NpM members Cordaid and FMO take 'risk' to invest in fragile states via IFC SME Ventures Fund

8 April, 2015

The original article (in Dutch) has been posted by P+. To access it, click here.


It seems to be common sense to consider investing in 'fragile states', i.e. countries in conflict or other sorts of crises, as financially risky and therefore unwise. Still, in the midst of the Ebola crisis, NpM member Cordaid decided to join the West Africa Venture Fund. This fund, which is part of the SME Ventures Fund of the International Finance Corporation (IFC), invests venture capital in the Small and Medium sized (SME) sector of Sierra Leone and Liberia, countries that were hit hard by the health crisis. NpM member FMO, the Dutch entrepreneurial development bank, already joined the IFC fund from the start and focuses on the Central African Republic and the DR Congo. 

After a meeting of the IFC Ventures Group at FMO in 2014, after which Cordaid joined the fund and decided to invest 4 million in the fund, a subsequent meeting took place at FMO in March 2015. Besides exchanging experiences between the fund managers and clients of the fund, another important goal of this last meeting in March was “to convince new investors to participate in the fund”, says Frederik-Jan van den Bosch, manager micro & small enterprise finance at FMO.

The reason for this need seems obvious. Laure Wessemius-Chibrac, director investments at Cordaid, explains that “investors often work with investment frames, while these markets require flexibility. And one has to have a long term vision and to be willing to commit oneself for a period of ten years”. Van den Bosch adds that “bankers think in terms of risks. But if you are better than the rest, than you will survive”.

The IFC SME Ventures Fund has been established in 2008 with the objective to increase the supply of venture capital in low income countries and facilitates the establishment of capital funds in Liberia, Sierra Leone, DR Congo, Central African Republic, Nepal, Bhutan and Bangladesh. With these capital funds one selects per country around 20 innovative companies with a clear growth potential. So far, this has been rather successful. “We really found business. Companies show annual growth percentages of 25%”. Even in countries like Sierra Leone and Liberia, there are companies that continue to do well”, says Tracy Washington, IFC’s programme manager of the SME Venture Fund.

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