BIO’s Development & Sustainability Report illustrates how BIO is translating its main mission and principal mandate into investments and business development support that contribute to the global community’s development aspirations.

Entrepreneurship is by far the largest source of employment in developing countries. Strengthening the private sector gives BIO an important lever to promote decent work and gender equality, and to fight poverty and climate change – the main barriers to human development.

The UN Sustainable Development Goals (SDGs) are our guide in our quest for impact. While we seek to contribute to achieving all 17 SDGs, this third edition of BIO’s Development and Sustainability Report has a special focus on SDG10: “Reduce inequality within and among countries.” BIO supports clients such as Banco Solidario, Ilara Health, and Barnana in Ecuador and Kenya in promoting inclusive businesses to reduce inequalities within countries in the short term, and in stimulating employment, private sector growth and productivity to reduce inequalities among countries in the long term. Many of our clients target un(der)served communities by being active in the agricultural value chain, in the health sector, and by providing them with microloans and/or micro-insurance products. Acting towards reducing inequalities is an essential objective in most of BIO’s investments.

By showing the impact they have had on reducing inequalities, Development Finance Institutions (DFIs) like BIO illustrate that they have become a key part of the development finance architecture, and are crucial in achieving the 2030 Sustainable Development Goals - and its central promise to leave no one behind.

Everybody concerned with international solidarity – not in the least BIO’s stakeholders: whether they be government, parliament, civil society or the Belgian taxpayer – can read here how BIO invests its money and seeks to improve people’s lives. This D&S Report provides an opportunity to look more closely at the issue of sustainable development and shows BIO’s commitment to promoting best practices to achieve a better world for all.

Géraldine Georges
Chair of BIO's board of directors

The private sector is crucial to achieving long-term, inclusive, and sustainable economic growth. It is responsible for over 90% of jobs in developing countries as well as for local value added, innovation, the provision of valuable goods and services, and tax revenue.

When looking at creating positive impact, the private sector is key in realising the Sustainable Development Goals by 2030 and actively contributes to mitigating poverty and reducing inequalities.

DFIs play a significant role in supporting the private sector in developing countries. They aim to create a strong, transformative, and responsible economy, mostly by working with investment capital.

DFIs support the creation of profitable and sustainable businesses that also have a positive impact on society. While DFIs vary in governance, and in their sectoral and regional focus, they are all government-backed and, as such, they can take more risks and adopt a longer-term perspective.

DFIs strategically invest in locations and sectors that are considered risky and where conventional investors hesitate to tread. Leading by example, DFIs possess a catalytic effect, mobilising capital from more traditional private investors.

In summary, DFIs are investors who prioritise development impact over financial returns.

The Belgian Investment Company for Developing Countries is Belgium’s DFI. It is fully owned by the Belgian State as a central instrument to advance its development cooperation objectives and principles. By investing in private enterprises that are (likely) to be(come) vulnerable to sustainable development issues, and by primarily focusing on micro, small, and medium-sized enterprises (MSMEs), BIO actively contributes to promoting sustainable human development in low- and middle-income countries.

Working hard to achieve maximum development impact, BIO assesses in which domains – gender, decent work, the fight against climate change, the promotion of basic services to the population, etc. – an investment project has high development potential. BIO then collaborates closely with sponsors to prioritise these aspects during project implementation.

It carefully assesses a client’s potential economic, social, and environmental challenges and proposes measures to mitigate these risks, with clear milestones for improvements over time. Additionally, BIO offers expert advice and technical assistance to enhance business management, performance, sustainability, and overall development effectiveness of its projects.

Since its establishment in 2001, BIO has diligently undertaken the task of assessing, monitoring, and evaluating the developmental outcomes of its portfolio companies. At the heart of this endeavour lies BIO's Theory of Change (ToC), a framework that aids in comprehending the true impact of its investments. This ToC offers an integrated approach, encompassing economic, social, and environmental development facets, while aligning strategically with six SDGs where BIO can wield its greatest influence.

The ToC also includes a set of key performance metrics that aim to capture BIO's significant contributions to each of the identified SDGs. In turn, BIO's Development Assessment, Monitoring, and Evaluation framework employs this ToC as a guide to measure its development impact.

This process of impact measurement and sustainability practices undergoes continual harmonisation with other European DFIs and impact investors. Through a structured, tangible, and transparent approach, this report illustrates BIO's contribution to the 2030 agenda, serving as a testament to BIO's commitment, not only to its investee companies but also to the Belgian State, the development community, civil society, and the wider public, all of whom are stakeholders in this pursuit.

BIO forges valuable partnerships with its fellow European Development Finance Institutions through EDFI. It actively collaborates with other influential development actors, such as the Belgian development agency, Enabel, and mobilises funds from the private sector (SDG17), amongst others through the SDG Frontier Fund.

• Development ex ante Assessment Tool – As part of the due diligence, the tool allows to structure and document the development rationale of a given investment project, its contribution to the 8 BIO development goals (BDGs), and its financial and non-financial additionality. The potential on certain strategic, cross-cutting topics like gender or climate is also assessed.
• Monitoring Tool – Yearly monitoring of key development metrics (pre-defined set of indicators reflecting the envisaged development goals) for all portfolio projects – and Joint Impact Model (JIM) – Economic modelling to assess indirect effects.
• External Case Study Evaluation (ECSE) – Annual independent in-depth development effectiveness evaluation of a sample of ongoing or exited projects.
• Project Completion Tool – Ex post review and summary of a project’s main achievements (including business, finance, development, and E&S) and key lessons learnt that will be used to improve operational and strategic investment decisions, as well as operational processes.

While there is some interdependence between these, each tool follows its own procedure and addresses specific needs at different stages of the investment process.

All investments by BIO and the SDG Frontier Fund pass through a similar cycle. Upon identifying a potential investment opportunity, BIO thoroughly assesses its alignment with the overarching investment strategy and its adherence to the prescribed investment conditions. If the criteria are met, a comprehensive due diligence exercise ensues, scrutinizing the project's governance, commercial viability, and financial aspects.

BIO also identifies environmental and social risks and opportunities, working closely with its clients to unlock the full development potential of the project. This crucial development aspect is thoroughly discussed from the outset, ensuring a shared vision between BIO and its investees.

Together, BIO and its investees establish a clear understanding of the expected development impacts, identifying areas where technical assistance may be required to bolster the project's success. Moreover, a concerted effort is made to create value not only for the company itself but also for its workforce and stakeholders, fostering a holistic approach to sustainable and impactful investment.

The IFC Performance Standards are the key reference when assessing BIO’s clients’ E&S performance. They cover a comprehensive array of environmental, social, and human rights topics. Each standard describes the desired outcomes and the specific requirements to help clients achieve them. They also allow to identify new opportunities that may help clients to sustainably expand their business and improve their competitive advantage.

By adhering to the IFC Performance Standards, BIO's clients are guided in responsibly managing their environmental and social risks, addressing crucial topics such as:

• PS1 - Risk Management
• PS2 - Labour
• PS3 - Resource Efficiency
• PS4 - Community
• PS5 - Land Resettlement
• PS6 - Biodiversity
• PS7 - Indigenous People
• PS8 - Cultural Heritage

BIO classifies its investments based on their associated environmental and social risks. Categories A, B+, B, and C respectively represent projects with high, medium-high, medium-low, and low potential impact. For projects carrying higher risks, BIO collaborates closely with its clients to define appropriate environmental and social actions, subsequently monitoring the outcomes of these efforts.

BIO actively engages with (prospective) clients to enhance their E&S performance, with its dedicated E&S team offering valuable advice, appropriate tools, and assistance in developing tailored E&S action plans to drive improvements.

In line with its commitment to robust E&S management, BIO requires an E&S action plan (ESAP) to be part of the investment contracts for all signed projects. Almost all of them incorporate measures related to E&S risk management (IFC - PS 1), with 60% of them encompassing actions addressing labour conditions (IFC - PS 2). For high-risk projects (A and B+), on-site visits are conducted by BIO and/or external experts to verify reporting and conduct independent assessments. Annual progress reports on the ESAP's various measures and actions are submitted by clients, reflecting the extent to which they remain on track.

When challenges arise and insufficient progress is noted, BIO talks to its clients to identify why, and to see how they can catch up on the ESAP's execution. Common causes of delays include unexpected business issues for entrepreneurs, capacity constraints, and human resource limitations.

BIO is committed to supporting its clients in bolstering their E&S capacity and competences, providing assistance through the BDSF or by offering guidance and training sessions led by BIO staff. Companies posing a higher reputational risk or companies in non-compliance with essential actions outlined in their ESAP are placed on an E&S watchlist, prompting intensified monitoring by BIO's E&S team. As of the end of 2022, four projects were on this list, out of a total of 146.

International certifications such as ISO, Fairtrade, Organic or FSC can be instrumental in reaching a company’s objectives. Grants from BDSF can help clients to obtain these. Alternatively, technical assistance and feasibility studies may be used to finance gender equality programmes, to create green financial products, to implement best lending practices, and develop client protection measures for the final beneficiaries of microfinance institutions. To ensure an alignment of interests and maximise a project’s chances of success, BIO always requires clients to bear part of the costs of the subsidised activities.

The BDSF has an annual budget of EUR 2 M. Since it established TA funds in 2005, it has supported 199 projects. Over the past five years alone, it has approved co-financing for 68 projects, amounting to EUR 5 M. Notably, 2022 was the year with the highest number of projects approved (20), for a total amount of EUR 1.7 M.

The Sustainable Development Goals (SDGs) are a universal call to action to end poverty, protect the planet, and ensure that all people enjoy peace and prosperity. BIO contributes to inclusive and sustainable economic growth by integrating the Goals in its decision-making processes and strategy.

Due to its specific mandate, BIO focuses on private sector growth, inclusiveness, and attention to the environment as core values and desired outcomes resulting from its interventions. This translates in a direct contribution to SDG5 and SDG10 (inclusiveness), SDG8 and SDG9 (private sector), and SDG7 and SDG12 (environment). These SDGs are linked to BIO’s Development Goals (BDGs) as explained in the Theory of Change and are thus integrated in the operations of assessment, monitoring, and evaluation of the investment projects.

More transversally, BIO contributes to the other SDGs, for example by investing in the agri-value chain (SDG2) or by steering its projects towards reducing GHG emissions (SDG13). Overall, BIO collaborates and cooperates with other institutions like Enabel or EDFI to strengthen the collective effort towards the achievement of the goals (SDG17). This report highlights the six SDGs to which BIO directly contributes.

Despite some progress in recent years, according to the UN gender inequality index, no country in the world has achieved full gender equality, nor are they expected to achieve it before 2030. Despite being the numerical majority, women are a minority in leadership positions and politics all around the globe. Because of increased household burdens and heightened risk of violence, they are also usually affected the worst by crises, such as the pandemic or climate change.

Since such gender inequalities pose a real barrier to sustainable and inclusive development, and could seriously harm the businesses themselves, Development Finance Institutions like BIO have intensified their efforts to reduce them.

Northern Arc India Impact Fund

In November 2022, BIO invested INR 650 M in the Northern Arc India Impact Fund (NAIFF), a private debt fund focused on India. BIO is the first DFI to invest.

NAIIF has adopted a Gender Lens Investing Framework, integrating gender considerations in its credit and underwriting process. The framework includes a gender equality policy, procedural guidance on how to apply it, and the instruments and tools to do so.

NAIIF meets all 2X criteria, confirming its dedication to advancing women's economic empowerment and fostering gender equality.

• Entrepreneurship: One of the founding members of NAIIF is Ms Fernandes, who retains an active role in the company.
• Leadership: Two out of five members of the investment committee and 45% of the senior management are women.
• Employment: Six out of the 14 employees of the fund are women, and there are many policies and initiatives in place supporting gender equality at work.
• Investment through financial intermediaries: 35% of the fund’s portfolio is invested in companies that have a focus on gender and/or are led by women, and all MFIs targeted by the fund have 100% female clientele.

Kashf Foundation

Kashf Foundation is a microfinance institution in Pakistan dedicated to fostering women's empowerment amidst the unique challenges of the Pakistani context. Kashf stands out among its competitors, it’s recognised for its exceptional gender-focused strategy and provision of non-financial services. To further support its mission, BIO has granted a USD 10 million loan to this transformative MFI.

Kashf Foundation serves an active client base of approximately 500,000 low-income microentrepreneurs. The institution primarily offers individual loans with an average ticket size of USD 330, repayable over a twelve-month period. Almost all of Kashf's clients (99.8%) are women, with 60% of them first-time borrowers.

Kashf provides community developing training to raise awareness, break cultural barriers, and build capacity to effectively address gender-related challenges. In 2020, more than 12,500 individuals took part. In total, nearly 36,000 women have benefited from empowering training sessions on leadership, counselling for victims of violence, and women's rights education.

A lack of access to reliable energy is a major constraint to economic growth and development. At the same time, fossil-fuel energy production and consumption are major contributors to climate change. To reconcile these conflicting challenges, BIO invests in renewable energy and energy efficiency projects.

Promoting clean and affordable energy requires tremendous public and private investments in energy infrastructure and climate finance. Estimates exceed EUR 1 trillion annually up to 2030. Because the energy sector creates a lot of jobs and economic development, these enormous investments indirectly help to reach other SDGs as well.

BIO has 13 direct investments in energy production facilities in its current portfolio. The total installed capacity of these projects reaches 1,453 MW. In 2021, they produced 4,657 GWh, an amount that would cover the annual energy consumption needs of about 15.1 million people. Ten are renewable energy projects that include geothermal, hydro, wind, and solar energy. They represent 26% of the total energy produced by BIO's direct energy projects and avoid the emission of 660,000 tonnes of CO₂ annually. That is almost equal to the annual CO₂ emissions of more than a million people in Ghana.

Increased availability, higher reliability, and lower prices for energy have large economy-wide effects as well, which include support to local jobs, added value, and opportunities for a modern and green industry.

Worldwide, there are still 940 million people who have no access to electricity. Off-grid solar systems could give hundreds of millions of them access at a more affordable cost. That is why SIMA, one of the largest investment funds in the off-grid solar sector, provides senior debt to innovative companies that finance, manufacture, and/or distribute individual solar home systems in sub-Saharan Africa and South Asia.

BIO has successfully exited its investment in SIMA’s Off-Grid Solar and Financial Access Fund, a 5-year closed-end investment fund focused on photovoltaic renewable energy solutions and access to solar home systems.

The fund ultimately invested USD 75 million in 19 off-grid solar companies and microfinance institutions. These provide access to energy to the poorest socio-economic groups and created 6,275 jobs, of which 30% occupied by women.

Overall, investees of SIMA have provided clean energy for over one million beneficiaries. It is estimated that SIMA’s portfolio companies avoided more than 6 million tons of CO₂ emissions.

Having access to clean, affordable and secure energy is a challenge in many of BIO’s countries of operation. When faced with a shortage of electricity, you can either increase your production or reduce your consumption. That is why BIO supports energy efficiency projects that reduce energy consumption by replacing obsolete equipment for newer, more efficient versions.

Cooking over open fires or inefficient stoves typically entails burning fuels such as wood, charcoal, coal, and kerosene that release harmful GHG emissions. Highly efficient cooking stoves use 30-60% less fuel, reducing forest degradation, deforestation, and climate change. This is what BIO contributes to through investments in clean cooking value chains e.g., Spark+, Xpress Gas.

In addition to the energy produced from fossil fuels or from renewable energy sources, there’s the energy locked into agricultural by-products or waste. By burning or digesting these under strictly controlled circumstances, we can recuperate energy that would otherwise have gone to waste. That is why BIO is also willing to invest in Waste-to-Energy facilities and will encourage its other clients to look for solutions for their by-products and waste streams.

candi solar

In 2022, BIO has granted an additional USD 7 M loan to candi solar, a company installing, owning, and operating solar production plants in India and South Africa. The investment follows on a first intervention in 2020, when BIO granted the company USD 5 M.

In addition to BIO’s investment, responsAbility – a leading impact asset manager who designs sustainable investment products - co-financed USD 7 M. This will further support candi solar's increasing capacity: they reached 32 MW in operation at the beginning of 2022. A technical assistance project has also been granted by BIO aimed to upgrade candi’s credit scoring tool.

SDG8 calls for the promotion of inclusive and sustainable economic growth, employment and decent work for all.

Jobs and economic growth mainly rely on the dynamism of private entrepreneurs: their role is crucial to ensure that jobs and economic growth also benefit more vulnerable groups. One of BIO’s main priorities is to support its clients to expand these economic activities, and to create formal, quality employment for the local population. This is well illustrated by BIO’s recent investments in Inka’s Berries and in Uhuru Growth Fund I, both of which are expected to have a significant impact on local economic growth. Another great example is BIO's indirect investment in Congo Call Center, which is the first introduction to the job market for many.

Importantly, economy-wide effects also create many jobs indirectly. JIM estimates suggest that in 2021 companies directly funded by BIO supported a total of 5.6 million indirect jobs. Most of these were created by loans from financial institutions (5.3 million). The remaining jobs come with the local purchasing of intermediary goods and services (140,000), wages spent in the local economy (370,000) and on energy (170,000). The investees of the funds in which BIO is invested would indirectly support an extra 1.1 million jobs.

Challenges and opportunities

Labour markets in emerging and developing countries are often poorly regulated. Many jobs are informal, with a lot of casual workers. Wages are generally low and working environments unsafe. Companies’ internal policies are sometimes poorly designed and may have a bad impact on the condition of workers.

That leaves a lot of room for improvement. Consequently, BIO assesses the labour employment and management practices of its potential clients and, in line with its environmental and social policy, requires clients to promote a fair, safe, and secure working environment.

Clients must adhere to all relevant local and international regulations, including the core conventions of the International Labour Organization (ILO). BIO’s reference standard with respect to working conditions is IFC Performance Standard 2. Its investment contracts require its clients to work towards achieving these E&S standards over time.

Financial services

BIO invests in companies to stimulate economic growth, innovation, productivity, and financial inclusion. Also, by investing in financial institutions, BIO improves access to financial services for entrepreneurs. Financial services such as savings, insurance, payments, and credit, allow people to manage their lives, grow their businesses, and improve overall prosperity. Investing in financial institutions also has a significant direct impact on job support and creation: 63% of the jobs directly supported by BIO are in FIs or MFIs.

Inka's Berries

In October 2022, BIO committed to invest USD 15 M in Inka’s Berries, a Peruvian company that produces and commercialises blueberry bushes and fresh blueberries for export.

Inka’s Berries aims to incorporate 200 ha of land owned by the Peasant Community of Chambara in the Peruvian coastal region and to transform it into a productive area. The project should create approximately 200 permanent jobs and 1,000 seasonal hirings under formal contracts and good working conditions in this remote area with limited economic opportunities. The community will be paid under an established dividend distribution plan and will have preferential access to jobs and annexed activities generated by the project, other than benefitting from infrastructure improvements deriving from the company’s activities in the area.

The Environmental and Social Action Plan (ESAP) focuses on creating a trusting relationship between the Chambara community and Inka’s Berries: the action plan is expected to serve as a template for future community engagement with Inka’s Berries’ other projects.

Agroserv Industrie

A good example of how BIO’s investments can support substantial improvements in HR management and working conditions is the case of Agroserv Industrie, a Burkinabe maize milling company to which BIO granted a EUR 3 M loan in 2022.

Agroserv is proactively structuring the upstream national agricultural value chain, and provides technical and financial support to a large network of small producers and farmer organisations from which it purchases raw materials. They aim to develop a new agri-food transformation plant to increase their processing capacity and efficiency, which will increase the number of employees by 20% and will create and support additional jobs upstream and downstream. This will mainly benefit the rural population and the local stakeholders, like the small growers involved in the production of maize and soy, the herders who will access additional bran to feed their animals and develop their activities, the equipment suppliers, and the local traders of grains as they will have access to more cereals to trade.

An action plan for further improvement

BIO and Agroserv agreed on an ambitious action plan to improve the working conditions and procedures in the company. Agroserv will design an HR manual and upgrade their internal regulations to ensure that all practices are aligned with local legislation as well as the requirements of IFC PS 2. The company has standardised the employment of temporary workers through collaboration with a third-party agency. Finally, it has included provisions on respecting labour legislation in their supplier contracts.

An external expert is carrying out a health and safety audit of their existing plant. Agroserv has put in place a committee to oversee any health and safety risks, and to set up first aid procedures, roles and trainings.

The Uhuru Growth Fund I

In 2022, BIO invested USD 8 M in equity in the Uhuru Growth Fund I, a private equity fund seeking to invest in high-growth companies across the Economic Community of West African States. It is managed by an emergent, solid and credible first-time fund manager in West Africa.

The fund aims to invest equity in small and medium-sized companies in the consumer-facing and financial sectors, to support their institutionalisation and growth, other than their expansion in neighbouring markets.

The focus sectors have a strong potential to enable employment and growth: the fund is expected to support at least 3,000 direct jobs and contribute to the creation of 1,000 fair and decent jobs.

Uhuru has a hands-on approach to value creation, with a strong emphasis on enhancing the operations of portfolio companies, enabling internationalisation and thus contributing to cross-border development and import substitution. Uhuru is committed to making responsible investments to create sustainable, long-term value for all its stakeholders by reducing the E&S risks and maximising the value creation potential and development impact in their portfolio companies.

Manufacturing, technology, agriculture and digital innovation are key sectors for BIO, since they represent the backbone of a dynamic and resilient private sector. BIO indirectly invests in 236 enterprises, among which 59 manufacturing companies and 36 ICT or energy projects. A fourth of its investees are tech-related or digital startups, financed through venture capital funds.

Twelve of the 23 new investments that were approved in 2022 have private sector innovation and SDG9 as a primary goal.

SMEs have trouble finding financing, especially long-term capital, in emerging markets. For smaller and more informal businesses, this is even more difficult.

BIO’s financing contributes directly and indirectly to the growth potential of these companies. It is currently directly invested in 18 SMEs that are active in the manufacturing sector or the agricultural value chain.

BIO's indirect investments through financial institutions and private equity funds support a much larger number of SMEs in these sectors and others. BIO’s key objective when investing in financial institutions is to increase their loans and services to SMEs, and for them to provide the necessary market knowledge, product distribution channels, and support to these clients.

In 2021, the 44 financial institutions in BIO's direct portfolio granted at least 148,000 loans to SMEs, of which 72,000 to small companies and 76,000 to medium-sized companies. Private equity funds also provide long-term capital to enterprises. Moreover, these funds’ teams actively participate in the governance and strategic management of their investees, adding value, especially to relatively young companies and start-ups.

In 2021, BIO had a total outstanding amount of EUR 144.1 million in 47 investment funds. These are mostly SME-focused private equity funds that are active in Africa. Together they are currently invested in 236 companies, 131 (micro-)finance institutions and 59 (small-scale) energy infrastructure projects.

Financing SMEs has great potential for environmental and social improvements, but also poses risks. SMEs face challenges with respect to pollution, lack of permits, threats to biodiversity, labour issues, dangers to human health, and impacts on communities. It is therefore crucial to address these risks, to mitigate them, and to strengthen the sustainability of doing business.

Therefore, BIO works with its (prospective) clients to actively identify opportunities for improvements in the E&S performance throughout BIO’s investment period. The beneficiaries can call on BIO’s Business Development Support Fund to co-finance E&S related studies, evaluations, trainings, and third-party expertise.

Because of their nature, financial institutions and funds themselves usually don’t have a large direct E&S footprint. However, their clients and investees often do. That is why financial institutions and funds must insist that these develop and implement an environmental and social management system. BIO can provide them with technical assistance to support this effort.

Convergence Partners Digital Infrastructure Fund

CPDIF is another good illustration of how BIO supports funds to enable infrastructure for the digital economy across sub-Saharan Africa.

In 2022, BIO committed to invest USD 10 M in Convergence Partners Digital Infrastructure Fund LP, a private equity fund that invests in digital infrastructure and the ICT sector, with a focus on fibre, wireless, data centres, 5G and digital service provider platforms.

The fund’s investments help to provide a more reliable, affordable and accessible internet connection for businesses and the population, in South Africa, Nigeria, Ghana, and Kenya mainly, where such infrastructure is currently scarce.

The digital sector is highly impactful and crucial for private sector consolidation and innovation: telecom infrastructure represents the backbone and key enabler of the digital economy, thus being critical to the creation of many digital markets and to the improvement of many real markets. CPDIF has a strong focus on closing the digital inclusion gap and measures its objectives quantitatively: its investees report on several aspects, like broadband access, employment creation, taxes paid, kilometres of fibre laid, homes and schools passed, and number of towers.

One of the first investments of the fund was Ctrack, a leading telematics Software-as-a-Service vendor providing fleet management analytics, insurance risk solutions and asset tracking solutions in South Africa.

SDG10 calls for reducing inequalities in income among and within countries, in addition to targeting inequalities on other factors such as age, sex, disability, race, ethnicity, origin, religion, or economic status. Inequalities continue to be a significant concern for developing countries despite progress and efforts to narrow disparities of opportunity, income, and power. Through its overall mission and specific interventions, BIO, alongside other DFIs, plays a significant role in reducing inequalities in income as well as in the above-mentioned other aspects, which, in turn, enables the realisation of other SDGs.

BIO seeks to address income inequalities between countries by investing in Least Developed Countries (LDCs) and fragile states, by enabling economic structural transformations stimulating employment, private sector growth and productivity, and by targeting inclusive businesses (e.g. microfinance institutions, smallholder finance, agribusiness with smallholders, gender-smart investment, off-grid power and solar-home systems, etc.). By triggering economic growth in low-income settings but also by directly targeting the bottom 40% of the population, amongst others through inclusive businesses, BIO’s interventions aim at supporting reducing inequalities within countries.

BIO is also combatting discrimination and inequality by supporting equal opportunity and protection for all the impacted stakeholders – including vulnerable consumers or communities – by promoting high environmental and social standards. This is done by imposing strong requirements regarding client protection, community health, safety and security, and land acquisition and resettlement.

Five of the 23 investment projects that were approved in 2022 were in least developed countries, and 19 had financial inclusion, rural development or access to basic goods and services as a primary objective.

In BIO’s portfolio, 21 of the 71 directly funded companies, and 119 of the 426 indirectly funded companies, are in least developed countries. In 2021, these companies contributed respectively EUR 537.2 M and EUR 423.4 M in tax revenues to their local governments. This is crucial because governments have a major redistributive role with respect to social and economic inclusion, healthcare, and education. Taxes and social contributions from BIO’s clients enable them to honour these commitments.

Banco Solidario

Banco Solidario is a microfinance institution that targets un(der)served populations in Ecuador by providing both productive and consumption loans up to USD 20,000.

Solidario’s 53 agencies specifically focus on the vulnerable groups involved in commercial activities in urban and peri-urban areas.

In 2018, BIO provided a USD 10 million loan to finance Solidario’s microfinance portfolio. BIO's primary development goals identified for this investment include

1. local economic growth by providing access to finance for microentrepreneurs and
2. financial inclusion by providing access to finance for microenterprises with Banco Solidario’s good geographical coverage and range of accessible loan products.

BIO also supported Solidario with three TA projects between 2018-2022: the first one aimed at developing a credit management module for a financial education programme, the second helped the bank to develop digital outreach mechanisms, such as the mobile app and virtual assistant, and the third TA project targeted the measuring and benchmarking of Solidario’s gender equality practices through an Economic Dividends for Gender Equality radiography of the institution.

Client Protection Principles

The Smart Campaign was a global initiative launched in 2009 to make sure that financial services are delivered safely and responsibly to low-income clients. It developed the first global financial consumer protection standard, established a rigorous certification programme to validate practices by financial service providers, produced consumer protection research, and convened partners to effect change. Over the course of the programme more than 135 financial institutions, collectively serving more than 62 million low-income clients in 42 countries, were certified for adhering to the Smart Campaign’s Client Protection Standards. In 2020, the Smart Campaign was transformed into the “Client Protection Pathway” of Cerise and SPTF (Social Performance Task Force), that offers a roadmap for improved client protection practices. It also promotes Universal Standards for Social and Environmental Performance Management.

BIO requires MFIs to adopt the Client Protection Principles and the associated certification. To achieve this certification, the client is, amongst others, required to be transparent about the loan pricing and to adopt adequate measures to limit the risk of client over-indebtedness. In 2021, 11 out of the 24 microfinance institutions in BIO’s portfolio were Smart Campaign certified.

International sustainability standards for agriculture and forestry projects encourage companies to use fewer natural resources and produce less greenhouse gasses, pollutants, and waste. Labels like Organic, Fairtrade, UTZ, Rainforest Alliance, FSC, and PEFC all contribute to sustainable consumption and production.

BIO offers technical assistance subsidies to help implement these standards. Two out of the four direct investments in the agriculture value chain approved in 2022 are sourcing and processing products that are Organic- and/or Fairtrade-certified, most often a secondary but increasing share of their activities. BIO also contributes to SDG12 by promoting production processes and services that respond to basic needs and bring a better quality of life. At the same time, it minimises the use of natural resources and limits the emissions of greenhouse gasses, pollutants, and waste.

BIO also invests in sustainably managed forests to sequester carbon emissions and promotes the use of green loans. These are used to finance climate projects, to prevent and control pollution, and to sustainably manage natural resources such as land, water and wastewater.

BIO has three main E&S objectives, based on IFC Performance Standard 3.

1. BIO wants its clients to avoid or minimise any adverse impacts on human health and the environment by avoiding or minimising pollution.
2. BIO advocates a more sustainable use of resources, especially of energy and water.
3. BIO wants to reduce project-related greenhouse gas emissions.

BIO requires at the very least that its customers avoid or minimise the release of pollutants to air, water, and land. If possible, the company is also encouraged to transform its waste into energy.

Moreover, all of BIO’s new direct investments are assessed by E&S-experts who suggest improvements in waste management, water consumption, and energy consumption.

BIO also requires companies to protect and conserve biodiversity and to maintain ecosystem services, following IFC Performance Standard 6 and the International Convention on Biological Diversity.

Compagnie Cacaoyère du Bandama

Cocoa is crucial to the Ivory Coast. It represents 10 to 15% of GDP, nearly 40% of export earnings, and provides a living to about one-fifth of the population.

The Compagnie Cacaoyère du Bandama (CCB) is a cocoa processing unit located in rural Tiassalé, Côte d’Ivoire. The company directly employs 122 workers and expects to hire an additional 38. These are jobs in remote rural areas with little industrialisation and limited job opportunities. Indirectly, CCB provides opportunities to tens of thousands of cocoa producers and their families by buying up large volumes of cocoa beans. This is done via 50 suppliers, of which 10 are local cooperatives working with 20,000 smallholders. CCB is UTZ, Fairtrade and FSCC 22000-certified.

Previously, CCB had the capacity to process 32,000 tonnes of beans per year. Since 2020, with the construction of its new factory equipped with the most modern processing machines, including a cocoa liquor line, this has been doubled to 64,000 tonnes. This should help to meet the Ivorian government’s objective of reaching 100% locally processed cocoa by 2025, keeping the added value in the country.

By processing cocoa locally, CCB manages to keep substantial cocoa profits in the country of origin instead of abroad. Hence, BIO’s investment supports the development of a local processing industry and upgrades Ivory Coast’s cocoa value chain.

In this third edition of BIO’s D&S report, we highlight to what extent BIO and its clients contribute to the SDGs. We provide concrete examples of BIO’s development effectiveness and underline the central role the private sector can play towards the 2030 agenda.

There are still important challenges to overcome, however. While some of these are specific to BIO, others we share with the other European DFIs and development actors. These include improving impact management and measurement. In 2022, BIO looked at improving the monitoring of job quality and designed a Decent Work policy that addresses BIO's approach and aspirations about working conditions for its clients' value chain. BIO is committed to adopt a concrete and progressive approach to living wages: its aspiration is that all clients, their investees and contractors evolve towards paying living wages. BIO’s contribution to Decent work and quality jobs is also the focus of this year External Case Study Evaluation.