The Good Return Impact Investment fund aims to raise $1 million to generate employment and income for 1,000 people living in poverty in the Asia-Pacific region. The funds will guarantee loans to small-to-medium enterprises, and will be focussed on women to create gender equitable practices. This gender lens aims to help drive the positive impacts of the funding further throughout their communities.
With long experience in the region, Good Return recognises the opportunities for powerful impact through funding trade and financial services capacity that we take for granted here in Australia.
“Across Asia-Pacific, agricultural value chains provide vast opportunities for small businesses to value add and retain much-needed income in their communities through activities like warehousing, grading, processing, packaging and distribution. The challenge is accessing finance. That’s why we launched our Impact Investment fund, to unlock capital and catalyse new sustainable financing models through our local partners, to generate jobs and income in rural communities, with a focus on women.” Explains Shane Nichols, Good Return CEO.
Good Return makes clear that the strategy is ‘impact first’. The core aim is to offer funding to businesses that otherwise wouldn’t have access to it, rather than prioritise a market-rate return for investors. The target return is described as being in-line with short-term deposit rates that could be expected from an Australian bank.
While a total of $1 million is sought from investors, a first-loss tranche of $250,000 has been contributed. DFAT provided the initial $200,000 grant, and CAGES Foundation has provided another $50,000.
The strategy is able to create a multiplier effect by using finance credit guarantees through partnerships with other financial service companies who partially underwrite perceived risks.
The fund opened in July 2020 and will be open to investment for the remainder of the year.
In Indonesia Good Return is working with CROWDE, a fintech that provides ‘agricultural value chain’ financing to women farmers. An example is a project that helps women to optimise the value of second-grade chilli, which otherwise might be thrown away. Through providing processing and packaging training they’ve developed a market for chilli paste and chilli powder.
During the first half of 2021 CROWDE has invested in 51 agricultural SME’s, deploying a combined 2.1 billion Indonesian Rupiah, and 75% were women-owned businesses.
Another partner, identified by CROWDE was Aulia Hasna Wardiayana. She owns an agricultural commodity trading business in Bandung, in West Java, and she recognised that many local farmers were selling their goods at unsustainable prices, and they were going out of business as they couldn’t cover capital costs. Her aim was to offer sustainable prices to local producers to improve their financial independence and increase the quality of local suppliers.
But in the process, she herself also came up against barriers to financial inclusion when she couldn’t access state-owned loan guarantees, a situation not uncommon to female business owners.
Aulia was able to push past these challenges with a $25,000 loan, and 50% loan guarantee, from the Good Return impact fund. It’s allowed her to build her business, which in-turn offers support to so many other local producers.