DGGF Impact report: Ten years of enabling entrepreneurship in frontier markets
As the Dutch Good Growth Fund – Financing local SMEs (DGGF) marks its 10th anniversary, we reflect on a decade dedicated to empowering SMEs in emerging markets. Launched in 2014 by the Dutch Ministry of Foreign Affairs, DGGF targets the 'missing middle'—enterprises too large for microfinance but too small for conventional banks. The impact report Ten years of enabling entrepreneurship in frontier markets highlights DGGF’s commitment to fostering sustainable economic growth and supporting the most underserved: young and female entrepreneurs, and businesses in fragile states.
Download the full impact report Ten years of enabling entrepreneurship in frontier markets via this link.
The DGGF approach
Since its inception, DGGF has taken on more risk than traditional development finance institutions and other investors in emerging markets. This approach is designed to show that investments in the missing middle can bring both financial returns and positive social impacts. DGGF was among the first investors to explicitly incorporate and quantitatively measure financial additionality and demonstration effects as part of its theory of change and investment process. DGGF also prioritizes investments that can support first-time venture capital funds, contribute to scaling access to finance and to strengthening investment ecosystems in its target countries. At the end of 2023, the Dutch Good Growth Fund (DGGF) amounted to almost €400m in committed capital across 75+ investees. In turn, these investees have financed 11,794 SMEs, supporting over 150,000 jobs.
The impact
The impact report highlights the impact of DGGF Financing Local SMEs over the past decade.
Empowering female entrepreneurs
DGGF has prioritized gender equality in its mission to foster sustainable development, especially in emerging markets where women entrepreneurs often encounter significant barriers. By incorporating gender lens investing (GLI) as a central aspect of its strategy, DGGF aims to close the financial gap for women entrepreneurs and support their growth. Over the past decade, DGGF has partnered with organizations like Capital 4 Development Partners in Asia, Acumen Latam Impact Ventures in Latin America, and Alitheia IDF in Sub-Saharan Africa. These partnerships have not only provided financial support but have also served as models for gender equity in the financial sector.
DGGF's commitment extends beyond funding. In 2022, it launched a GLI technical assistance program managed by Value for Women and Tetra Tech, which has already made significant strides in promoting gender equality. This initiative has enhanced awareness, capacity, and investment in women-led and inclusive organizations, and provided a collaborative platform for DGGF investees focused on GLI investing.
Supporting Youth Entrepreneurship
Recognizing the pivotal role of young entrepreneurs in driving economic and social development, DGGF has dedicated efforts to support youth-led enterprises. Since its inception, DGGF has focused on strategic investments in financial intermediaries that cater to youth-owned or led SMEs. This has included a particular emphasis on enhancing digital lenders, digitized microfinance institutions (MFIs), and venture capital funds that target high-growth youth-led businesses.
Initiatives like Kobo Hub, which joined DGGF’s Incubation Ecosystem Support Programme in 2021, exemplify DGGF’s commitment. Kobo Hub aids in the acceleration of SME growth within challenging environments, focusing on early-stage businesses in the DRC. Additionally, DGGF supports the MENA Ecosystem Builders program by Village Capital, which collaborates with accelerators to bolster youth-led entrepreneurship in the MENA region. This program builds on findings that experienced funds are increasingly investing in young talent, enhancing their capabilities to strengthen their teams.
Serving Fragile States
DGGF has committed to supporting economies in fragile states, focusing on countries like Afghanistan, Liberia, Mali, Myanmar, the Palestinian Territories, and Ukraine over the last decade. These regions often lack robust trade and investment infrastructure, posing significant challenges for local finance providers and the SMEs they support. Despite the entrepreneurial spirit and solid business plans, the prevailing uncertainty in these areas deters most international investors.
An example of DGGF’s impact is seen in its equity investment in Bank Lviv in Ukraine, which serves the agricultural, micro, and SME sectors with over 43,000 clients. This investment is particularly significant as it addresses the expanding financing gap for SMEs in a conflict-affected area, setting a practical precedent for other investors. Furthermore, the case of ACTB Sierra Leone showcases a resilient and scalable financing model that has thrived despite severe economic shocks, demonstrating the potential for sustainable growth in fragile contexts.
