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Connecting Impact Investors with SMEs
Last week Christian Aid joined forces with four of our peer NGO’s (Traidcraft, Practical Action, Twin and Challenges Worldwide) to launch ACRE (Access To Capital For Rural Enterprises) - a new platform to link investors with SMEs needing long-term capital to expand and benefit their communities in rural Africa, Asia and Latin America.
We have created a syndicate through which investors can back businesses in developing countries that have a clear social and economic impact, using a model similar to that of the “Dragon’s Den” TV series in which entrepreneurs pitch their business plans to prospective impact investors.
Why are we entering this space?
It is estimated that there are between 365 and 445 million micro, small and medium enterprises in emerging markets. Yet these companies which drive the engine of the global economy find it desperately hard to access the finance needed to keep growing. The World Bank estimates this credit gap to be a staggering $2.6 trillion.
We believe we can bridge the gap between investors who want to make a difference and SMEs which have great potential to grow. We also hope to fill some of the so-called ‘missing middle’ in which SMEs require investments of between £100,000 and £1 million – amounts that many impact investors find too risky or expensive.
What is the value we bring?
As charities already working with enterprises across Africa, Asia and Latin America, we have the relationships and the understanding of local contexts that impact investors need, and the footprint and networks to reach hundreds of enterprises.
We bring our relationships and understanding of the impact that can be achieved in each situation. We’re using existing impact investment reporting standards, as well as our experience of measuring impact to demonstrate that investors can help to change the lives of people in poverty.
What’s in it for impact investors?
A lot of impact investors understand the enormous barriers faced by these types of enterprises, which make it hard for them to identify pipeline enterprises that are investment ready, whilst generating impact. ACRE, with its programmatic footprint, offers a great opportunity in identifying enterprises, in addition to providing pre-investment business support.
ACRE helps impact-first investors to find and support these enterprises and provides the comfort of building on existing relationships, with the added benefit that successful investments will return the capital to be reused elsewhere.
What types of enterprises does ACRE work with?
The enterprises we’re working with typically lack a track record in formal business and the experience to present their financials, business models and growth plans to investors. They also suffer from the price of debt in the local market and lack familiarity with equity investments. So as well as linking investors and companies, this platform will help companies become investment-ready.
Among the 100 businesses already in the ACRE investment pipeline are a Nicaraguan producer of concentrates made using the climate-resilient plant Hibiscus and a Ugandan clean energy company which turns waste into solid and gas fuels, amongst many others.
For more information
Contact Joanna Heywood, ACRE project lead, Christian Aid
Watch the ACRE video to find out how ACRE works
Visit our new website.
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