Stockholm (NordSIP) – Although many financial institutions in emerging and frontier markets have weathered the Covid-19 pandemic, the crisis threatens decades of progress made towards reducing global poverty and inequality. Among other concerns, the risk aversion that has accompanied the crisis and the disruption created by repeated waves of lockdowns has undermined the ability of micro, small and medium-sized enterprises (MSMEs) to access financing.
MSMEs constitute the backbone of developing countries’ economic growth and employment and contribute to 40% of GDP in emerging economies. To support MSMEs through the remainder of the pandemic, BlueOrchard, a leading impact investment manager and member of the Schroders Group, launched the “BlueOrchard Covid-19 Emerging and Frontier Markets MSME Support Fund” in partnership with leading public and private investors at the end of 2020.
“At times like these, decisive action and strong cooperation are needed to support those most in need. We are very grateful for, and proud of, the trust placed in us by investors who share our mission and goals,” says Maria Teresa Zappia (Pictured), Chief Impact and Blended Finance Officer, Deputy CEO, BlueOrchard.
Now, BlueOrchard announced the second closing of the fund at USD 207 million, with commitments from IDB Invest, part of the Inter-American Development Bank Group, and the Visa Foundation as new investors into the Fund. With the participation of IDB Invest and the Visa Foundation, the Fund sharpens its profile as a leading blended finance vehicle, fighting against the economic consequences of the Covid-19 pandemic.
“At IDB Invest, we are pleased to close this transaction with BlueOrchard. Our partnership will increase the availability of private debt financing for MIPYMES in LAC, restoring creditworthiness and increasing the supply of emergency financing for MSMEs that seek to mitigate the severe impacts of Covid-19 on jobs and value chains. Supporting MSMEs and job creation is key to an inclusive recovery for Latin America and the Caribbean,” James Scriven, CEO, IDB Invest, continues.
Other investors include Schroders, CDC (the UK’s development finance institution), DFC (U.S. International Development Finance Corporation), FSD Africa Investments (the investment arm of a specialist development agency supported by UK aid), JICA (Japan International Cooperation Agency), KfW (the German development bank) and SECO (Swiss State Secretariat for Economic Affairs). As of March 2021, the Fund has invested in 14 financial institutions across 13 countries, spanning Africa, Asia, Eastern Europe, and Latin America, and is supporting more than 26 million jobs.
The Fund qualifies under the 2X Challenge criteria — a commitment by the development finance institutions of the G7 to mobilise capital toward investments that support women’s economic empowerment in emerging markets.
“Visa Foundation is proud to support partners that enable equitable access to capital for small and micro-businesses as they rebuild from the pandemic. BlueOrchard’s approach, which provides tailored financing to microfinance institutions and small Geneva business lenders helps small business, especially women-led ones, build resilience and supports long-term community development,” Graham Macmillan, President of Visa Foundation adds.
“Providing liquidity to financial institutions in order to maintain MSME-lending plays a key role in the mitigation of the economic impact of the Covid-19-crisis, both in the short and medium-term. The Blue Orchard Covid-19-Support-Fund is an appropriate vehicle for raising private and public capital to fulfil this mission,” Dr Stefan Breuer, Member of the Management Committee, KfW Development Bank, concludes.