Industry, innovation and infrastructure
Industry, innovation, and infrastructure are fundamental for developing countries, they generate employment and income for a dynamic economy.
Manufacturing, technology, agriculture and digital innovation represent the backbone of a dynamic and resilient private sector and are therefore key sectors for BIO.
BIO has indirectly invested in 306 enterprises, among which 73 manufacturing companies and 83 infrastructure projects. BIO also finances 96 tech-related businesses through 6 venture capital funds that target technology focused companies in the health, education and finance sectors (health-tech, edtech & fintech).
20 of the 22 new investments that were approved in 2023 have private sector innovation as a primary or secondary goal.
SMEs in emerging markets have trouble finding financing, especially long-term capital. The smaller and the more informal, the more difficult.
BIO’s financing contributes directly and indirectly to the growth potential of these companies. As of end of 2022, 26 of the 43 institutions directly funded by BIO mostly focus on the SME segment.poa! internet
In 2023, BIO invested EUR 3 M in poa! internet Ltd., a Kenyan low-cost internet service provider. poa! develops and delivers unlimited, affordable internet access to underserved communities in Kenya, with an emphasis on individuals, households and small businesses in urban and peri-urban areas. poa! targets this market segment, which is often overlooked by other mobile operators due to cost limitations and infrastructure challenges in these areas.
Benefits of the investment:
- The investment will fuel a significant network expansion, increasing the number of towers from 62 to 267, allowing for a much greater reach and customer base.
- Following this network expansion in greater Nairobi and the other top 25 urban centres in Kenya, an increase in the number of clients is expected from 8,500 to 76,000.
- The plan foresees to scale up across sub-Saharan Africa within the next 5 years.
- This investment is expected to directly create around 300 jobs throughout the investment period, starting off in the first year by doubling the current staff from 72 to 145 full-time equivalents. Subcontracting will likely create additional indirect jobs.
- Through a collaboration with Google X, poa! internet is the first Kenyan company to use a laser beam technology. This innovative solution will help poa! bring low-cost, high volume internet to customers beyond the range of traditional operators.
BIO’s key objective when investing in financial institutions is to increase their loans and services to SMEs, to allow them to provide the necessary market knowledge, product distribution channels, and support to their clients.
In 2022, the 43 financial institutions in BIO's direct portfolio granted over 189,000 loans to SMEs.
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 2022, BIO had EUR 217.7 million outstanding investments in 45 investment funds. Mostly SME-focused private equity funds active in Africa, they are currently invested in 306 companies, 200 (micro-)finance institutions and 88 (small-scale) energy infrastructure projects.
Financing SMEs has great environmental and social potential. SMEs face challenges with respect to pollution, lack of permits, threats to biodiversity, labour issues, dangers to human health, and impacts on the surrounding communities. It is therefore crucial to strengthen their sustainability when 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. Indirectly, however, their impact cannot be underestimated. Financial institutions and funds can insist that their clients develop and implement an environmental and social management system, with BIO providing back-up in the form of technical assistance.
Digital for Development
Digital technologies are a powerful force for achieving the SDGs, and can catalyse companies’ efficiency and effectiveness, in particular in developing products and services for more vulnerable groups.
These digital companies need early stage funding, often not available through mainstream finance channels, given the (sometimes perceived) high level of risk. This is why BIO invests in these companies through specialised private equity funds, focusing on agritech, fintech or health-tech in order to bring digitalised solutions to more vulnerable populations, such as smallholder farmers (for example through the omnivore agritech climate sustainability fund III), women, remote patients, etc. As part of BIO's non-financial additionality, we ensure these funds have environmental and social policies and management systems (ESMS) in place that ensure that E&S risks are assessed and mitigated at all stages of the investment process.
In addition, the Business Development Support Fund has grants available to strengthen the digitalisation of products, services, internal processes, staff capacity, and the protection of clients’ personal data.
MAA General Assurance
In 2023, BIO invested USD 10.5 M in MAA General Assurance Philippines, the 12th largest non-life insurance company in the Philippines. In this investment, BIO proposed an IT value creation plan designed to propel MAA's digital transformation. The plan focuses on three areas: developing a digital strategy, strengthening the IT internal capabilities and bolstering the infrastructure and security of MAA. These improvements will enhance customer and distributor experience, particularly regarding data acquisition and consolidation. Additionally, these digitalisation efforts will unlock opportunities to expand its reach to cooperatives, rural banks and labour organisations.
Metier Capital Growth Fund
Metier Capital Growth Fund is a good example of how BIO supports funds that provide growth capital to companies in the IT infrastructure, manufacturing and energy efficiency sectors across sub-Saharan Africa.
BIO’s investment in Metier will enable it to provide growth capital to 8-12 new companies, indirectly contributing to employment creation, tax revenue generation, infrastructure and trade development across the region.