HEKS/EPER and Swiss-based impact investment firm iGravity have officially launched the Rural Livelihoods Investment Window, a private debt facility that provides financing and business support to enterprises in Sub-Saharan Africa to promote sustainable employment and income opportunities for communities in rural areas. The focus of the initial phase is on Uganda and Senegal.
While impact investing is growing rapidly, many charitable foundations and NGOs still struggle to incorporate investment capital into their philanthropic activities. HEKS/EPER is among the frontrunners of charitable organizations active in the impact investment space having started back in the 1990s with investing in microfinance institutions across Eastern Europe. Building on these activities, HEKS/EPER took the decision to expand its activities in impact investment to invest directly in small to medium enterprises – often referred to as the “missing middle” – in Sub-Saharan Africa. The Rural Livelihoods Investment Window aims at supporting local enterprises that generate employment and income opportunities for rural households or provide access to relevant goods and services, such as water and sanitation solutions or renewable energy. “We strongly believe that impact investing – how we understand it – is a powerful tool which complements our traditional work to improve livelihoods of rural communities. Direct investments into local SMEs have the potential to create much needed income and employment opportunities, and have a sustainable impact”, says Bernhard Kerschbaum, Head of Global Cooperation at HEKS/EPER.
The Rural Livelihoods Investment Window has started building a portfolio of long-term private debt investments in 10 – 15 enterprises, balancing tangible social and environmental impact with financial returns. According to Peter Jordi, Head of Controlling at HEKS/EPER, “this partnership is an important first step to demonstrate the viability of an impact investment approach to rural development.”
For portfolio development, execution, and investee management, HEKS/EPER has joined forces with impact investment specialist iGravity. With local offices in Kenya and Uganda, iGravity has built a large pipeline of target enterprises combining a traditional financial due diligence with a comprehensive impact assessment. “The Rural Livelihoods Investment Window plays a crucial role in supporting local enterprises that struggle to access bank financing and are still too small for many other impact investors. Often, under this initiative, we act as one of the first institutional investors, backing these companies with long-term and flexible capital”, says Patrick Elmer, Founder and CEO of iGravity.
The two entities combine and leverage complementary expertise, notably in rural market systems development and economic inclusion (HEKS/EPER) and solid financial and impact investment practices (iGravity). The first closed transactions under the window are a loan to the company Venture South which provides solar receivables and warehouse receipts financing in Uganda as well as a loan to Kumba, a grain processing company in rural Senegal. The transaction size ranged between USD 200 and 500K. An additional 6 to 7 deals will be made across the two countries in 2022. The invested portfolio will generate a positive impact in the areas of income and market access for smallholder farmers, employment and training opportunities for people in rural and peri-urban areas, and access to affordable and relevant goods and services that improve the quality of life in under-served areas. “We have already screened over 200 small and medium size enterprises in the sustainable agriculture and clean energy sectors, and have been really encouraged by the opportunities for positive impact on rural livelihoods offered by so many Ugandan and Senegalese companies” says Elizabeth West, Head of Impact Ventures at iGravity.
The two partners have started to plan the scaling of this initiative through a dedicated open-ended debt vehicle which will invest in SMEs in the sustainable agriculture, clean energy, and access to finance for productive use sectors in Sub-Saharan Africa, while at the same time developing formal partnerships with outcome payment agencies to strengthen its risk-return-impact profile. HEKS/EPER and iGravity welcome like-minded impact investors, such as foundations, development agencies, banks and independent asset managers, to join this promising initiative.
For further information, please contact:
Marisa Althaus: marisa.althaus@heks.ch
Elizabeth West: elizabeth.west@igravity.net
Or see HEKS/EPER's press release, or the portfolio's factsheet.
