As part of DFID’s Impact Programme which aims to catalyse the market for impact investment in Sub-Saharan Africa and South Asia, DFID has launched a £40 million Impact Acceleration Facility.
The Impact Accelerator, managed by CDC, aims to generate economic opportunity and employment through the creation of both direct and indirect jobs, and by increasing access to basic goods and services, especially in remote areas or fragile states. Investments will be made alongside CDC’s existing portfolio, focused on existing investee companies. The Impact Accelerator’s capital, unique expertise and partnerships will allow a focus on high impact investment strategies in two specific areas:
- Helping businesses to do high development impact interventions related to their core business that they wouldn’t otherwise have done – such as entering a new, very difficult geography or developing a product offering at a significantly lower price point to allow access to goods and services for poorer consumers, particularly women and girls.
- Helping businesses in challenging geographies to establish green or brownfield companies adjacent to their mainstream investments to provide essential goods and services vital to their operations – such as housing healthcare and transport.
The Impact Accelerator which will be piloted over the next four years, is expected to make between four to six investments and aims to leverage a minimum of 1:1 matched capital from private partner investees. It also aims to create linkages between micro, SMEs and larger anchor businesses and unlock potential for entrepreneurial strategies from within the companies.
After two years of investing, the Impact Accelerator has produced a publication, which makes a series of practical recommendations to investors in emerging markets on how to build an impact-focused portfolio and highlights the investments it has made since 2015.
Impact Accelerator Investments
The Impact Accelerator has committed up to US$9m in Virunga Energy, a hydro-electric power business backed by UK charity, The Virunga Foundation to provide clean electricity to communities living in and around Virunga National Park in North Kivu, Eastern Congo. The investment will support the development of the existing electricity grid and the construction of two new plants resulting in almost 50MW of total generation.
The Impact Accelerator is investing US$10 million in Africa Improved Foods to address malnutrition in Africa. The investment will support manufacturing facilities in Rwanda and Ethiopia that will produce a low-cost, nutrient-rich food through locally-sourced raw materials, with World Food Programme guaranteed off-take, as well as government and commercial sales channels.
The Impact Accelerator is investing $5.5 million with LafargeHolcim in 14Trees, which aims to accelerate the production and commercialisation of Durabric – an environmentally-friendly, affordable alternative to traditional clay burnt bricks. Durabric produces bricks that are made from a mixture of earth and cement, compressed in a mould, and left naturally to cure without firing, in the process saving up to 14 trees per house. By avoiding this firing phase, Durabric reduces greenhouse gas emissions tenfold compared to traditional fired bricks.
In 2017, the Impact Accelerator (IA) invested in Kamponji Enterprises Ltd (KEL), a vertically integrated poultry business in Malawi involved in the production, processing, distribution and retail of table eggs, broiler day-old-chicks (DOCs) and animal feed. We invested $15 million for a 49 per cent equity stake to provide working capital and refinance the company’s foreign exchange debt to drive protein value chain at the village level.
In 2016, the Impact Accelerator (IA) committed $8 million in Jacoma, an inclusive agribusiness which will expand its production of high value macadamia nuts, birds eye chili and paprika in northern Malawi. The investment will benefit local stakeholders through offtake from out-growers and the provision of irrigation infrastructure for neighbouring smallholder farmers.