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Is the World Bank to Blame for the Cambodian Microfinance Crisis?
For the past five years, Cambodia’s microfinance sector has been experiencing a major over-indebtedness crisis. And as inclusive finance consultant Daniel Rozas explains, despite multiple warnings that the sector was overheating, IFC, the World Bank’s private investment arm, poured fuel on the flames by investing in the largest and fastest-growing of the country's leading microfinance institutions. Making matters worse, after an investigation by IFC’s own ombudsman concluded that clients had been harmed due to its failure to monitor the social risks created by its investments, its board dismissed those findings. He explores how the industry went off the rails in Cambodia, and argues that IFC not only worsened the crisis, it helped undermine the sector’s own efforts to avert it.
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Right-Sizing IMM: Five Ways Impact Measurement and Management Can Work for Enterprises — Not Just Investors
Impact measurement and management (IMM) systems too often reward compliance over impact, extracting more than they’ve given back. According to Julia Mensink at Acumen and Heather Esper at the William Davidson Institute, impact data tends to be focused mainly on satisfying investors’ requirements, not informing investees' decisions — and gathering it often ends up consuming enterprises' time and resources and constraining their ability to create the impact they’re expected to measure. They share learnings from a gathering of IMM experts earlier this year, highlighting several ways investors, investees and IMM professionals can right-size these practices, aligning them with enterprises' actual decisions and integrating them into their core operations.
- Categories
- Investing, Social Enterprise
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Parked Capital is a Missed Opportunity: Why Donor-Advised Funds Should be Funding Climate Businesses Now
If philanthropic capital is waiting for a rainy day to address climate change, it’s already pouring. But according to Adam Fraser at Terraset, instead of supporting solutions to this challenge, a significant source of funding is either lying dormant — or actively contributing to the problem. As he explains, Donor-Advised Funds (DAFs) are sitting on over $327 billion in capital: money that was already gifted to a charitable entity and earmarked for the public good. That money is invested in the market, growing tax-free, and sometimes even financing high-emission sectors like the fossil fuel industry, while innovative startups struggle to fund carbon removal and other climate solutions. He explores the sort of impact this funding could make if it were mobilized, and argues that the time to deploy it is now.
- Categories
- Energy, Environment, Investing
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Scaling Without Breaking: A Practical Tool for Strengthening Health-Focused Digital Wholesalers in LMICs
Patients across low- and middle-income countries (LMICs) often use private providers for healthcare products and services, making these frontline settings a valuable pathway for increasing the availability of quality medicines and improving health outcomes in these markets. François Lepicard, Alice Magand and Guillaume Massot at Hystra, and Laura Collet at Sanofi share learnings from the Sanofi Impact Fund, supported by the Hystra team, which invests in digitally enabled wholesalers that help stock last-mile providers with medicines and other health products. They highlight the common challenges these businesses are facing, exploring how funders can help overcome them, and sharing a tool that outlines key priorities and performance targets across the digital wholesaler business model in the health sector.
- Categories
- Health Care, Investing
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Missing the Exit: The Growing Need for New Exit Pathways in Agriculture Investing
Exits make the wheel of impact investing go around, enabling companies to sustain and grow their operations, while also allowing investors to recycle returned capital into other impactful solutions. But as Coco Lim at Acumen explains, right now that wheel is not turning — particularly in agriculture, which has the lowest ratio of exits to deals of any sector in Africa. She argues that this situation puts impact investors at a crossroads: They can stay the course and hope that big exits are around the corner, or they can build the necessary exit pathways themselves. She discusses the challenges of achieving exits in smallholder-focused agriculture, highlighting the limitations of current investing models and exploring some exit strategies that offer untapped opportunities for impact investors and businesses.
- Categories
- Agriculture, Investing
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From Nano to Investable: Why Formalising MSMEs Hasn’t Led to Scale, and What India Can Do About It
India has achieved something remarkable over the past decade: Millions of once-informal micro, small and medium enterprises (MSMEs) have been formalized, and it is now easier to start and register a business, and access credit and government programs and markets. But according to Pranshu Chhabra, Rudra Midhun Kumar and Chiropriya Dasgupta at Quiver, over 99% of these enterprises remain at the "micro" level, and the overwhelming majority of them are classified as “nano,” a subset of the lowest level of the MSME classification. They argue that while India has become very good at bringing enterprises into the formal system, it is struggling to help them move into their next stage of growth: becoming large enough to attract formal investment. They explore this challenge, explaining why the transition from nano to investable cannot be solved by capital alone.
- Categories
- Investing
- Tags
- governance, MSMEs, public policy, scale
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Moving Beyond Grants: How NGOs Can Diversify Toward Earned Revenue, and How Funders Can Support That Transition
The development sector has reached an increasingly firm consensus that it needs to depend less on grants as the aid landscape evolves, and strategies to generate earned revenue have emerged as a key solution for NGOs seeking to remain financially sustainable. But as Toon Driesen at the Enabel Innovation Hub and Alex Losneanu and Pritika Kasliwal at Brink explain, commercializing innovative solutions to complex societal issues typically costs money before it makes money, and early funding support often falls away before a business model can scale. They share research that reveals what NGOs must do differently to execute the transition to an earned revenue model, and explore how funders can help them implement these changes.
- Categories
- Investing, Social Enterprise
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Financing AI Transformation in LMICs: What Multilateral Development Banks Must Do Differently
Multilateral development banks have spent the last decade building the foundations of digital economies across low- and middle-income countries (LMICs), and the broadband networks, digital ID systems and other priorities they've financed are helping to make AI deployments in these markets possible. But as Kunal Walia at Dalberg Advisors explains, this funding often goes toward piloting individual use cases, expanding digital infrastructure or creating an enabling environment, rather than uniting these different components into holistic AI systems that aim to scale. He argues that multilateral development banks must rethink their approach to ensure that the infrastructure they've helped build can actually enable AI transformation.
- Categories
- Investing, Technology
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