The success of blended finance rests critically on the ability to maximise additionality, both in terms of the financial resources mobilised and the developmental impact created, while minimising concessionality, i.e. providing public capital at as close to market conditions as possible.

Why might blended finance be needed to help meet climate and development goals?

Progress on achieving the 17 Sustainable Development Goals, including SDG 13 on climate action remains insufficient. In 2015 the annual shortfall in the finance required was US$2.5 trillion and by 2022 this had increased to US$4 trillion For comparison, in 2021 US$178.9 billion of foreign aid was provided by members of the OECD Development Assistance Committee.
Raising the finance to meet climate goals is particularly difficult for low- and middle-income countries. Developed countries committed to channelling US$100 billion per year to developing countries in 2009 but have so far failed to deliver on this promise. This gap in funding climate action is growing: a report published ahead of COP27 suggested that the investment needs for climate action alone in emerging markets and developing countries (other than China) total US$1 trillion per year.

The political nature of development assistance and the budgetary implications for donor countries mean that these financing gaps cannot be closed through increased aid alone. In international fora such as the G20 UN institutions the Organisation for Economic Co-operation and Development and the International Energy Agency, as well as in development finance institutions (DFIs), ‘blended finance’ is viewed as a promising tool to bridge the SDG and climate financing gaps by mobilising private sector investment.

Figure 1. Common instruments used in blended finance transactions

There are several ‘instruments’ used in blended finance transactions, as shown in Figure 1 and described below.

Debt mechanisms: In 2020, concessional senior debt (e.g. loans at conditions more attractive than market terms but prioritised for repayment compared with junior debt) was the most commonly used instrument in blended finance transactions by members of the DFI working group Debt instruments typically include loans, direct lines of credit and bonds. The Women’s Livelihood Bond which pools loans made to social enterprises focused on empowering women in Southeast Asia, is an interesting example of a debt-based blended finance investment.

Equity mechanisms: When equity mechanisms are employed, investors take a share in the ownership of a corporation or a certain project and derive a claim on the residual value of cash flow streams after creditors’ claims are met. As in debt structures, there are typically senior and junior (subordinated) tranches. Senior investors’ claims are met first while junior investors’ claims are secondary. An example is the AfricaGrow Fund of the German development bank KfW and insurance company Allianz. This represents a ‘fund-of-funds’ structure, whereby the AfricaGrow Fund channels financial resources to African private equity and venture capital funds which then select small- and medium-sized enterprises and entrepreneurs in Africa to invest in.

Senior vs. junior (‘subordinated’) positions: Blended finance mobilises private capital by altering the risk–reward relationship of private investors. When development finance providers such as DFIs take junior or subordinated positions they absorb higher risks, for instance by taking first losses compared to those (private) investors holding senior debt and equity positions. Under these altered risk–reward conditions, private investors view the blended finance projects more favourably and are incentivised to deploy their capital when they otherwise would not have.

Grant funding: This represents the provision of financial resources free of interest or provision of repayment. Grants help decrease the total funding costs of a given investment project and as such are sometimes used to make projects ‘investment ready’. A recent example is the Digital Invest Blended Finance programme by the United States Agency for International Development (USAID), which promotes investment in digital infrastructure in developing countries.

Guarantees: These can be defined as a type of insurance policy meant to protect financial institutions and investors from the risks of non-payment. They can be tailored to cover specific types of risk, which might be linked to the instruments for which they are used. Guarantees offer the benefit of not requiring immediate monetary outflows by donors, and preliminary evidence suggests that guarantees tend to be more effective than debt or equity instruments in mobilising private capital. An interesting example of the use of guarantees is NASIRA a programme by Dutch development bank FMO which provides a guarantee for a portfolio of loans from local financial institutions to stimulate lending to underserved groups (e.g. women, refugees or young people).

Technical assistance typically represents grant-like resources used for project preparation as well as feasibility studies to ensure the quality, efficiency and sustainability of projects. According to data from early 2019 one-third of blended finance transactions to date have included technical assistance. The AfricaGrow fund mentioned above includes a technical assistance facility which is used to support funds and portfolio companies.

This Explainer was written by Timothy Randall with review by Hans-Peter Lankes.

Inequity in Climate Finance Distribution

Notably, the distribution of climate finance that Africa does receive is highly uneven. About 60% of all climate financing is concentrated in just 10 countries, and Uganda is not among them. This disparity is in stark contrast to the region’s level of commitment; up to 98% of African countries have ratified their NDCs, and over 80% have submitted updated NDCs, making Africa among the most compliant regions to the NDCs process.

In Uganda, the financing gap is glaringly apparent. Despite ratifying its NDCs and submitting updated commitments, the country receives only about 3.9% of the estimated $28.1 billion it needs to implement its NDCs.

The Imperative for Blended Finance

Addressing the urgency to bridge the financing gap requires a comprehensive understanding of the current financing profile. International public finance dominates, contributing 80 cents for every $1 invested in climate finance across Africa. The private sector contributes 14 cents, with only about 4 cents coming from the national government. This distribution is mirrored in Uganda, where global climate finance flows are significant compared to domestic sources.

The implications are clear. First, Africa, and Uganda in particular, need to increase the share of private sector financing, including from local private sources. Second, attracting these private sources necessitates prioritizing credit support or credit guarantee schemes to de-risk the climate finance landscape. Lastly, there is a need to clearly define the investment opportunity inherent in the NDCs, with only 28% of African countries currently having a well-developed NDC with an associated investment plan.

The Role of Innovative Blended Finance

Blended finance, which combines public and private capital, presents a critical solution to bridge the finance gap. It can help de-risk investments, attract additional private sources, and operationalize costed NDCs with the help of innovative investment plans.

An innovative blended finance tool for operationalizing the NDCs investment plan is being developed. It draws its “innovativeness” from the diverse components that work in complementarity towards de-risking and operationalizing NDCs investments. This includes training for various stakeholders, insurance to cover market risk, enhanced market access for products developed from the NDCs, cash guarantees, and effective traceability and accountability for timely progress monitoring.

Key Takeaways

1. De-risking involves more than just fiscal resources; it includes training, targeted policies like fiscal incentives, and other elements that lower the risk of investment failure.
2. The innovative blended finance tool being developed goes beyond a traditional blended finance facility, incorporating multiple components that work together to de-risk and operationalize NDCs investments.
3. Different stakeholders need to be engaged based on their expertise and comparative advantage to operationalize the tool.
4. Financing NDCs implementation must target vulnerable groups like youth and the informal sector to be effective.
5. The innovative blended finance tool is a public good, intended to be implemented by all stakeholders, not the government alone.
6. The tool is a subset of the entire NDCs investment plan and is applicable to a variety of NDC priority areas as they ascend the hierarchy of national priorities.
7. Capitalization of cash guarantees and financing different aspects of implementation can draw from both the exchequer, bilateral/multilateral sources, and the private sector.
8. High interest rates make the majority of cooperatives inaccessible. Addressing these rates calls for actions on two levels: application of cash guarantees to cover repayment defaults and central bank intervention through policy and regulation to bring interest rates down.
9. The tool being developed is a compendium of recommendations and guidelines, designed to be implemented by the different players needed to achieve de-risked financing for the implementation of the investment plan.
10. The climate finance unit is developing a strategy to integrate this innovative tool, which is seen as a subset of the entire NDCs investment plan.
11. The blended finance tool is poised to address not only the initial focus areas – agroforestry, solar dryers, solar irrigation – but also other NDCs priorities as they ascend the hierarchy of national priorities.

In conclusion, bridging Africa’s climate finance gap is an urgent task that demands a multifaceted approach. The innovative use of blended finance provides a promising solution, offering a way to leverage both public and private capital, de-risk investments, and operationalize NDCs.

As we continue to refine and implement this tool, there’s hope that we can catalyze a shift towards a more equitable and sustainable climate finance landscape in Africa.

By Dr. Richard Munang, Head of Global Environment Monitoring Systems and Early Warning for the Environment Unit, UNEP

Established in 2009, AgDevCo’s vision is a thriving commercial African agriculture sector that benefits people, economies, and the environment. The organisation contributes to this goal by providing investment capital and technical assistance to grow sustainable and impactful businesses across the agricultural value chain. In doing so, it aims to promote resilience, gender equality and the production of better-quality, more nutritious food.

This new funding builds on the original endowment funding provided by the UK government which helped establish AgDevCo over the past decade. This endowment has provided capital to agribusinesses that have directly created or sustained more than 15,000 jobs and to work with 750,000 smallholder farmers to help increase their income and improve their resilience to climate change. It has also allowed AgDevCo to build a capability and track record to the point where it can secure external investment capital.

In welcoming the investment, Keith Palmer, AgDevCo’s founder and Chairman, said: “Securing investment from CDC, Norfund and DFC is a major milestone in AgDevCo’s history. It is a strong endorsement of AgDevCo’s team and our strategy. We are excited that our vision is shared by our new funders, who recognise the important contribution that AgDevCo investments can make to productivity, sustainability, and inclusivity in Africa. Their funding marks the beginning of a partnership in which AgDevCo will use its sector specialism, drawing on our new funders’ networks and resources, to increase the number of impactful investments in African agriculture.”

UK Minister for Africa, Vicky Ford, said: “I am proud to see how AgDevCo’s investing has boosted sustainable agriculture across Sub-Saharan Africa over the past 10 years, including deepening impact on smallholder farmers and SMEs. This new investment will bring continued growth, by enabling agribusiness SMEs to expand, improve farmer incomes, create new jobs and strengthen climate resilience across Africa.”

Tenbite Ermias, CDC’s Managing Director for Africa, said: “This investment reinforces our long-term commitment to investing in key sectors in Africa including agriculture, which is critical for creating jobs, promoting gender equality and supporting people to build a better life for themselves and their families. Furthermore, it reflects our continued focus on climate finance which is central to our new strategy over the next five-year period, to support emerging economies that are most vulnerable to the impacts of the climate emergency.”

Ellen Cathrine Rasmussen, Executive Vice President of Scalable Enterprises in Norfund, said: “Norfund is very pleased to partner with AgDevCo to deliver on our joint mission: to create jobs and improve lives by investing in businesses that drive sustainable development. A thriving commercial African agriculture sector is vital for economic growth and job creation. More than half of Sub-Saharan Africa’s population work in agriculture, yet Africa does not produce enough food to feed the continent. The investment in AgDevCo will create jobs, increase food production, improve climate change resilience, and promote gender equality. The AgDevCo team’s skills, networks and achievements are impressive – and we look forward to working with them.”

Algene Sajery, DFC’s Vice President of External Affairs and Head of Global Gender Equity Initiatives, said: “DFC is thrilled to support AgDevCo with a $20 million loan to bring additional capital to smallholder farmers and agricultural businesses in Africa, promoting food security for lower-income communities across the continent. DFC’s loan, alongside financing from our partner DFIs, will enable AgDevCo to link more farmers to markets and create jobs for underserved populations, with a focus on women farmers.”

“These excellent results underscore the Bank’s strong dedication to continuing to support its clients in the wake of the pandemic as well as its commitment to decarbonise economies and enable the transition to a more sustainable future, with a focus on involving the private sector and supporting reforms to tackle climate change,” said EBRD President Odile Renaud-Basso.

The 2021 green results, a significant increase on the 29 per cent share of total financing in 2020, fall under the EBRD’s Green Economy Transition (GET) approach.

They follow the Bank’s recent twin commitments to align all its investments with the goals of the Paris Agreement on limiting climate change by the end of this year, a decision taken by its Board of Governors at last July’s Annual Meeting, and to make a majority of its investments green by 2025.

At the November 2021 COP26 climate summit in Glasgow, the EBRD also set out how it plans to support the transition to a low-carbon economy in its regions by doubling the mobilisation of private-sector climate financing by 2025.

The EBRD, a leading climate finance investor, works in some of the world’s most fossil-fuel dependent countries and aims to support them in planning and executing their transition to a low-carbon economy.

Among its many successes is EBRD Green Cities, a €5 billion urban environmental programme, which has grown to include 53 cities in its five years of existence and helps them identify, prioritise and connect their environmental challenges with sustainable infrastructure investments and policy measures.

The EBRD announced in November that the programme was doubling in size, allocating a further €2 billion to invest in green urban infrastructure over the next two years.

The 2021 green finance record was a key element in the EBRD’s second highest overall annual business volume ever. The record of €11 billion was set in 2020 when its investments were buoyed by emergency lending at the start of the Covid-19 pandemic.

The total number of its projects in 2021 was 413, compared to 411 in 2020. The share of private sector investment rose four percentage points to 76 per cent.

Annual Mobilised Investment - the amount made available to clients from entities other than the EBRD due to the Bank’s direct involvement – climbed sharply to €1.8 billion from €1.2 billion in 2020. Disbursements totalled €7.3 billion for the year.

The EBRD raised approximately €1.2 billion in donor funds to support its operations in 2021 and is an important partner for the European Union, the Bank’s largest multilateral donor.

Under its EU budget and NextGenerationEU funding programmes, the EU provided €291 million in 2021 and through the EU’s pandemic-related Recovery Resilience Facility €500 million in concessional finance were provided by Greece.

Bilateral donors contributed some €123 million to the High-Impact Partnership on Climate Action (HIPCA), the EBRD’s first green-focused multi-donor facility, launched at COP26.

Inclusion and digital, the EBRD’s two strategic priorities other than green, also made a major contribution to the Bank’s success in 2021.

Projects with a strong gender component accounted for 35 per cent of projects signed during the year, nearly double a target floor of 18 per cent.

With two new interlinked EBRD strategies for the promotion of gender equality and equality of opportunity released in November, the Bank now aims to integrate gender equality components into at least 40 per cent of its operations by the end of 2025, and a quarter of EBRD annual investments will fund inclusion projects.

The Bank published its first Digital Approach, also in November, addressing the urgent need for economies to embrace rapid technological change to overcome the challenges exposed by the Covid-19 pandemic through investment, policy engagement and advisory services.

The 2021 ABI results showed the quality of the EBRD’s investments and impacts rose, as measured by the Bank’s performance indicators.

The EBRD’s impressive operational performance in 2021 was matched by strong profitability. More details on the latter will be announced in the weeks ahead.

By Vanora Bennett

Hoa Nang Organic’s strong fit with the Beacon Fund’s mission to promote the growth of women-led and owned companies, as well as the support of Hoa Nang Organic’s existing investor Louis Nguyen, led to both parties concluding the due diligence and disbursement process quickly.

While there were multiple reasons for why Beacon decided to back Hoa Nang Organic, the main factors that stood out were: first, the passion and knowledge the founders have for organic farming in Vietnam; second, the company’s ability to secure a major contract with one of the largest dairy companies in Vietnam, a testament to the company’s professionalism and strong execution; and ‘and finally, a rare female CEO in the agriculture sector with a demonstrated commitment to gender diversity at the team and farmer level’.

“We are excited to make an investment in Hoa Nang Organic. They have demonstrated a deep level of knowledge and passion for organic farming in Vietnam and making a difference to the lives of ordinary farmers. In addition to supporting Hoa Nang Organic’s capital needs, we are equally excited about working with them via providing technical support to help improve their management capacity and bring about their next phase of growth”, said Shuyin Tang, CEO of the Beacon Fund.

Even though the COVID-19 pandemic affected the overall economy negatively, Hoa Nang Organic quickly took steps to adjust to the new reality, including modifying its supply chain structure, and developing and implementing an online sales and product delivery strategy. This allowed the company to capture new sales and increase revenues by 30% in 2021.

With this investment from Beacon Fund, Hoa Nang Organic will have additional resources to reach its goal of expanding operations to growing areas in the Mekong Delta region. This will help position the company in the long term, to develop additional organic product lines of even higher value and to serve more customers.

On the collaboration with the Beacon Fund, Ms. Dang Thi Truong An – CEO of Hoa Nang Organic said: “The Beacon Fund is the first institutional foreign investor to invest in Hoa Nang. This recognition from an independent institutional investor is a testament to Hoa Nang Organic’s track record and their faith in our future direction. This is an important milestone in our continuous efforts to bring more value to the community and positively impact society”.

Hoa Nang Organic became widely known after appearing on Shark Tank Vietnam Season 2, 2018, and receiving a seed investment of US$500k from Shark Louis Nguyen, a prominent investor in Vietnam and the Chairman & CEO of Saigon Asset Management (SAM).

—

About Hoa Nang Organic

Hoa Nang Organic (HNO) is a company producing organic rice as its main product. The company is proudly certified organic by the Control Union (a Dutch certification company) in line with USDA and European organic standards, including the non-usage of pesticides or herbicides, and the usage of only organic fertilizers that are Organic Materials Review Institute (OMRI)-certified. Hoa Nang Organic also applies integrated pest control practices with natural methods.

With a safe cultivation process, together with indigenous purebred organic rice varieties, Hoa Nang Organic is proud to bring natural nutrition and genuine quality to the table of every Vietnamese family.

About Beacon Fund

Seeded by Patamar Capital, the Beacon Fund is the culmination of many years of engaging with and investing in female entrepreneurs in Southeast Asia through a number of impact investing funds. This led the Beacon team to identify a significant opportunity amongst the “missing middle” of firms which are too small for private equity, too big for micro-finance, do not fit the growth profile of venture capital and are underserved by banks. The Beacon Fund’s initial focus will be on debt and mezzanine products, which tend to be a better fit for the moderate-growth, cash-flow positive businesses that the fund targets. Through its strategy, Beacon hopes to shine a light on alternative models of investing and entrepreneurial success.

About Saigon Asset Management (SAM)

Established in 2007, Saigon Asset Management (SAM) is a fund management and capital advisory firm based in Saigon and Hanoi, Vietnam. The fund has invested over $185 million in 65 Vietnamese companies and projects, and has one of the best investment track records among Vietnam-focused fund managers.

SAM has been managing funds that outperformed their peers as well as the Vietnam Index and the MSCI EM Index, focusing on sustainable and innovative companies with better ESG performance which provide solutions to Food Security, Healthcare, and Inclusion.

Sensoterra today announced it has joined the Inmarsat Application and Solution Provider (ASP) Programme, an ecosystem for providers of software, hardware and solutions, and original equipment manufacturers (OEMs) in commercial land markets. As an ASP member, Sensoterra will gain access to Inmarsat’s global L-band satellite connectivity network, ELERA, and worldwide reach to scale its solutions into new sectors and geographies.

Based in Utrecht and operating in 30 countries, Sensoterra’s mission is to improve water management worldwide by providing detailed insights in soil moisture. Its simple, robust and low-cost wireless soil moisture sensors generate over 60 million global data points. These smart soil moisture measurements empower better decision making for land management resulting in tangible productivity gains and ultimately, more sustainable outcomes.

Sensoterra’s approach is built on combining high-quality, durable, easy-to-install sensors with an open-API platform to allow customers to create the water management insight solutions that meet their requirements. These sensors help users save water, increase yields, prevent drought damage and use land and natural resources more efficiently. Able to adapt to 14 different types of soil moisture conditions customers will encounter across the globe, it has developed its sensors and API platform in such a way that a network of multiple sensors forms a fine-meshed ‘sensor ecosystem’.

Commenting on Sensoterra’s membership in the ASP, Mike Carter, President, Enterprise at Inmarsat, said: “Inmarsat is pleased to welcome Sensoterra to our ASP programme and to be working with them to support their ambitious growth plans. Innovative solution providers like Sensoterra are using leading-edge technology to help industries respond to some of the biggest global challenges. Inmarsat stands ready to support their journey through the provision of reliable connectivity through our industry-leading ELERA narrowband network, as well as go-to-market alignment and support.”

René Voogt, Commercial Director, co-CEO, Sensoterra comments: “As Sensoterra, we want to be the global go-to brand for anyone who wants to measure soil moisture as part of their water management solution. Partnering with Inmarsat’s ASP Programme not only gives us the connectivity solutions to enable that with our API platform, but also a partnership ecosystem we can leverage to power our ambitious growth plans. We’re thrilled to join Inmarsat’s ASP programme because we need reliable, global connectivity and a trusted partner to bring our wireless soil and water optimisation solutions to new markets, so we can aid better decision making for water management through smart soil moisture measurements where it is most needed.”

The Inmarsat ASP Programme is open to new entrants, disruptors, and established brands of any size who have developed an innovative digital product or service but may need additional support to exploit the benefits of satellite-enabled IoT solutions. Inmarsat provides dedicated technical guidance on how to integrate and support its highly-reliable satellite services, go-to-market strategy planning and exposure to the Inmarsat distribution channel to enable access to new markets.

Providers working across a diverse range of industries, including agriculture, aid and NGO, energy, exploration and leisure, media, mining, transport and utilities, as well as agnostic technology providers will be considered for membership.

Companies operating in locations and regions without reliable connectivity, or which have mission-critical connectivity needs, use the Inmarsat ASP programme to access a broad choice of satellite-enabled Internet of Things (IoT) solutions developed by a range of providers that enhance the efficiency, safety and sustainability of their businesses.

Other organisations can register or learn more about Inmarsat’s ASP Programme here.

Founded in 2013 in Singapore, Giift has quickly become a leading provider of loyalty management solutions around the globe. Acting on the belief that traditional, in-house points and redemption programs were outdated, ineffective and ripe for disruption, the company has developed an end-to-end loyalty technology to reduce touch points and cover all the needs of point issuers, users, and merchants.

The Giift Loyalty Platform consists of five products:

• Giift Loyalty Business Management System is an end-to-end loyalty platform that can accommodate a wide range of loyalty capabilities from routine transactional rewards to specific, customized behavioral options.
• Giift Marketplace is a points and rewards redemption platform with extensive offerings from global brands and local businesses.
• Giift Engage is a user engagement platform enabling companies to connect with their customers through hyper-personalized digital offers and experiences.
• Giift Box is a merchant-funded offers platform designed for merchants and brands to create and share coupons and special offers throughout the Giift ecosystem to drive customer acquisition and loyalty.
• Giift Pay is a coalition rewards program for mobile wallets and payment processors enabling their merchant partners to issue rewards to customers.

Supported by the funding, Giift will expand its resources in APAC and Africa as it invests in regional sales and business development and build market share in North America and Europe. The company will also continue to innovate and invest in its proprietary loyalty technology and platform to ensure maintenance of its competitive technological advantage. In addition, as an ESGI-native investor, Apis Partners will be working to maximize the societal impact of the investment which supports electronic payment infrastructure across emerging regions, which is a key enabler of financial inclusion across these economies.

Giift CEO and Co-Founder, Laurent Xatart, said, “At Giift, we believe that a comprehensive loyalty program is a critical asset for companies in all industries and of all sizes. This investment by Apis Growth Fund II will dramatically help accelerate Giift’s growth in the coming years as we become the global standard of the loyalty and rewards industry. Our partnership with Apis will enable us to enhance our platform through innovation, deliver premium value to our clients, and grow our team around the world.”

Apis Partners Co-founder and Managing Partner Matteo Stefanel said: “We are delighted to announce our partnership with Giift and it has been a real pleasure working with Laurent and his talented team throughout the process. Giift has already shown great success, being active in over 50 countries, and we are very excited to help the company grow and develop even further.”

Apis Partners Co-founder and Managing Partner Udayan Goyal added: “As loyalty programs are becoming a critical component to business’ go-to-market strategies, this was the perfect time for us to invest in Giift, which we see as a market leader in this field. Giift’s strong track record speaks for itself, and we are sure that we will be able to celebrate more successes with the company in the coming months and years.”

Canaccord Genuity in New York acted as advisor to Giift on the transaction.

About Giift

Giift serves the multi-faceted loyalty industry across three main functions including Loyalty Issuance, Loyalty Exchange, and Loyalty Payment. Founded in 2013, today Giift manages 50k+ programs across 55+ countries and over 130 million users. The company is headquartered in Singapore and has offices in New York, London, Wuhan, San Francisco, Nairobi, Beijing, Mumbai, Dubai, Lagos, Jakarta, New Delhi, Doha, Dhaka, and Colombo.

www.giift.com

About Apis Partners

The Apis Group (“Apis”) is an ESGI-native global private equity and venture capital asset manager that supports growth stage financial services and financial infrastructure businesses by providing them with catalytic growth equity capital. Collectively Apis, through its team of approximately 30 professionals with deep industry expertise, manages or advises on total committed capital from investors (including drawn and invested capital) of US$1.2 billion.

Including its headquarters in London, Apis has representation in seven countries across Europe, North, East and West Africa and South and Southeast Asia. Apis is highly conscious of the developmental impact that the provision of growth capital for financial services and financial infrastructure businesses in growth markets can achieve, and as such, financial inclusion is a core tenet of Apis’ approach and investment mandate. Apis became a signatory to the United Nations backed Principles for Responsible Investment (UNPRI) upon inception of the firm in 2014.

www.apis.pe

The GIIN’s research brief: Institutional Asset Owners: Strategies for engaging with asset managers for impact addresses this gap in the market. Building upon the institutional asset owner series, this second research brief explores the ways in which institutional asset owners work with asset managers to incorporate impact within their existing portfolios. The first Institutional Asset Owner brief focused on investors’ approaches to identifying impact priorities and setting targets – a critical step in enabling asset owners to assess progress relative to their goals and revise targets as needed. This new research brief reveals approaches asset owners are taking to collaborate with asset managers to achieve impact.

Drawing on quantitative and qualitative data from institutional asset owners along with qualitative data from asset managers and intermediaries, this research seeks to detail which strategies and mechanisms asset owners may need in place to align with asset managers to achieve impact across their portfolios. The research brief covers the nature of engagement with asset owners, challenges in pursuing impact alongside asset managers, and strategies to align impact incentives with external asset managers. Specifically, this research offers insights into existing practice and strategies institutional asset owners take to align with asset managers when managing impact performance. The key strategies that asset owners can employ to engage with asset managers to apply an impact lens to existing portfolios include:

• Articulating specific impact objectives or priorities;
• Codifying impact in formal investment and legal documents;
• Identifying and using standardized impact reporting systems; and
• Establishing expectations for rigorous impact reporting to enhance alignment.

Learn about these strategies and ways in which institutional asset owners are looking ahead to better align with asset managers by downloading the research brief below.

But even as the government has prioritized the expansion of local cashew production and processing to drive economic growth, women’s productivity and incomes remain constrained by poor access to finance and markets.

Recognizing the cashew industry’s importance to the national economy, CIDR Pamiga, MSC (MicroSave Consulting) and Mobisoft/Agristore joined forces to address the complex issues facing actors – including women – across Côte d’Ivoire’s cashew value chain. Together, they launched the Wi-Agri agritech platform, a “one-stop shop” for agricultural value chains in West Africa that offers financial services, market access, business training and extension services to smallholder farmers, wage laborers, buyers, small processing businesses and exporters.

Because of the critical role women play in the cashew industry, their needs are at the core of Wi-Agri’s product design. By leveraging financial services to improve rural women’s access to and returns on labor and markets, Wi-Agri’s offerings can help them build more resilient livelihoods and a stronger cashew value chain.

How lack of access to finance and markets affects women’s livelihoods in the cashew value chain

Women make up about 20% of Côte d’Ivoire’s 350,000 cashew producers. An additional 1.5 to 2 million women are involved in picking and processing the crop.

Women in these roles often lack access to markets where they can sell crops at good prices. As the chart below demonstrates, they also lack access to formal banks and microfinance institutions, and many rely on informal finance provided by savings groups. Although most have a mobile money account, they remain largely unaware of the range of financial services available from their phones, primarily using the accounts to send and receive remittances.

This lack of access to markets and finance affects women in different ways across the value chain.

Producers rely heavily on the income they earn from cashew production to cover household expenses. Women in this role tend to be older than those in other roles across the value chain. They often work the land themselves, sometimes with the help of their children. Women cashew producers often lack access to financing for inputs and labor, which limits their productivity, and they often rely on informal local buyers who typically offer below-market price for cashews. These constraints ultimately limit earnings.

Wage laborers that producers hire to harvest the fruit and separate the cashew apple from the nut are often referred to as “pickers.” These workers tend to be younger than producers, averaging 30 years old. Many work on cashew farms to cover their families’ expenses, while also growing subsistence crops for household consumption. Because many cashew producers lack the funds to pay laborer wages, they are often forced to either pay pickers in-kind with a portion of the cashew crop or wait to pay until their harvest is sold. For pickers paid in-kind, access to markets can determine when they are paid and how much they ultimately earn. For those who aren’t paid until producers sell their crops, lack of access to formal savings or credit to fall back on until they receive their earnings leaves them unable to cover urgent family expenses.

Once the harvest is complete, pickers often seek jobs at local cashew processors. They use their earnings to save and invest in their own farms and businesses in hopes of improving their livelihoods. However, employment at local processors can be unreliable. An estimated 80-90% of Côte d’Ivoire’s cashew production is exported as raw nuts to be processed abroad. Because processors only hire when they can source cashew from local producers, competition from exporters means lost income for the tens of thousands of rural women who rely on this seasonal wage labor.

How Wi-Agri addresses the needs of women in the cashew value chain

At the core of Wi-Agri’s offerings is a market linkage service which connects sellers with local buyers offering fair prices for raw cashew. By helping rural women bypass middlemen offering below-market prices in favor of formal buyers such as local cashew processors, the market linkage service provides women producers an opportunity to obtain a better price for their harvests. Similarly, market linkages can provide opportunities for women wage laborers paid in-kind to improve the amount and timeliness of their earnings. By prioritizing sales to small local processing businesses, Wi-Agri services can strengthen local value chains and ensure that local processors have the reliable supply of cashew they need to provide wage labor opportunities for rural women.

Wi-Agri also offers a suite of financial services adapted to the diverse profiles and needs of women throughout the cashew value chain. For example, Wi-Agri provides producers with access to short-term credit and digital payments needed to hire and pay laborers, helping them pay workers immediately and in cash, rather than waiting until the harvest is sold or paying in raw cashew. Laborers can also access credit to cover immediate expenses as they wait for their wages, savings that allow them to set aside money for their own farms and business and digital payments that for many offer a first opportunity to engage with formal financial services.

To ensure women can access and fully benefit from these solutions, Wi-Agri is also adapting content and delivery methods to their unique needs. For example, the platform is working to overcome women’s barriers to smartphone ownership by offering device financing through a local partner. In addition, Wi-Agri works to empower women producers and laborers to organize women-led cooperatives, provides financial and business management education and offers agricultural advisory through voice-based modules in local languages, ensuring accessibility for illiterate women. Particular attention is given to strengthening women’s capacity to negotiate with buyers in the Wi-Agri marketplace through their cooperatives. These women-led cooperatives also allow laborers, who tend to be younger with aspirations to graduate into cashew production, to interact with and learn from the older women producers whose role they may one day inhabit.

Why Wi-Agri offers a model for building stronger, more inclusive value chains across West Africa

Wi-Agri launched its services in 2021, enrolling over 2,000 subscribers to date, including smallholder farmers, licensed cashew buyers, cooperatives and small processing businesses. In the coming months, the platform will continue to work with financial institutions, advisory services providers, women’s leadership organizations, input suppliers and the Côte d’Ivoire government to expand and improve upon its services. However, Côte d’Ivoire’s cashew value chain is only the beginning. Ultimately, Wi-Agri hopes to become a model for strengthening agricultural value chains and the livelihoods of rural women across West Africa. To this end, Wi-Agri is working on plans to expand into additional crops and new markets, including Burkina Faso, Senegal and beyond.

Renée Chao-Beroff is founder and CEO of Wi-Agri. Dr. Jennifer Isern is founder and CEO of Catalyze Global Impact and vice chair of CIDR Pamiga.