The Dutch Good Growth Fund Track 2 - Financing Local SMEs applies a unique ecosystem approach. This combines investments with capacity building and ecosystem support initiatives to help local entrepreneurs. The video below shows our intervention logic and the suppor that we offer.
Financing local SMEs
Local businesses find it difficult to get the financing they need. This means it is difficult to grow. This group is called the missing middle. These businesses have outgrown microfinancing but do not yet have access to regular financial services.
DGGF wants to expand financing opportunities for this so-called missing middle. Not by investing directly in local SMEs, this is much too difficult. To increase local SMEs’ access to finance, the DGGF invests in funds which in turn invest in businesses in the DGGF countries. The DGGF enlarges its impact by investing in intermediary funds that are better placed to reach local SMEs. This part of the DGGF is a 'fund of funds': it is building up a portfolio of intermediary funds that are catalysts for local economic growth. Greater access to finance enables local SMEs to grow and strengthens the financial sector in low- and middle-income countries. The DGGF has set specific targets for intermediary funds that invest in young or female entrepreneurs and entrepreneurs in fragile states. More information about Financing local SMEs?
You can find inspiring case stories about entrepreneurs that were able to succeed with the help of DGGF’s investment on the ‘DGGF in practice’ page.
Enabling entrepreneurship in frontier markets
Since its inception in 2014, the Dutch Good Growth Fund (DGGF) - Financing Local SMEs has made a lasting contribution to improving the financial ecosystems of frontier markets. DGGF's mandate is to bring change to underserved entrepreneurs, and to be a catalysing investor - through the capital we provide and through our role as a pioneer, mentor, advisor, and knowledge builder. Since 2014, DGGF has been able to create a positive impact in 53 countries by, among other things, supporting 65.000 jobs and financing over 11.300 SMEs of which 9.000 SMEs vie the support to local finance providers1.
Do you want to know more about how DGGF’s unique approach is making an impact? Read our impact report: 'Enabling entrepreneurship in frontier markets'.
Image: © Balloon Ventures
The DGGF 'Financing Local SMEs' is an initiative from the Dutch Ministry of Foreign Affairs and aims to improve access to finance for 'missing middle' SMEs in selected DGGF countries. The 'missing middle' refers to entrepreneurs who have outgrown microfinance, are too small or risky for conventional financial market players or lack the growth or return on investment sought by traditional venture capital players2. Greater access to finance enables local SMEs to grow and thus contributes to sustainable development in frontier markets. DGGF particularly aims to invest in young or female entrepreneurs and entrepreneurs in fragile states.
The DGGF ‘Financing Local SMEs’ aims to reach the missing middle via two different ways:
Would you like to know more about DGGF’s impact to date? Read the impact report 'Enabling entrepreneurship in frontier markets'.