De-risking investment with the CFC’s unique approach to development finance
One of the keys to unlocking crucial funding for agribusinesses in vulnerable commodity-dependent countries is de-risking investments in small and medium-sized enterprises (SMEs).
The Common Fund for Commodities’ (CFC) unique strategy does this by gradually building investor trust and SME capacity, to maximise development impact.
CFC Chief of Strategy and Development, Andrey Kuleshov, recently presented this approach at the 2022 session of UNCTAD’s expert meeting on commodities. He described how the CFC takes investors and SMEs on a journey from simple low risk instruments, such as short-term working capital, to more complex structures including investment in innovation, capital expenditures and impact bonds.
Alongside enabling investors to access SME agribusinesses with confidence, the CFC also supports SMEs to meet the impact reporting requirements of investors, which they would otherwise find difficult and costly to do, while keeping related overheads manageable.
By supporting SMEs in such collaborative way, CFC is both positively impacting those at the bottom of global commodity value chains, such as smallholder farmers, while doing utmost to preserve our capital. In turn, this contributes to the sustainable development of commodity dependent countries, because SMEs create more jobs per unit of capital, provide food security, boost incomes and touch the lives of 2.5 billion people.
The CFC is constantly working to grow its impact which is why we have created the Commodity Impact Investment Facility (CIIF) to bring in partners from private sectors alongside public ones. This fund will enable institutions and corporations to participate in and strengthen a proven investment model that makes a positive difference to people’s lives.
CIIF is open to qualified investors by invitation, with a target size of USD100 million. The CFC will provide USD20 million in funding and build CIIF’s activities on its track record of capital preservation. CIIF is currently in the pre-marketing stage in preparation for a roll out in the near future.