Together, these nine investment originators and fund managers in impact investing have about USD 15 billion of assets under management in financial inclusion, invested in more than 80 emerging and frontier markets across Africa, Asia, Eastern Europe, the Middle East, the Caucasus, Central Asia and Latin America.
Measures taken locally to reduce the spread and impact of COVID-19 can affect clients, operations and liquidity of Microfinance and SME finance institutions. The Memorandum of Understanding (MoU) aims to coordinate efforts in the provision of ongoing refinancing in a responsible manner, thereby enabling these institutions to adequately respond to temporary changes in business conditions.
Frank Streppel, Head of Investments (Impact Private Equity and Debt) at Triodos IM and among the initiators of this MoU: “As investors we feel a shared commitment and responsibility to support our investees in these unprecedented and challenging times. By working closely as a group we can act efficiently and swiftly, on a case-by-case basis. Measures may include rescheduling of payments and a payment moratorium. All with the aim to support financial institutions in a position to address the needs of their clients, and help them play their vital role in recovery once the COVID-19 crisis recedes.”
The MoU notably emphasises: “Microentrepreneurs and SMEs will form a vital basis for social and economic recovery. Supporting Financial Inclusion and preservation of the strong foundations that have been built over recent years is therefore of vital importance. This calls for enhanced cooperation within our sector. We have learned from previous experience that through transparency and close cooperation we can best help our partners and our own organizations through challenging times. The purpose of this document is therefore to guide our organizations, our investment teams, our clients, other finance providers and other relevant stakeholders.”
The MoU is not legally binding but forms a strong basis for coordination over the coming months, with pragmatism, transparency and tolerance as key principles. The MoU also serves as a basis for dialogue with other stakeholders, such as multilateral and development finance banks and policy makers.
The signatories welcome additional impact fund managers to join the initiative in the coming weeks, as many have expressed interest.
Strong alignment among market protagonists is the best possible way to safeguard the interests of impact investing, and ultimately the social impact and benefits that the sector offers to low income households and small businesses in low- and medium-income economies.
Read joint press release here.
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