Investment

At the nexus of investment and development: lessons from a 60-year experiment in SME impact investing

At the nexus of investment and development: lessons from a 60-year experiment in SME impact investing
 

Linda Jones and Katie Turner (2014), Enterprise Development and Microfinance, 25 (4), 299-310.

 Mennonite Economic Development Associates (MEDA) was launched as an investment club in 1953 when a group of North American Mennonite business people joined together to support the development of communities in Paraguay, Uruguay, and Argentina. With their business background, this group of early 'impact investors' determined that they would provide loans to small to medium enterprises (SME) in order to catalyse sustainable economic growth. They offered the loans as high-risk venture capital and mitigated the risks with the provision of business coaching and technical assistance. Since those early days, MEDA and the SME investment fund managers which it has co-founded (Microvest and Sarona Asset Management) have continued to make impactful investments and to work towards a common development goal, 'to help people help themselves' (Fretz, 1978 : 19). This paper presents a case study of the 60-year 'MEDA experiment', (Fretz, 1978), describes specific activities and innovations, and identifies MEDA's learnings that have emerged from this SME investment experience.

GEM Case Study - Macrosentra Niagaboga

GEM Case Study - Macrosentra Niagaboga

Macrosentra Niagaboga invests in male and female employee’s gender awareness.

Macrosentra Niagaboga (MN) is part of Cimory Group, a family business in Indonesia. MN distributes over 500 needed consumer goods including dairy, processed meats, eggs, and soy products across the archipelago. Founded in 2004, MN has 614 employees with 174 women staff.

About the Gender Equality Mainstreaming (GEM) Pilot

Under the USAID Asia and Middle East Economic Growth Best Practices Project, MEDA partnered with local investment funds and small and medium enterprises (SMEs) to evaluate and upgrade gender equality within business operations by mainstreaming gender across environment, social and governance (ESG) standards commonly applied in the investment industry.

GEM Case Study - Portea

GEM Case Study - Portea

Portea pilots empowerment training for female and male nursing attendants

Established in 2013, Portea is a leading health care provider in India. Portea serves more than one million patients through a home-based care model. Most of Portea’s services, which span elder care, physiotherapy, post natal mother and child care and more, are delivered by low-income male and female nursing attendants (NAs) and nurses. Portea has almost 4,000 employees with women representing about 52% of the workforce, especially at lower levels.

About the Gender Equality Mainstreaming (GEM) Pilot

Under the USAID Asia and Middle East Economic Growth Best Practices Project, MEDA partnered with local investment funds and small and medium enterprises (SMEs) to evaluate and upgrade gender equality within business operations by mainstreaming gender across environment, social and governance (ESG) standards commonly applied in the investment industry.

Improving Impact: Increasing Blended Finance to achieve the Sustainable Development Goals

Improving Impact: Increasing Blended Finance to achieve the Sustainable Development Goals

“Honesty is more than not lying. It is truth telling, truth speaking, truth living, and truth loving.”
-    James E. Faust

The above quote from James E. Faust lies at the heart of the movement to go from Development Finance Institutions to Blended Finance Institutions or “from DFI to BFI” as a key contribution to the global effort to strengthen collective action from public, philanthropic and private sector investors to achieve the Sustainable Development Goals (SDGs). For it is absolute honesty that has led to leaders from public, philanthropic and private sectors to acknowledge their need for each other and their limited knowledge of each other’s investment values, to redesign development finance and launch a new way to blend capital to promote sustainable development and inclusive growth.

Invest East Africa Project Profile

Invest East Africa Project Profile
MEDA along with an investment partner, SEAF (Small Enterprise Assistance Fund), will spur economic growth in East Africa by attracting investment to small and medium enterprises that contribute to cross-border trade between East African Community members (Tanzania, Kenya, Rwanda, Burundi, and Uganda), particularly in the agricultural sector.

SME/Investment - Profile

SME/Investment - Profile

Small and medium enterprises (SMEs) are engines that drive economic growth in emerging and frontier markets. SMEs make significant contributions to decreased poverty, increased employment, the diversification of products and services, and the creation of market linkages for smallscale producers and other suppliers. At the national level, and as part of the formal economy, SMEs also add to the country’s GDP and tax base, allowing benefits to be shared beyond their immediate circle of employees, consumers and suppliers.

Investment capital is the necessary fuel that enables SMEs to flourish. However, SMEs are challenged in accessing sufficient growth capital. Development finance institutions (DFIs) have played a key role
in financing many SMEs, but in order for adequate flows of capital to reach the growing number of SMEs in frontier and emerging markets, private equity is also needed. Local private equity markets are weak and investor confidence is not strong, so international private equity investment in local funds both supports SMEs and encourages growth in the local equity market. Moreover, many SMEs are either not investment ready or are struggling to grow and therefore require technical support including capacity in environmental, social and governance (ESG) areas.

SME/Investment at the Nexus of Investment and Development

SME/Investment at the Nexus of Investment and Development
Small and medium enterprises (SMEs) are engines that drive economic growth in emerging and frontier markets. SMEs make significant contributions to decreased poverty, increased employment, the diversification of products and services, and the creation of market linkages for smallscale producers and other suppliers. At the national level, and as part of the formal economy, SMEs also add to the country’s GDP and tax base, allowing benefits to be shared beyond their immediate circle of employees, consumers and suppliers.

Investment capital is the necessary fuel that enables SMEs to flourish. However, SMEs are challenged in accessing sufficient growth capital. Development finance institutions (DFIs) have played a key role
in financing many SMEs, but in order for adequate flows of capital to reach the growing number of SMEs in frontier and emerging markets, private equity is also needed. Local private equity markets are weak and investor confidence is not strong, so international private equity investment in local funds both supports SMEs and encourages growth in the local equity market. Moreover, many SMEs are either not investment ready or are struggling to grow and therefore require technical support including capacity in environmental, social and governance (ESG) areas.