Impact driven finance
To achieve our global ambitions, developing countries face a funding gap of $2.5 trillion. SNV employs a range of innovative mechanisms to help bridge that gap.
Small and medium enterprises have significant and positive impact on emerging and frontier markets. They create jobs, contribute to inclusive economic growth, provide access to essential goods and services, and spark innovative technologies and business models.
But collectively, across low- and lower-middle-income countries, they face an annual finance gap of US$ 930 billion. In 2016 the UNDP stated that developing countries face an annual gap of US$ 2.5 trillion. Added to this amount is the US$ 1 trillion needed for Covid recovery spending, according to the OECD.
To achieve the Sustainable Development Goals (SDGs) and the Paris Climate Agreements, and to overcome these barriers, the involvement of the private sector is a necessity.
Raising additional funds for development aid
Impact driven finance leverages Official Development Assistance (ODA) and philanthropic funding, using it to de-risk investments to levels that are acceptable for private markets, and develop new financial instruments to attract new investment.
Impact driven finance mechanisms are not designed to replace ODA, but they can help bridge the funding gap and scale up efforts.
SNV works with enterprises across our target countries to identify opportunities to invest and blend traditional ODA funding to catalyse market development and to leverage private sector finance.
Accelerating and scaling impact
Our extensive experience has given us the knowledge and the relationships we need to employ approaches and tools across the business lifecycle which aim to de-risk investments, catalyse sustainable businesses and markets while building reliable funding streams for agri-food, energy, and water systems.
To do so, we use instruments such as catalytic grants, incubation or enterprises, results-based financing, guarantees and insurance, and we take an active role in access to finance and investment brokering.
One example is the Dutch Fund for Climate and Development (DFCD) – a € 160 million investment fund focusing on high impact investment themes related to climate resilient water systems, forestry, food security and protecting the environment. Together with WWF NL, we are jointly responsible for the Origination Facility (OF) providing grant funding and technical assistance.
Impact driven finance has the power to accelerate and scale impact for enterprises in agri-food, water, and energy systems. As we drive towards achieving the SDGs, it is an area in which we commit to further invest together with our partners over the coming years.