Oxfam Novib and Goodwell Investments have announced a new €20 million fund dubbed Pepea.
The fund will support early-stage growth companies in East Africa by addressing the ‘missing middle’, investing in businesses that are still struggling to secure finance from banks and investment funds to accelerate growth.
Aimed at small- and medium enterprises (SMEs) with high-impact potential, the fund will reflect the meaning of its Swahili namesake to help young companies ‘take off’ and ‘flourish’ while contributing to a greener, fairer, and more inclusive society.
Oxfam Novib and Goodwell both have a long history of supporting impact-driven SMEs. The two organisations are now joining forces to leverage each other’s strengths, in an initiative that represents one of the few occasions where an NGO and impact investing firm are collaborating on an investment programme for SMEs.
Oxfam Novib has been actively investing in impact for almost 30 years and launched its first investment fund in 1996. Since 2015, the organisation has been improving SMEs’ access to finance through its Impact SME Development (iSME) Programme.
With Pepea, they are furthering this mission by making EUR 20 million available for investment in Kenya, Uganda, and Ethiopia, allowing growing businesses to maximise their positive impact within their community and the wider region.
According to Tamara Campero, Investment manager at Oxfam Novib, “Oxfam Novib played a sterling role in developing the microfinance sector as a means to provide access to financial services where they were most needed.
“As that sector has matured beyond NGOs, we are ready to change direction toward a less-served market segment. We acknowledge the challenges of SMEs in the region (especially those that are women-owned) to access fine-tuned patient capital and we now want to play a role in addressing that need.”
Goodwell Investments will support the success of the fund and the development of the portfolio with their experienced local investment managers, the potential for follow-on investments from other Goodwell funds, and most importantly, a shared mission to create a positive impact. Oxfam Novib and Goodwell are actively involved in setting and monitoring the fund’s strategic course.
This new fund focuses primarily on the sustainable agriculture, energy, clean mobility and logistics, and waste management sectors. These industries produce many of the basic goods and services that represent a huge proportion of household spending for lower-income communities.
To improve the quality and affordability of these essentials, Pepea is targeting SMEs that drive the growth of a greener, fairer, and more gender-inclusive ‘human economy’ that serves the needs of society while respecting the planet.
Additionally, Pepea offers an exciting opportunity to take concrete action on gender equality by investing in women working in impact SMEs. By using innovative venture debt structures, with a focus on mezzanine finance, the investment instruments were specifically designed better to encompass the needs of female entrepreneurs and stakeholders.
Els Boerhof, Managing Partner at Goodwell Investments commented, “Goodwell is always looking for innovative ways to better serve the needs of SMEs, and we’re extremely pleased to have the opportunity to do so with one of the most professional, critical NGOs in the impact sector. There are so many synergies between our organisations, and I’m convinced that together, we can set higher standards in the impact investing space.”
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