Goodwell Investments and Oxfam Novib have announced a new EUR20 million (US$22 million) fund that will address the “missing middle” in East Africa by investing in early-stage growth companies that are struggling to secure finance from banks and investments funds.
Goodwell Investments is an impact investment firm focused on inclusive growth in sectors providing basic goods and services and income generation opportunities to underserved communities in Africa and India. Oxfam Novib stands behind the people who stand up for equality, fighting for a world where everyone has equal opportunities, regardless of gender, ethnicity or skin colour.
The two organisations have a long history of supporting impact-driven SMEs, and are now joining forces to leverage each other’s strengths in an initiative that represents one of the few occasions where an NGO and impact investing firm are collaborating on an investment programme for SMEs. The EUR20 million fund is dubbed Pepea, and is aimed at small- and medium enterprises (SMEs) with high impact potential.
“Oxfam Novib played a sterling role in developing the microfinance sector as a means to provide access to financial services where they were most needed. As that sector has matured beyond the realm of NGOs, we are ready to change direction toward a less-served segment of the market. We acknowledge the challenges of SMEs in the region – especially those that are women-owned – to access fine-tuned patient capital and we now want to play a role to address with that needs,” said Tamara Campero, investment manager at Oxfam Novib.
Goodwell Investments will manage Pepea’s day-to-day operations, supporting the success of the fund and development of the portfolio with its experienced local investment managers, the potential for follow-on investments from other Goodwell funds, and most importantly, a shared mission to create positive impact. Oxfam Novib and Goodwell are both actively involved in setting and monitoring the fund’s strategic course.
This new fund focuses primarily on the sustainable agriculture, energy, clean mobility and logistics, and waste management sectors. These industries produce many of the basic goods and services that represent a huge proportion of household spending for lower-income communities. To improve the quality and affordability of these essentials, Pepea is targeting SMEs that drive the growth of a greener, fairer, and more gender inclusive ‘human economy’ that serves the needs of society while respecting the planet.
The fund’s focus on inclusion also makes it an ideal conduit to expand both Oxfam Novib and Goodwell’s approach to gender-lens investing. Pepea offers an opportunity to take concrete action on gender equality by investing in women working in impact SMEs. By using innovative venture debt structures, with a focus on mezzanine finance, the investment instruments were specifically designed to better encompass the needs of female entrepreneurs and stakeholders.
“Goodwell is always looking for innovative ways to better serve the needs of SMEs, and we’re extremely pleased to have the opportunity to do so with one of the most professional, critical NGOs in the impact sector. There are so many synergies between our organisations, and I’m convinced that together, we can set higher standards in the impact investing space,” said Els Boerhof, managing partner at Goodwell Investments.
