Intermediate financing of local SMEs

The DGGF ‘Investment Fund Local SMEs’ is an initiative of the Ministry of Foreign Affairs to improve the access to finance for ‘missing middle’ SMEs in selected DGGF countries. The ‘missing middle’ refers to entrepreneurs whose financing needs are neither served by microfinance nor by conventional capital market players.

 The DGGF aims to reach out to underserved markets, foster innovative financing products and invest in specific target groups (young and female entrepreneurs and entrepreneurs in fragile states that face high barriers to attracting capital). By doing so, the DGGF contributes to knowledge transfer, increased employment and production capacity and thereby becomes a driver of economic growth.

Intermediary investment funds for local SMEs

To increase local SMEs’ access to finance, the DGGF part Investment funds for local SMEs 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 intermediary funds for local SMEs.

Seed Capital & Business Development

The purpose of the Seed Capital and Business Development (SC&BD) programme is to further the impact of the DGGF part Investment funds local SMEs. The SC&BD programme focuses on SME finance initiatives that are of strategic interest for the DGGF, but too young, small or risky for an investment to form part of the DGGF investment portfolio, and can hence apply for support from seed capital. In addition, the SC&BD facility offers Technical Assistance and Business Development Services to DGGF clients. More information about the SC&BD programme.