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Dutch Good Growth Fund Update

With the Dutch Good Growth Fund (DGGF), Triple Jump has further broadened its target market and increased its focus on access to finance for underserved SMEs in 68 countries in Africa, Asia, Latin America and Eastern Europe. The DGGF is a EUR 195 M Fund of Fund initiative, funded by the Dutch Ministry of Foreign Affairs, aiming to address the finance gap that exists for small and medium sized businesses in emerging markets. The fund has special attention for investing in fragile states, innovative initiatives, and for young and female entrepreneurs, and comes with a EUR 26 M Seed Capital and Business Development facility that can support early stage initiatives, knowledge studies and technical assistance. The consortium (Triple Jump and PwC) that manages DGGF track ‘financing local SMEs’ through investment funds has reviewed over 230 proposals since its kick-start in mid 2014.

Last year we shared news on DGGF’s first four investments:GroFin SGB Fund (Africa), Novastar Ventures East Africa Fund, Investment Fund for Health in Africa II (IFHA II), and Aavishkaar Frontier Fund (AFF) (Asia). Since then, five more investments have been made, bringing the total commitments to approximately USD 80M. Selected investments range from Funds that invest in fragile states, to important sectors in sustainable development, to fund managers with innovative approaches, as well as promising local fund managers seeking international support.

Dolma Impact Fund I (Dolma) is the first international private equity fund focused purely on SMEs in Nepal, providing capital and expertise to local growth companies. Nepal has a shortage of risk capital between grants and finance for micro-businesses, and larger firms that already have access to capital markets. Dolma serves this missing middle and builds positive social and environmental impact into the core of investee company strategies. More information: https://www.dolmafoundation.org

Credo is a Georgian microfinance organization and a market leader in individual rural lending in Georgia. This gives the company an excellent position to launch SME-financing in rural areas, something that is, until now, very restricted as major banks have limited presence outside the cities. A DGGF loan to Credo finances an SME portfolio in the riskier economic sectors such as agriculture and tourism through an innovative risk-sharing model which has not been offered by the market thus far. More information: https://credo.ge/en

Cambodia Laos Myanmar Development Fund II (CLMDF) invests growth capital into SMEs in Cambodia, Laos, and Myanmar, across a range of sectors which serve growing domestic markets or have potential for regional expansion. For example in the business services or agri-business sector, innovative financial services and retail and services focus on growing middle-income domestic demand such as education, healthcare, and food and beverage. CLMDF backs entrepreneurs who are dynamic, ambitious and engaged in building the region’s private sectors. CLMDF’s management plays an active role in supporting the fund’s portfolio companies. CLMDF 2 will be one of the very first funds to provide equity investments to SMEs in Laos and Myanmar. More information: https://www.emergingmarkets.asia

African Rivers Fund (ARF) is the only SME fund that provides risk capital to sustainable growing and early stage SMEs in some of the most underserved markets of Central Africa such as the Democratic Republic of Congo, Congo Brazzaville, Uganda, and in a later stage, potentially Burundi and the Central African Republic. Hereby, ARF will create jobs, improve social and economic security, and access to local goods and services in countries where the low income population is still very dependent on imports for their daily needs. ARF differentiates itself with its focus on mezzanine financing in combination with hands-on business advisory. More information: https://xsmlcapital.com/funds/african-rivers-fund/

Centro de investigación y desarrollo rural (CIDRE) is one of the few NGOs providing loans to SMEs in Bolivia with an interesting outreach in the agricultural and rural sector, and represents DGGFs first investment in Latin America. CIDRE was originally a microfinance institution, but today around 50% of its portfolio is allocated to SME loans, many of them in rural areas of the country. DGGF’s loan to CIDRE will help them to reach out to difficult SME sectors in rural areas (such as infrastructure, acquisition of different agricultural machines and equipment, manufacturing) in one of the poorest countries in Latin America. By providing CIDRE a convertible loan, DGGF is actively supporting the institution in its goal to transform into Bolivia’s first dedicated SME bank. For more information: https://www.cidre.org.bo/

The DGGF track ‘financing local SMEs’ through investment funds is part of a large EUR 750M initiative that also addresses financing needs of Dutch SMEs with an interest to expand to emerging markets (managed by RVO and Artradius). More information on DGGF: https://english.dggf.nl/