Energy, Agriculture, Finance

Development investments

A response to global challenges

A new publication – Development investments: a response to global challenges – shows how collaboration between the public and private sectors has generated USD 3 billion from USD 3 million in development investments.

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Ivo Germann (left), Head of Operations at SECO, with Christian Etzensperger (right), Head Corporate Strategy and author of ‘Development investments: a response to global challenges’

Take USD 3 million of start-up financing from the Swiss State Secretariat for Economic Affairs (SECO), an asset management team with initiative, and 13 years in the fertile ground of development investments and what do you get?

USD 3.2 billion of assets, 80% of which is from the private sector, invested through 14 investment vehicles in a total of 560 companies across 96 countries, that’s what.

New publication on success of public sector start-up finance

The responsAbility success story is a prime example of effective collaboration between the public and private sectors, and it’s told in a new publication Development investments: a response to global challenges.

The publication describes how the Swiss asset manager responsAbility Investments AG has been able to successfully build the development investments business since 2003. 

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The responsAbility publication Development investments: a response to global challenges. Available in English and German.

Die responsAbility-Publikation Development Investments: Eine Antwort auf globale Herausforderungen. Erhältlich auf Deutsch und Englisch.

Generating development impacts and attractive returns for investors

Development investments are return-oriented investments in private companies with inclusive business models. They focus on sectors such as energy, agriculture and financial services and aim to generate development impacts combined with attractive returns for investors.

Development investments by sector

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Source
GIIN ImpactBase, Preqin, Symbiotics MIV Survey

The sharing of roles between the public and private sectors has proved an effective approach when mobilising assets for investment in development-related companies and opening new markets for investment.

The state assumes a pioneering role by supplying start-up capital and the private sector subsequently multiplies that capital. 

Private sector development and sustainability

Development investments: a response to global challenges also looks at the relationship between the private and public sector in developing countries, especially where the public sector is poorly resourced due to an inadequate tax base.

The public sector covers basic needs and the private sector takes over when public resources reach their limits. Investments in local entrepreneurship generate jobs, income and taxes.

World’s largest investment fund in micro and SME financing

The first responsAbility investment solution, which was launched in the form of a public-private partnership in 2004, is today the world’s largest investment fund in micro and SME financing and is 100% privately funded.

responsAbility’s development investments – development over time and SECO and SDC contribution

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Source
responsAbility Investments AG, 2017

Why returns and impact go hand in hand

Rochus Mommartz, CEO of responsAbility Investments AG, said: “We give investors access to around 100 emerging local markets where we invest directly in companies with sustainable business models and growth potential.

“The new publication examines the interface between the investment market and development support over the last 15 years and shows why returns and impact go hand in hand.”

Outlook

Development investments have most recently been experiencing another boost. The global development agenda (UN Sustainable Development Goals), adopted in September 2015, and the climate change agreement concluded in Paris shortly afterwards, urgently require the private sector for the financing.

The financing requirements to achieve the Sustainable Development Goals alone are estimated at USD 1.4 trillion annually. At least half of these investments must be financed by the private sector.

Topic Case Development

The responsAbility publication Development investments: a response to global challenges. Available in English and German.

Die responsAbility-Publikation Development Investments: Eine Antwort auf globale Herausforderungen. Erhältlich auf Deutsch und Englisch.