2015 Report on Operations

15 Pages·2016·2.66 MB·English

Rep oR t o n
opeR ations
2015
index Mission
3 Mission sifeM is the development finance institution (dfi) of
4 2015 AT A gLAnCE switzerland and a key pillar of switzerland’s economic
6 ForEworD by JEAn-DAnIEL gErbEr development cooperation. sifeM promotes long-term,
7 ForEworD by CLAuDE bArrAS
sustainable and broad-based growth in developing
8 How we woRk
economies and emerging markets by providing financial
A ToTAL oF APProx.
8 InvESTMEnT CyCLE
support to commercially viable small, medium and oth- uSD 707.9M hAS bEEn
11 PorTFoLIo ovErvIEw invested in 108
er fast-growing enterprises. this in turn helps to create
12 CorPorATE govErnAnCE investMents
secure and permanent jobs and reduce poverty while also
to date.
investMents & Case studies contributing towards the integration of these countries
1 6 new investMents into the global economic system.
18 CASE STuDIES
PerforManCe
24 DEvELoPMEnT IMPACT
Core Pillars of sifeM’s Mandate
26 FInAnCIAL ovErvIEw
SIFEM’s strategic objectives are defined by the Federal Council for four-year cycles
This report on operations is complemented by a separate, compre-
(2014-2017). The set of 27 objectives is based on the following core pillars of SIFEM’s
hensive Annual report (strategy, corporate governance, perfor- SIFEM IS DIrECTLy
mandate:
mance of the investment portfolio, risk management and financial AnD InDIrECTLy
statements). both reports can be downloaded at www.sifem.ch. • Investment focus: SIFEM invests primarily in funds managed by financial intermedi- InvESTED In 421
aries and in other financial institutions (e.g. banks, leasing companies, investment
CoMPanies in
funds, guarantee funds, structured credit vehicles), providing access to capital and
sifeM aG editing: 72 Countries.
know-how to local, growth-oriented businesses;
c/o obviam DFI Ag Monika gysin, obviam, bern
bubenbergplatz 11 • Development effects: SIFEM investments aim to produce a specific and verifiable
Design:
3011 bern Push’n’Pull | Deutschweiz, bern development impact through the promotion of viable and dynamic SMEs and other
Switzerland
fast-growing companies in the private sectors of the target countries. This entails
Photos:
[email protected] first and foremost the creation of lasting and decent work;
Kylie haase, Monika gysin,
[phone]
Mostafa Darwish and various sources • Countries: SIFEM concentrates its activities on the priority countries and regions of
www.sifem.ch print: the Swiss development cooperation;
© 2016 siFeM vögeli Druck, Langnau
• Leverage: SIFEM seeks to optimise the mobilisation of additional capital for the
target countries and beneficiary companies from private and other institutional in-
vestors. To this end, in accordance with its mandate, SIFEM will bear a portion of the
political or commercial risks and, conversely, will share the returns from the invest- tHe siFeM poRtFo-
ments with the private and institutional investors; LIo, TogEThEr, wITh
• Subsidiarity: SIFEM provides financing which is either unavailable on the market or not ITS Co-FInAnCIErS
available at reasonable terms and conditions or in sufficient amounts or maturity; Has suPPorted
over 342,000
• Complementarity/Additionality: SIFEM will carry out investments that not only fill
a gap in financing but also include tangible value add, particularly in the form of jobs (SInCE ThE
know-how transfer and technical support for financial intermediaries and companies;
IMPLEMEnTATIon oF
• Sustainability: SIFEM investment activity adheres to the basic principles of financial, ITS DEvELoPMEnT
economic, social and environmental sustainability.
EFFECT MonITorIng
SySTEM In 2005.
2 Report on operations siFeM 2015 Report on operations siFeM 2015 3
2015 at a GlanCe
aGriCultural rural iMPulse fund investMent fund for HealtH new CoMMitMents
global in afriCa ii
reGion instruMent sPlit seCtor sPlit
siFeM investment: Sub-Saharan Africa
3 Africa 5 Private Equity Funds 1 health
siFeM investment:
$ 6 m 2 Latin America 1 Debt Fund 1 Infrastructure
$ 10 m 3 Southeast Asia 2 Loans 3 generalist
1 global 1 Mezzanine Fund 3 Financial Services
1 FinTech
ventureast ProaCtive fund ii
india
siFeM investment:
banCo lafise banCentro
$ 10 m
nicaragua
siFeM investment:
$ 10 m
subordinated loan
aCleda
Cambodia
siFeM investment:
$ 10 m
asHMore andean fund ii
Colombia, Peru and selectively
subordinated loan
Central America
siFeM investment:
$ 15 m
business Partners vantaGe MeZZanine fund iii CaMbodia laos MYanMar
international east afriCa Sub-Saharan Africa with a focus develoPMent fund ii
Kenya, rwanda, uganda on South Africa Cambodia, Laos, Myanmar
siFeM investment: siFeM investment: siFeM investment:
$ 4 m $ 12 m $ 4.2 m
421 $ 81.2 m 72 9 7.27 % $ 42.5 m
ToTAL InvESTEE CoMPAnIES ToTAL AMounT oF nEw InvESTMEnTS CounTrIES wITh InvESTMEnTS ToTAL nEw InvESTMEnTS InTErnAL rATE oF rETurn rEFLowS FroM InvESTMEnTS
4 Report on operations siFeM 2015 Report on operations siFeM 2015 5
ForEworD by ForEworD by
jean-daniel Gerber Claude barras
Dear reader, Dear reader,
with the adoption of the new united nations Sustainable Development goals (SDgs) by the international 2015 has been a challenging year for developing economies and emerging markets, with global economic tur-
community, 2015 was an important year for development cooperation. Political leaders from around the world bulence threatening to set back the hard-won growth achieved in recent years. This has inevitably affected the
gathered in Addis Ababa in July to determine how the SDgs should be financed. The result, known as the Addis operations and portfolio risk profile of SIFEM, and casts a shadow over the next two to three years. nevertheless,
Ababa Action Agenda (AAAA), is remarkable. never have world leaders given a stronger endorsement to the despite these adverse circumstances, SIFEM has had a solid year in terms of financial results, new investments
private sector with respect to its key role in the eradication of poverty, for the improvement of living standards and development effects.
in developing countries, and for sustainable development in general. In particular, the AAAA stresses the impor-
tance of Development Finance Institutions such as SIFEM, which stimulate broad-based and inclusive growth in I am pleased to report that in 2015 SIFEM posts a net profit of ChF 834,000 and, more importantly, for the first
target countries while also mobilising private capital for development. time in SIFEM’s short history, a positive operational result of ChF 610,000. This validates the decision of the
board, as reported in the 2014 Annual report, to revise the business Plan to increase the size of the SIFEM loan
In supporting SIFEM, the Swiss government indicates clearly that it continues to emphasise the importance of portfolio, and therefore mitigate the volatility of current income derived from the equity positions. The first com-
private sector promotion in its development assistance activities. SIFEM has proven its ability to reach its devel- plete year of Euro hedging has also contributed positively to the result by reducing the foreign exchange effects
opment objectives, from broadening access to capital to creating jobs in developing economies and emerging despite an unstable currency environment.
markets. In particular, creating local employment opportunities is not only of importance for these countries, but
should also help reduce over time the strong migration pressure towards Europe. Furthermore, SIFEM’s capital In terms of new investments, during 2015 SIFEM fulfilled the objective set by the Board, with the commitment
investments in SMEs and other fast-growing companies and financial intermediaries generate direct investment of usd 81,2 million in nine projects, with this amount split equally between debt and equity investments.
reflows, which can be reinvested in new projects. Investment in these projects was the result of a thorough and careful selection process aimed at expanding the
development reach of sifeM in the priority countries of the swiss development cooperation, while at the same
The end of 2015 marked the half-way point in SIFEM’s current four-year strategic objective period. I am glad to time contributing to the financial health of the portfolio. For instance, we have partnered with two SME banks
report that we are en route to achieving most, if not all, of our development objectives. Many of the financial in Cambodia and nicaragua that have a strong footprint in remote areas. SIFEM invested for the first time in a
indicators are also on track, despite the operational losses incurred in the 2011–14 start-up period. In particular, vehicle fully dedicated to the provision of financial services to smallholder farmers at the base of the pyramid, as
i would like to highlight the fact that sifeM reached operational break-even in 2015. Considering how young well as in a fund dedicated to improving the delivery of healthcare services in Sub-Saharan Africa. In Latin Amer-
sifeM is as an institution and how challenging the economic environment in our target countries remains, this is ica, SIFEM committed to a fund addressing the massive infrastructure gap in the Andean region which hampers
a significant achievement. It also confirms that SIFEM is not only an excellent generator of development effects, the competitiveness of these economies. with regard to geography, SIFEM has continued to develop a diversified
but also a solid investment for the swiss Government. portfolio across all developing economies and emerging markets, with particular focus in 2015 on increasing
exposure to least developed countries such as Laos, Cambodia, Myanmar, rwanda and uganda.
The board of SIFEM is grateful to the Swiss government for its constant support and looks forward to continuing
this constructive relationship, working together to meet the challenge of growing SIFEM’s capital base in line SIFEM’s latest development impact report shows commendable results on the ground. First and foremost, since
with the increases in the resources of many of its peer European Development Finance Institutions. 2005, the projects supported by SIFEM have created and sustained more than 340,000 jobs in developing econo-
mies and emerging markets – jobs which are critical for men and women striving to provide for their families.
Indeed, in order to maintain its role as a relevant actor in the field, SIFEM is under pressure to grow. Additional The development effects of SIFEM go beyond job creation; for instance, the latest available data show that the
capital would directly contribute to further improving development outcomes without weighing on the accounts most recent investee companies in the SIFEM portfolio collectively paid uSD 460 million in taxes to their respec-
of the Swiss government. SIFEM’s endeavour to foster growth via its strategic influence in investment projects tive governments in a single year. I encourage the readers to consult the various case studies found on the SIFEM
would be strengthened in its partner countries. Additional capital allowing an increase in average investment website, which capture more comprehensively the development effects of SIFEM’s investments.
would increase SIFEM’s influence in individual investments. without additional capital, this can only be achieved
at the expense of diversification and hence with increased financial risks. The obviam team is delighted to have won the tender for the SIFEM mandate conducted in 2015 and will thus
continue to be entrusted with the management of a company whose operations truly impact people’s lives.
To complement contributions from the Swiss government, SIFEM is also committed to continue mobilising
private capital for co-investments through its management company obviam. Such co-investments render SIFEM I would like to express my gratitude to the Swiss government, and SECo in particular for the continuous support
investments more efficient and effective. The board of SIFEM thanks obviam for the efficient and successful we receive in order to fulfil our mandate. I also warmly thank the SIFEM board for its constructive contributions
implementation of SIFEM’s strategy and investment projects and looks forward to continuing the constructive and meaningful guidance throughout the year.
and fruitful relationship over the coming years.
Sincerely yours,
yours faithfully,
Claude barras
Jean-Daniel gerber CEo of obviam, the investment manager of SIFEM
Chairman of the board of SIFEM
6 Report on operations siFeM 2015 Report on operations siFeM 2015 7
How we work the investment team works on the 1. seleCtion of investMents
InvESTMEnT C yCLE basis of a specific investment cycle. The investment team reviews all investment appli-
cations, but also seeks out interesting investment
fund investments have a cycle of
opportunities proactively. The team investigates
about 10 years. whether a potential investment in a fund or a
financial institution will satisfy SIFEM’s strategic
ovjectives and investment guidelines.
6. exit and reinvestMent
After a period of several years, when the portfolio sifeM
companies have grown sufficiently to become financially
self-sustaining, the investment company or fund begins to
divest. The normal exit is to sell its shareholdings to pri-
fund
vate investors; alternatively, the investee companies have
the option of refinancing their operations independently 2. sCreeninG and due diliGenCe
in the capital market. once all the investments have been
After initial evaluation of the investment pro-
exited, the fund is closed. SIFEM receives back its
posal, the team seeks concept approval from
original investment together with a return. This
the Investment Committee. The investment
money is available to be reinvested.
appraisal phase then begins. The investment
manager travels to the investment location. he
or she undertakes a thorough assessment of the
investment company or financial institution and
sifeM fund their team, and examines the proposed invest-
ment strategy and business plan. Furthermore,
he or she checks environmental, social and
fund governance guideline compliance, and seeks to
5. MonitorinG
ascertain the expected development effects.
The SIFEM investment team remains in continued
contact with the investment company or the financial
institution in which SIFEM has invested. The invest-
ment manager receives regular report and, exchanges
perspectives with local managers, including through
regular on-site visits. Each year, SIFEM investigates Investment strategy
and analyzes the development effects that have taken business plan
Environmental, social
place, for example the number of jobs created or the
and governance guidelines
amount of tax revenue generated by the investee Development effects
companies.
fund

sifeM
4. investMent PHase 3. investMent deCision and siGninG
of ContraCt
The investment company or fund then will seek
out small and medium sized enterprises in which to The Investment Committee of the SIFEM board of
invest. The local fund managers will support and Directors makes the final decision concerning the invest-
advise the SMEs, for example, with respect to the ment. If a green light is given, contracts are negotiated
introduction of new production technologies and and signed.
their compliance with environmental and social
guidelines. The company is able to grow due to the
investment capital and to create jobs.
8 Report on operations siFeM 2015 Report on operations siFeM 2015 9
InSTruMEnTS SECTorS PorTFoLIo ovErvIEw 1 Data as of 31 December, 2015,
measured by active commitments
2 Data as of 30 June, 2015
SIFEM invests its money in local, regional or glob- SIFEM invests primarily in sectors that are of par- GeoGraPHY1 instruMent1
al funds. These funds in turn select local small ticular importance to the economic development
2% 5%
and medium sized and other fast-growing com- of the partner countries: 18 %
29 % 12 %
panies, and encourage their growth with financial
support and experienced advice. As a general rule,
SIFEM invests between
8 %
5 and 15
12 %
million SME DEVELOPMENT EDUCATION HEALTHCARE
10 %

69%

Swiss francs in funds, which in turn make invest-
ments in between eight and twelve local enterpris-
35 %
es. Alternatively, direct investments can be made in
Africa global Microfinance Current Income Funds
local financial institutions, banks, leasing compa-
INFRASTRUCTURE AGRICULTURE FINANCIAL SERVICE asia Latin America other financial growth Capital Funds
nies, microfinance institutions or other companies.
CEE&CIS intermediaries Infrastructure Funds 2
SIFEM enters into long-term partnerships with
emerging local fund managers, financial institu-
tions and other intermediaries, who serve as local
contact persons for the companies and assist them larGest CountrY exPosure invested CaPital exPosure
with the implementation of their growth plans. MANUFACTURING CLEAN ENERGY GENERALIST bY invested CaPital2 Per seCtor2
7 % 7 % <1 %
8 % 15 % 4 % 20 %
2 %
rESPonSIbLE CounTr IES 8 % 7 %
14 %
investM ent
6 %
8 % 9 %
In addition to seeking development effects, when SIFEM focuses exclusively on developing economies
4 %
making its investments SIFEM is committed to and emerging markets. It invests only in countries
upholding international environmental, social whose gross national Income (gnI) per capita is
and governance standards in order to contribute below a set threshold (uSD 7,175 as of 2015) as 8 % 12 %
8 %
to sustainable development in the target defined by the world bank. The partner countries
markets. of the Swiss development cooperation are given 9 % 11 %
33 %
priority: at least
For example, in 2015 SIFEM offered three-day ESg india South Africa Manufacturing Electricity, gas and
60 %
water supply
training courses to fund managers and managers China Azerbaijan Transport, storage and
of investee companies. This training programme communications Construction
nicaragua Sri Lanka
was delivered in cooperation with CDC, the british business activities and hotels, restaurants
vietnam Peru
Development Finance Institution. of SIFEM‘s investment volume in any given year services and catering
Albania Colombia
must be allocated to these priority countries. Financial intermediation health, social, education
and recreational
wholesale and retail
Mining and quarrying
Agriculture, fishing,
and forestry
10 Report on operations siFeM 2015 Report on operations siFeM 2015 11
sifeM board MeMbers
CorPorATE g ovErnAnCE
11 22
sifeM’s role as the swiss development finance institution (dfi) is legally anchored
in the following two ordinances of the swiss federal Council: > ordinance on inter-
national development co-operation and humanitarian aid of 12 december 1977.
> ordinance on co-operation with eastern european countries of 6 May 1992.
3 4 5
swiss Confederation
PArLIAMEnT
SECo
FEDErAL CounCIL
6 7
1 jean-daniel Gerber 3 susanne GrossMann 5 Geoff burns
Chairman of the board, Chairman of the vice-Chairman of the board, since 2014, Member of the investment Committee,
investment Committee, since 2011 Member of the investment Committee, Member of the audit Committee, since
sifeM obviaM Jean-Daniel gerber was Director of the since 2011 2014
State Secretariat for Economic Affairs Susanne grossmann is a Managing Part- geoff burns has over 30 years of expe-
boArD boArD CEo
(SECo) until he retired in 2011. During ner at bTS Investment Advisors, a private rience in private equity. he has his own
SECrETAry
his career in the service of the Swiss equity fund advisor for investments in private equity advisory business specif-
government, Jean-Daniel gerber has non-listed Indian small- and mid-sized ically to address the challenges facing
been active in various areas of responsi- companies. besides her involvement Development Finance Institutions (DFIs)
investMent AuDIT investMent FInAnCE &
bility: in the trade sector as Swiss repre- in private equity Mrs. grossmann also in this sector. he has provided advice on
CoMMITTEE CoMMITTEE teaM ADMInISTrATIon
sentative in the world Trade organisa- manages the social engagement of the all aspects of investing to a number of
tion (wTo); in the field of development bTS group in India. Susanne grossmann bi-and multilateral DFIs, including the
cooperation as Chief of Section for has been active in private sector finance Asian Development bank, FMo, CDC,
Developing Countries in the former Fed- in developing economies and emerging norfund, among others.
business Management Agreement eral office for Foreign Economic Affairs; markets since 1999. Since 2014, she
Portfolio Management Agreement in the diplomacy as Minister and head of advises the SECo Start-up Fund. 6 HuGo fasel
the Economic, Financial and Commercial Member of the board, since 2011
office of the Swiss Embassy in washing- 4 julia balandina jaquier hugo Fasel has been Director of the
ton; at the world bank as Executive Di- Member of the investment Committee, Swiss charity Caritas since 2008. he was
swiss Confederation sifeM obviaM rector and Dean of the Executive Direc- since 2011, Chair of the audit Commit- previously an elected member of the
SIFEM Ag is a private limited company, The board of SIFEM is responsible The management of SIFEM’s investment tors of the world bank group (1996/97); tee, since 2014 Swiss national Assembly, serving for
the shares of which are 100 % owned by for investment decisions and other portfolio and its day-to-day operations and as Director of the Federal office Dr. Julia balandina Jaquier has over four consecutive terms between 1991
the Swiss Confederation. The share- executive management tasks. As per its have been delegated to obviam, an for Migration (1998–2004). Jean-Daniel 20 years of investment and strategic con- and 2008, representing the Christian-
holder rights are exercised by the Fed- organisational regulations, the board independent company established specif- gerber currently also sits on the board sulting experience, acquired at AIg global Social Party from the Canton of Fribourg.
eral Council. It defines SIFEM’s strategic has delegated certain responsibilities ically for this purpose. The core manage- of Lonza group and is President of Swiss Investment group, Abb Financial Services,
objectives for a four-year period. Acting to two committees: the Investment ment team of emerging market finance Sustainable Finance (SSF) and the Swiss and McKinsey. For the past 12 years, her 7 katHrYn iMboden
on behalf of the Swiss government, the Committee and the Audit Committee. specialists at obviam has managed the Society on Public good. work has focused on impact investing, Member of the investment Committee,
State Secretariat for Economic Affairs investment and divestment decisions investment operations of SIFEM’s port- and, as the founder of an independent since 2014
(SECo) is responsible for the control are delegated to the Investment Com- folio since the establishment of SIFEM in 2 MiCHel juvet investment consultancy, Julia balandina Kathryn Imboden is a Policy Advisor
and oversight of SIFEM. SECo conducts mittee. The Audit Committee validates 2011, and previously as advisors to SECo. Member of the board, since 2011 Jaquier has advised major private, insti- for the Consultative group to Assist
regular controlling and portfolio review valuations of SIFEM investments, As part of the establishment of SIFEM, Michel Juvet is a partner and member tutional, and sovereign investors on the the Poor (CgAP), a research and policy
meetings with the SIFEM board and reviews SIFEM’s financial accounts the team created obviam as a new and of the Executive board of bordier & Cie, design and implementation of impact platform on financial inclusion housed
obviam. An oversight concept and su- and related matters, and liaises with independent company. This facilitates the a geneva-based private bank. he is also investment strategies and funds. She at the world bank. Following nearly
pervisory framework ensure that SIFEM the auditor. SIFEM does not have any raising of third-party capital by obviam, President of the board of Directors lectures at St. gallen university and is twenty years with the Swiss Agency for
is investing in line with its remit. employees beside the part-time board thus fulfilling SIFEM’s objective of mo- of bo Funds, a Luxembourg Investment the author of two books. Development and Cooperation (SDC),
secretary. bilising private investments into target Company and President of the ISFb she worked for women’s world banking,
countries, while shielding SIFEM and the (Institute for Studies in Finance & united nations Capital Development
Swiss government from liability risks. banking, geneva). Fund and the Aga Khan Foundation,
before joining CgAP in 2007.
12 Report on operations siFeM 2015 Report on operations siFeM 2015 13
in v es tMent s
& C A SE S TuDIES
14 Report on operations siFeM 2015 Report on operations siFeM 2015 15
new i nvestMents
4 investMent fund for 6 aCleda bank 8 vantaGe MeZZ anine
HealtH in afriCa ii fund iii
Private commercial bank
Private equity fund, size: usd 160m sifeM investment: usd 10m Private equity fund, size: usd 250m
sifeM investment: usd 10m subordinated loan sifeM investment: usd 12m
sector: healthcare (care provision, sector: microfinance and SME-financing sector: generalist with potential expo-
wholesale and distribution of healthcare Country: Cambodia sure to renewable energy, manufactur-
products, health insurance and health- impact: by being present in all Cam- ing, services and consumer goods
care product manufacturing) bodian provinces, ACLEDA bank has a Countries: Sub-Saharan Africa, with a
1 2 3
Countries: Sub-Saharan Africa strong footprint in rural areas, which concentration in South Africa
impact: The healthcare sector in allows the bank to reach clients in impact: Access to finance is one of
Africa is chronically underfunded. while the more remote and underserved the most prevalent challenges facing
access to long-term capital is in general areas of the country. The loan provid- entrepreneurs and business owners in
difficult for SMEs, those in the health- ed by SIFEM will be fully earmarked this emerging market. Alternate finance
care sector are even worse off, as the to ACLEDA bank’s on-lending to SMEs, products, such as mezzanine instru-
sector is perceived as very risky. The which together with the microfinance ments, are scarce in Sub-Saharan Africa,
Fund aims to support companies that allocation made up more than 75 % of largely due to the difficult business and
can provide a broader range of quality ACLEDA bank’s total loan volume in regulatory environment. The Fund will
services and products at a lower 2015. SMEs play a major role in Cam- invest via mezzanine instruments, a
4 5 6
price to a broader segment of the bodia by creating jobs and generating much sought-after finance product with
population, and thereby improve the income, supplying low-cost goods and characteristics of both equity and
state of healthcare in Sub-Saharan services, and participating in research debt, providing growth capital to its
Africa. and innovation. investees.
5 banCo lafise banCentro 7 CaMbodia-laos- 9 ventureast ProaCtive
7 8 9
MYanMar develoPMent fund ii
Private commercial bank
fund ii
sifeM investment: usd 10m Private equity fund, size: usd 175m
subordinated loan Private equity fund, size: usd 35m (target)
sifeM investment: usd 4.2m sifeM investment: usd 10m
1 aGriCultural rural 2 asHMore andean fund ii 3 business Partners sector: SME finance in the industrial,
iMPulse fund international east agricultural and commercial sectors. sector: (micro) finance, education, sector: early stage, technology-focused
Private equity fund, size: usd 300m
afriCa Country: nicaragua healthcare, food and beverage (includ- companies
Private equity fund, size: usd 200m sifeM investment: usd 15m
impact: The agricultural sector in ing processing), tourism and selected Country: india
sifeM investment: usd 6m Private equity fund, size: usd 35m
sector: transport, power, telecoms, nicaragua is still largely underserved, niche manufacturing opportunities impact: Early-stage companies have
sifeM investment: usd 4m
sector: sustainable financial services for logistics and social infrastructure with limited access to finance. with a Countries: Cambodia, Laos, Myanmar limited access to capital which remains
smallholder farmers and other people (i.e. healthcare and education). sector: generalist large geographical coverage throughout impact: The economies of Cambodia, a main hindrance for company growth.
living in rural areas. Countries: Colombia, Peru and selectively Countries: Kenya, rwanda, uganda the country the bank is able to attend Laos and Myanmar have grown in The Fund will actively promote entre-
Countries: global Central America impact: Small enterprises have a lack of to clients in remote areas and extend recent years, but the lack of capital and preneurship in India, and will invest in
impact: The majority of the world’s poor impact: There is a huge infrastructure collateral and irregular cash-flows. They credit lines, with a focus on SMEs in the managerial know-how continues to companies working on technology-
live in rural areas and access to finance deficit in developing countries, and gov- do not have access to formal sources industrial, agricultural and commercial delay the establishment of a healthy, based solutions which provide or facili-
is recognised as one of the major chal- ernments cannot meet this gap alone. of capital and often rely on private sectors. formalised private sector, impeding tate access to financial services, primari-
lenges faced by rural entrepreneurs at Thus, supporting funds such as Ashmore savings, family and friends as their only these countries’ overall development. ly to India’s large unbanked population.
the base of the pyramid. The Fund pre- Andean Fund II are key to reducing the source of financing. The Fund will invest For SMEs, bank loans are often unsuita-
sents a compelling impact opportunity glaring infrastructure gap which ham- amounts from uSD 50,000 upward, but ble and difficult to obtain even with the
to reach rural populations with viable pers economic development and leaves not more than uSD 1m using a variety required collateral. The Fund will invest
financial products, as well as to offer millions of poor people without access of instruments. Investments will be in SMEs serving scalable local markets,
technical assistance. to basic transportation, education and complemented with technical assistance including those targeting the base of
healthcare. support. the pyramid.
16 Report on operations siFeM 2015 Report on operations siFeM 2015 17
Case studies
AbACuS PArEnTErAL Drug S L IMITED
development effects in a nutshell
Since its beginning, APDL has maintained a strong quality and compliance record.
Maximum standards of hygiene and quality control are ensured throughout the
manufacturing facility, contributing to the improvement of standards and imple-
mentation of best-practice methods across the whole industry.
APDL has expanded its capacity by creating a new production line and construct-
350 5 9.5 ing a new facility located on 36 acres outside Kampala using capital from SIFEM
and co-investors in AfricInvest II to finance the investment. The new plant has the
capacity to produce 65 million units of parenteral drugs per year, enabling it to
EMPLoyEES SChoLArShIP ProgrAM For MILLIon Euro FunD produce intravenous (Iv) fluids and sterile ear and eye drops for uganda, Tanzania,
5 STuDEnTS To obTAIn A investMent burundi, rwanda, South Sudan and Kenya.
bAChELor oF PhArMACy
Local production of Iv fluids by APDL caused a reduction in the wholesale price by
30 % in the first five months of production. This shows that the local industry has
the potential to significantly lower the price of medicines and thereby facilitate
accessibility of these vital products to a market suffering from poor healthcare
availability and standards.
abacus Parenteral drugs limited (aPdl) is one of the largest sterile injectables
APDL is strongly committed to sustainable production and operation standards
pharmaceutical companies in east africa, with its state-of-the-art manufacturing and promotes the use of environmentally friendly processes and raw materials.
For example, the manufacturing facility was designed to be completely illuminat-
facility located in uganda. it produces a range of life-saving intravenous infusion
ed by daylight to reduce the reliance on electric lighting and APDL has installed
products as well as eye, ear and nose drops catering mainly to government and a plastic granules recycling plant, alleviating raw material shortages and reduc-
ing costs. Additionally, APDL has replaced oil-fired boilers with environmental-
private hospitals, aid agencies, and nursing homes.
ly-friendly biomass boilers which burn abundantly available coffee husks, saving
on fuel costs while recycling a local waste product.
situation in uganda location: uganda social responsibility
sector: pharmaceutical manufacturing «our priorities lie in the
Approximately 20 % of uganda’s 37.6 million inhabitants live below the national APDL’s corporate social responsibility (CSr) activities include a scholarship pro-
investment year: 2011
poverty line and the average gnI per capita is uSD 600. Chronic political instability continuous investment gramme, which annually provides five students from low-income backgrounds
fund intermediary: AfricInvest II
and inconsistent economic management has left uganda among the world’s poorest with full board, tuition fees and other expenses to obtain a bachelor of Pharmacy
sifeM investment into fund: Eur 7m in the development of
and least-developed countries. at a local university.
fund investment into holding
human capital and
uganda’s labour force is growing more than 4 % per annum; this means that more company: Eur 9.5m
than 500,000 people enter the labour market every year. There is a need to develop employment: 350 employees technology in order to be
local productive industries, such as pharmaceutics, and this includes the challenge of website: www.abacusparenteral.com
able to provide quality
finding and/or training local workers for the skills required. The development of the
local industries will increase the number of local quality employment available for the
products with easy access
growing number of labour market participants.
for all customers at
The local pharmaceutical industry has developed significantly over the last 10 years;
however uganda continues to face challenges such as a sizeable counterfeiting indus- affordable prices.»
try, poor healthcare funding, corruption, and regulatory environment deficiencies, and
still relies on imports for 90 % of its essential medicines and health supplies.
b. S. ramesh babu,
with only 10 % of medicines and health supplies produced locally, there is an immense
Managing Director APDL
potential for the expansion of the domestic manufacturing sector, including an in-
crease of local jobs and taxes paid, as well as an enhanced availability of manufactured
medicines as the supply grows and prices drop.
The manufacturing process for pharmaceuticals is very sophisticated. highest quality
standards have to be guaranteed during every stage of production. Access to capital
for expansion and modernisation in uganda is very limited overall, and is traditionally
non-existent for risky sectors such as pharmaceuticals.
18 Report on operations siFeM 2015 Report on operations siFeM 2015 19