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The Dutch government’s MASSIF Fund, managed by development bank FMO, which aims to take the early high investment risks and act as a catalyst for the growth of the private financial sector and financial inclusion in developing countries, has this month passed EUR 1.0 billion in total investments since its inception in 2006.
The fund has tripled its initial capital since its formation marked a gearing up in the development policy of the Netherlands, towards promoting the private sector as an engine for development. The Dutch government mandated MASSIF’s management to FMO with EUR 325 million of total funding to focus on financing small and medium-sized enterprises.
Over the last decade, the MASSIF Fund has made 425 investments in 50 countries, which has helped to finance over one million micro-entrepreneurs, such as small traders, market women and smallholder farmers, and close to 50,000 small and medium-sized businesses. The fund’s net annual return on investment over this period has been a healthy 3%, facilitating the expansion of its impact investing role in developing countries around the globe.
Jeroen Harteveld, MASSIF Fund Manager, said: “MASSIF has been a flagship for the Dutch government’s policy of ramping up its focus on the private sector in developing countries over the past decade. Although we often take on the highest risks at an early stage to support local banks and funds and pave the way for other investors, MASSIF has had both good returns and a solid impact investing track record. Our clients have been able to provide access to credit, and other financial services and knowledge, to a wide range of entrepreneurial individuals and small companies, contributing to the creation of thousands of jobs, while improving livelihoods and driving economic growth.”
Harteveld is to announce at the annual ‘Africa Day’ development congress to be held in Amsterdam on April 14 that the Dutch Ministry of Foreign Affairs is to provide an additional EUR 25 million in financing to the MASSIF Fund, for investing in women, young entrepreneurs and the FinTech sector.
African countries accounted for around 40%, or EUR 228 million, of MASSIF’s total global investment commitments of EUR 562 million in 2017.
Two touchstone African projects where FMO has provided financing through the MASSIF Fund include:
The Farmer Finance programme of Babban Gona Agribusiness, which turns subsistence farmers into entrepreneurs in Northern Nigeria, a region marred by the Boko Haram insurgency and very high youth unemployment. Thanks to the company’s support, these smallholders have doubled their crop yields and more than tripled their incomes.
In Zimbabwe, where credit has been scarce due to economic stagnation and periods of hyperinflation, MASSIF has invested in the Takura Fund, a private equity vehicle that invests mainly in growing local companies.
A few years ago, Takura invested in local baker Lobel’s, which helped the organisation to overcome the challenges of escalating prices of raw materials to keep their bread affordable. It was the first baker to introduce a half loaf size into the local market. Thanks to the growing popularity of its products, Lobel’s now has a one-third share of the domestic bread and confectionary market.