GLOBAL – The SDG Loan Fund has rallied an impressive US$1.1 billion from institutional investors like Allianz, FMO, and Skandia, employing an innovative “blended finance” model to propel the United Nations Sustainable Development Goals (SDGs) in emerging and frontier markets.
This fund, managed by Allianz Global Investors and FMO IM, ventures into a blend of loan participations supporting financial institutions serving small and medium-sized businesses in regions across Latin America, Asia, Africa, and Eastern Europe. The targeted sectors span energy, financial services, and agribusiness.
Its unique structure features a “first-loss” investment from FMO, complemented by a partial guarantee from MacArthur, galvanizing capital from institutional investors typically cautious about high-impact loans in these markets.
Tasked with addressing the US$3.9 trillion annual funding gap for the SDGs in developing nations, the SDG Loan Fund stands as a beacon among endeavors to channel private sector investments into these markets, focusing on economic growth, equality, and climate action.
Anticipating to invest in 100 impactful loan participations, the Fund envisions creating close to 60,000 jobs and averting around 450,000 tCO2 eq of greenhouse gases per year, building on FMO’s track record.
Deborah Zurkow, Global Head of Investments at Allianz Global Investors, highlights their partnership’s role in unleashing private capital crucial for these markets’ development. She envisions the SDG Loan Fund as a model for successful multi-stakeholder collaboration.
Nic Wessemius, Managing Director at FMO Investment Management, echoes the sentiment, expressing enthusiasm for their joint initiative and underscoring its potential to empower local prosperity in developing nations.
Debra Schwartz, Managing Director of Impact Investments at the MacArthur Foundation, speaks proudly of their contribution, emphasizing how the Fund can bridge crucial funding gaps, fostering economic, environmental, and social benefits for numerous small businesses, families, and communities.
The funding comes when there is a need to improve access to capital to unlock a wave of clean energy spending in Africa, according to a new report from the International Energy Agency (IEA) and the African Development Bank Group (AfDB).
Even though Africa accounts for almost 20% of the world’s population and has ample resources, it is the destination for around just 2% of global clean energy spending.
Overall energy investment on the continent has struggled in recent years, while to meet African development ambitions, as well as international energy access and climate goals, it needs to more than double by 2030, with nearly two-thirds going to clean energy.
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