The so called Small Enterprise Impact Investing Fund, a joint initiative of Oxfam, the City of London Corporation and Symbiotics, a Swiss micro-finance specialist, announced its first investment last week; a $1m loan to Xac Leasing, a Mongolia based machinery leasing company. According to Oxfam, lending to Xac Leasing fits the fund’s mandate of investing in financial intermediaries supporting small and medium-sized businesses in Asia and Africa. Xac Leasing LLC currently lends to approximately 260 small-medium enterprises. The venture’s business model is also in line with the Social Enterprise Investment Fund’s requirements, as it includes both social and environmental considerations in its lease appraisal process.
The fund’s managers hope that the fund, which was able to attract capital from both private and institutional investors, will be worth $100m within three years. They want to use the money to invest in initiatives that can offer both a financial and social return for small and medium-sized ventures in the developing world. Oxfam’s role within this fund will be to measure the impact of the fund’s investments.
“We are determined to prove to the investment industry that its scale and influence means it could play a significant role in eradicating poverty,” said Dame Barbara Stocking, chief executive of Oxfam. The charity hopes that this effort can successfully make impact investment a mainstream investment product and will be recognised by the sector as a serious tool that allows financial and social impact. The partnering corporations saw the need of the so called ‘missing middle’, consisting of the countless small businesses in developing markets that have great potential to thrive but are stifled by limited access to credit. To summarise the funds value to investors, Mark Boleat, policy chairman of the City of London Corporation said ”This fund is an innovative model that enables private sector investors to make a measurable social impact at a comparatively low risk to their financial returns.”