Triggering Private sector Investments
BFP-B is catalysing private sector investment in developing new prototypes and bring to scale viable business models that serve small businesses based on understanding the challenges small businesses face in accessing and using financial services.
By absorbing some of the financial-risk associated with investing in these business models through a grant of up to 50% of the project, we expect the private sector to overcome market failures that would otherwise prevent them from making an initial investment, either from the cost of information discovery, costs of mitigating risks or simple lack of available capital.
We do this by generating a rigorously assessed pipeline of investible projects and investing in the most promising projects through a high-level independent private-sector led investment committee, mentoring and monitoring these investments through payment-by-results contracts, and promoting emerging successful business models to spur wider industry adaptation of the business models.
We expect an additional £34m to be made available for financing to these small businesses through a combination of support from the Challenge Fund and our partnerships with the private sector. This will also create 33,000 jobs.
Co-investment to spur innovation and scalability
By 2020, we will have co-invested in 25 new projects that are expected to provide convenient access to financial services to 180,000 small businesses.
We are generating a rigorously assessed pipeline of investible projects. Creating investment pipeline involves identification of market challenges facing small businesses, significant marketing to generate demand and competition, assessment and sorting of concepts, field based due-diligence and assessments of viability business plans, independent private-sector review and decision-making, preparation of performance milestones, and negotiation of contracts.
We are investing in the promising projects and managing these through structured payment-by-results contracts, ensuring that develop and maintenance of a high-quality portfolio. We fund investments with a higher appetite for risk than commercial money, and with greater acceptance of a lower economic return on investment.
Funding is spread across the innovation spectrum, including frontier funding to help underwrite the start-up costs of developing innovative solutions, funding to fill viability gaps as traditional models might take longer to reach break-even for particular geographies and groups of people such as women’s businesses, and funding to enable established proof-of-concepts to go to scale into new geographies and markets.
Our investment portfolio covers innovations in business models to address two key binding constraints for small businesses, the challenge of limited last mile distribution that makes it difficult for the financial system to viably reach and service small businesses, and the challenge of narrow band of financial instruments and platforms on offer that do not maximise the value of financial services for small businesses.
Promoting business models
We are promoting business models through systematically capturing and disseminating knowledge to hasten rapid diffusion of innovative business models across the financial sector through adaptation and replication.
We also take a proactive approach of creating exit strategies from our successful investments by matching our projects with external investors so that the projects can continue to grow beyond the life of our direct investment in these projects.
Finance Against Merchandise
By SSD technologies Limited. Creating financing opportunities for e-commerce merchants
Private-private Initiative for Access to Insurance Programme
By Pragati Life Insurance Limited and INAFI Bangladesh. Composite micro-insurance covering life, asset and liability
A voice-based ERP solution, backed by a Bengali speech recognition system that eliminates the need for paper-based record-keeping for 70,000 micro and small enterprises by September 2018
By Bank Asia. Establishing an online loan application submission and credit approval system to provide financing to 10,000 micro and small enterprises by end 2018
Save & Grow
By bKash and participating banks. Mobile financial service that collects deposit payments and disburses loans from banks to provide 7,200 micro and small enterprises with finance opportunities by end 2018
By ACACIA SRIM Limited. Establishing Bangladesh’s first socially responsible MSE investment platform
Agribusiness Boost Bangladesh
AbB is a young entrepreneurial global initiative with a strong objective to support high growth- and high impact potential agro MSEs (micro & small enterprises).
Aamra Payment Network
By aamra technologies limited: uses Near Field Communication (NFC) as an alternative to expensive point-of-sale machines for micro and small enterprises
Cash Management Decision Support System
By Trust Bank Mobile Money and shurjoMukhi: overdraft facilities to 10,000 mobile financial services/mobile money agent
Agent bank services
By Dutch Bangla Bank Limited (DBBL). DBBL agent banking outlets to provide banking services to 15,000 micro and small enterprises
By Bangladesh SME Corporation Limited (BSCL). Third party match making platform between financial institutions and MSEs, which will provide banking and BDS services to 10,000 micro and small enterprises by end 2018
By pi Strategy Consulting and Robi Axiata Limited. Mobile phone based ERP and business analytics service access to 700 micro and small enterprises by end 2018
By bKash. 7,550 loans to qualifying bKash agents and merchants by end 2018
Better Life Enterprises Development
By Young Consultants. Developing a marketplace to connect technical service providers with potential clientele
Agriculture Weather Index Based Insurance
By Green Delta Insurance Company Limited. Insurance to mitigate risks from weather events for 9,800 farmers by September 2018
By BD Venture Limited. Online platform for investors and investees to create alternative finance opportunities for small businesses