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5.4 Case Study 4: Enterprise solutions to poverty

Guest post by: Shell Foundation

Article Overview: SME investment funds – deploying local capital and the challenge of going to scale

5.4 Case Study 4: Enterprise solutions to poverty

SME investment funds – deploying
local capital and the challenge of
going to scale

Key Features of the SME financing case study

The Shell Foundation is supporting the sustainable
growth of SME’s in Africa via the linked provision
of both business development assistance and noncollateralised
finance. African SMEs are typically
unable to secure commercial finance because
local banks are reluctant to take on the ‘risks’
represented by lending to entrepreneurs who lack
both business experience and collateral

In the last 2 years, in partnership with local banks,
we have set up the $5 million Uganda Energy
Fund and the $8 million Empowerment through
Energy Fund in South Africa. Our banking
partners in these initiatives are fully at risk with us.
Results to date:

345 pro-poor enterprises have received business
development assistance – of which 170 are now
receiving finance and ongoing mentoring.

It is estimated that these two funds have created
almost a thousand new jobs plus generated a
variety of other pro-poor outcomes

Both funds have gained enormously from valueadded
and no-cost support from local Shell
companies.

Both funds are generating financial returns that
are attractive to commercial investors
$20 million second stage funds are planned for
both with the large majority of capital being
provided by local banks

Things are further advanced in our SME
investment fund programme – called Investment
Partnerships – now operating in Uganda and South
Africa, and soon to be extended elsewhere in Africa
and beyond. The issue – lack of energy access by
poor rural households and producers – is the same
as in India only more extreme.51 The energy access
challenge being explored by Shell Foundation in
Africa is also the same as in India: how to catalyse
the development of a financially viable SME sector
capable of supplying pro-poor energy sources and
services.

Related Articles
  6.0 Propositions and conclusion: Enterprise solutions to poverty
  6.3 Come Together: Enterprise solutions to poverty
  2.0 Introduction: Enterprise solutions to poverty
  1.15 Building an employment agenda: Working Out of Poverty
  1.9 Building local development through cooperatives: Working Out of Poverty

Article Tags: Africa, banks, business development assistance, commercial finance, Energy Fund, investment fund, local capital, Shell Foundation, SME, South Africa, Uganda Energy Fund



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