Incofin invests USD 4.7 million in Series A round of the Indian financial services provider Namdev. This investment is done from the recently launched Incofin India Progress Fund (IPF).

Jaipur-based Namdev Finvest Private Limited (Namdev), was founded in 2013 and has rapidly established itself as one of the leading non-banking financial companies in North West of India. The company focuses on impact lending to micro, small and medium enterprises (MSMEs) and has presence in rural and semi-urban areas in the northwestern region of India. Namdev services currently more than 13,000 borrowers and aims to reach 100,000 clients in the next five to seven years. Founder and Managing Director of Namdev, Jitendra Tanwar labels this investment as a milestone for Namdev: “We are glad to partner with a world class impact investor as Incofin IM. The funding from IPF will strengthen our organic expansion plans. We would leverage Incofin’s strategic and deep impact support in our mission to provide affordable and qualitative financial services to our clients.

Aditya Bhandari, Regional Director Asia for Incofin comments: “Namdev provides a rare combination of deep social impact, a solid management team and a strong balance sheet. This is our first investment out of our new India focused equity fund IPF. India’s growth story depends largely on tech-enabled solutions for MSMEs and in-turn for rural prosperity. We are pleased to collaborate with Namdev in its vision to support first-time borrowers and women entrepreneurs in rural India.

Incofin has a strong presence in India with two local offices (one in New Delhi and one in Chennai). Besides Namdev, current investments in India include Sohan Lal Commodity Management (agri-to-finance integrated group), SAVE Solutions (one of the largest business correspondent networks), Faircent (largest peer-to-peer lending platform) and Light Microfinance (leading microfinance company focused on rural women entrepreneurs).

Incofin cvso disburses a EUR 1.7 million loan to Bina Artha, the financial institution that, through micro-loans, allows hundreds of thousands of entrepreneurial women in Indonesia to build a better future for themselves.

Indonesia is not only known for its idyllic beaches, but also for impressive economic growth rates since the Asian crisis in 1997. The economy is now part of the top 20 largest economies in the world. This growth went along with important poverty reduction, with a poverty rate at 10% in 2020, while at the turn of the century that group was still twice as large. However, there are still around 26 million people living below the poverty line. The consequences of COVID-19 – which might push between 5 and 8 more million Indonesians into poverty – is therefore a setback. It shows that economic progress is still very fragile for a large part of the population.

While Covid-19 is having a significant impact on the Indonesian economy, Incofin CVSO has at heart to support microfinance institutions (MFI) even in times of crisis. In this context, CVSO has provided a loan of EUR 1.7 million to PT Bina Artha Ventura (Bina Artha) at a time of tight liquidity management and operations stabilization efforts from the MFI. The support from its international lenders partly explains Bina Artha’s resilience during the crisis.

Bina Artha – founded in 2011 – is one of the biggest institutions in Indonesia in terms of portfolio size. The MFI brings micro-credits to more than 350,000 low-income households in rural communities – increasing financial inclusion. In Indonesia, 51% of the adult population still do not even have an account in a financial institution. Therefore, with a total population of 270.6 million, there is a huge market growth potential for microfinance.

Especially low-income women have barely access to the formal financial sector because they lack independence and education. That is why microfinance institution Bina Artha focuses mainly on women who don’t have or have only partial access to the formal financial sector.

By increasing the access to capital, Bina Artha supports the income generation of entrepreneurial women, such as Bu Sabaria Bunga Lele. I used to sell my vegetables with a cart going around from place to place. At the end of 2017, I decided to take a loan from Bina Artha and open a shop on the road side near my house. Now, I provide a wide selection of fresh vegetables, spices, dried fish and other products. The people of the community around my shop buy their necessities from my stall and lots of cars stop with people from further afield as well. Thanks to the strategic location, my store is also doing fine despite the pandemic.

Incofin cvso believes that Bina Artha is well positioned to efficiently and rapidly grow further, thanks to its business model, support from its Credit Access network and investments in technology. They have for example integrated third party payment services into their core banking system.

“Bina Artha has been very transparent in dealing with clients and funding partners and therefore continues to gain support. Incofin is a proud partner of Bina Artha, via them we can deliver our impact and open up opportunities to many Indonesians for a better livelihood”says Vuthy Chea, Deputy Regional Director Asia of Incofin Investment Management.

The regions where Bina Artha operates are in dark blue.

Incofin IM, together with Triodos Investment Management, BlueOrchard, Developing World Markets, Microvest, Oikocredit, responsAbility, Triple Jump and Symbiotics signed a Memorandum of Understanding (MoU) for coordination in response to COVID-19 to support the microfinance sector.

 

Together, these nine investment originators and fund managers in impact investing have about USD 15 billion of assets under management in financial inclusion, invested in more than 80 emerging and frontier markets across Africa, Asia, Eastern Europe, the Middle East, the Caucasus, Central Asia and Latin America.

Measures taken locally to reduce the spread and impact of COVID-19 can affect clients, operations and liquidity of Microfinance and SME finance institutions. The Memorandum aims to coordinate efforts in the provision of ongoing refinancing in a responsible manner, thereby enabling these institutions to adequately respond to temporary changes in business conditions.

The MoU notably emphasises: “Microentrepreneurs and SMEs will form a vital basis for social and economic recovery. Supporting Financial Inclusion and preservation of the strong foundations that have been built over recent years is therefore of vital importance. This calls for enhanced cooperation within our sector. We have learned from previous experience that through transparency and close cooperation we can best help our partners and our own organizations through challenging times.”

The MoU is not legally binding but forms a strong basis for coordination over the coming months, with pragmatism, transparency and tolerance as key principles. The MoU also serves as a basis for dialogue with other stakeholders, such as multilateral and development finance banks and policy makers.

The signatories welcome additional impact fund managers to join the initiative in the coming weeks, as many have expressed interest. Strong alignment among market protagonists is the best possible way to safeguard the interests of impact investing, and ultimately the social impact and benefits that the sector offers to low income households and small businesses in low- and medium-income economies.