Oxfam launches fund to make 'impact investments' in the developing world

By David Ainsworth, Third Sector Online, 10 October 2012

A farm in Mongolia

A farm in Mongolia

The overseas aid charity is linking up with the City of London Corporation and Symbiotics to help small and medium-sized enterprises, with the first investment in Mongolia

Oxfam has joined up with investment experts to launch a fund worth up to $100m (£62.5m) that will make "impact investments" in small and medium-sized companies in the developing world.

The Small Enterprise Impact Investing Fund, an initiative of Oxfam, the City of London Corporation and Symbiotics, an investment company specialising in microfinance and impact investment, today announced its first investment – a $1m (£625,000) loan to Xac Leasing, a machinery leasing company in Ulan Bator, the capital city of Mongolia.

Managers hope the fund, which has attracted capital from private and institutional investors, will be worth $100m within the next three years. It will make investments that offer both a financial and a social return for small and medium-sized enterprises in the developing world. Oxfam’s role within the fund will be to measure the impact the investments have.

"We are determined to prove to the investment industry that its scale and influence means it could play a significant role in eradicating poverty," said Dame Barbara Stocking, chief executive of Oxfam.

"Our aim is to make impact investing a mainstream investment product that the sector recognises as a serious tool for both financial return and social impact.

"In particular, the SEIIF has been designed to meet the needs of the ‘missing middle’. These are the countless small businesses in developing countries that have the potential to thrive but are completely stifled by limited access to credit."

Mark Boleat, policy chairman of the City of London Corporation, said: "This fund is an innovative model that enables private sector investors to make a measurable social impact at a comparatively low risk to their financial returns."

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