KNOW ABOUT THE FINANCE GAP…

THE “MISSING MIDDLE” PRESENTS A FINANCIAL AND

SOCIAL OPPORTUNITY

WHY INVESTORS DON’T FINANCE MISSING MIDDLE

COMPANIES

Source: Saltuk, Bouri and Leung, Insight into the Impact Investment Market, 2011

- Too costly: an investment of 2 million EURO requires same amount of work as 200k EURO

- Risky companies, need for risk capital, need for business development, moving from informal to formal

- capital requirement often risk capital providers are not capable to invest (large size, local presence)

- Why we can bridge this finance gap: local presence, business

development through NGO, geographical spread, network and knowledge

HOW TO MEASURE IMPACT ?

HOW TO MEASURE IMPACT ?

THREE CASES

1. The graduation model

2. NGOs as a shareholder

3. A Co-creation project

BIO-OILS MALI

Company processing nuts (Jatropha, Ximenia, Balanites) into bio-fuel

- Created in 2009 by Dutch entrepreneur and philanthropy investors

- Developed together with ICCO a foundation that planted 1 million

Jatropha trees for the future sourcing of nuts

- Farmers are 30% shareholder of processing facility

- 13 cooperatives already reached and 4,800 farmers selling nuts

EXPERIENCE

• With Jatropha alone there was not a positive business case. Other nuts

are added to the portfolio to have an all year operational cycle

• Great model where ICCO NGO and ICCO Investments bring in their

expertise

• Farmers may earn up to 3 euro per day additional to their existing

income

• Scalable model, where entire region (Burkina, Mali, Ghana may be

included)

AGRI-MARKETING GHANA

Marketing company in Northern Ghana sourcing produce from

cooperatives and selling in the local market

- Created in 2009 by ICCO and local NGO partner

- >15,000 farmers (corn, soya, sorghum, etc.)

- Turnover of 1 million dollars annually

- Buyers are processors of produce (eg. Breweries, etc.)

- 250,000 EURO invested and now in turn-around situation

EXPERIENCE

• After profitable years last two years loss-making and facing

bankruptcy

• Unclear ownership (two NGOs) and lack of good governance

• Handing over of sourcing responsibilities to farmers which weakened

business model

• Unclear objectives of Shareholders with the company

• Inefficient operations to be serious commodity player in the market

BIO-MASS PLANT BRASIL

Dutch seasoned entrepreneur processing ACAI pits sourced from

waste collectors into biomass

- Created in 2009 by VAR and ICCO as a Co-creation project

- 70 direct jobs created so far and through the foundation over 534

collectors have been trained. Objective is to reach out to 5,000

collectors over the next 3 years

- Clients are local factories that need bio mass to produce process heat

EXPERIENCE

• Start-up company that was initiated without total financial needs covered

(to scale up and to cater for working capital)

• Dutch entrepreneur lacked local knowledge and partner (technical

problems, sabotage, etc.)

• ICCO Investments and co-investor worked out restructuring plan and

made additional investments

• Since 6 months in production and expected (hopefully ) to be EBITDA

positive end of year

CONCLUSION

Financial Inclusion is not just a straight forward principle. It needs hard

work, well thought models and committment.