USAID and Acumen Partner to Spur Private Debt Capital for Social Enterprises in Developing Countries
New York – Today the U.S. Agency for International Development (USAID) and Acumen Fund, a nonprofit global venture fund addressing poverty across Africa and South Asia, announced a collaboration to facilitate the flow of up to $15 million in private debt capital to social enterprises working to provide critical goods and services to the underserved across these regions.
Under this agreement, USAID’s Development Credit Authority will partially guarantee loans made from banks or nontraditional capital providers to approved social enterprises within Acumen’s portfolio. Acumen will leverage its investment expertise and global networks to aid its investees in sourcing and securing loans that will qualify under the terms of this agreement.
“Our work has shown us that in order for these local enterprises to be transformational and sustainable, access to different types of capital is essential,” said Raj Kundra, Deputy Chief Investment Officer at Acumen Fund. “We are excited by this new way to support enterprise development and look forward to facilitating this additional access to financing alongside USAID.”
Motivated by both financial and social returns, social enterprises can fuel vital progress in the poorest countries in sectors ranging from health to education. However, due to both real and perceived risks in the markets in which they operate, these companies often struggle to attract growth capital needed to expand and reach scale. Furthermore, local financial markets are often under-developed, often resulting in a limited number of affordable financing options for social enterprises.
“Ultimately these loans will deepen the credit history of these enterprises, helping them secure non-guaranteed loans in the future,” said Ben Hubbard, Director of USAID’s Development Credit Authority. “Additionally, the guarantee will help to prove the viability of this sector, encouraging local commercial banks and nontraditional lenders to continue investing in social enterprises without donor involvement.”
The partnership between Acumen and USAID has a term of ten years with all loans being placed over the next four years to enterprises across Acumen’s portfolio.
About Acumen Fund
Acumen Fund is working to create a world beyond poverty by investing in social enterprises, emerging leaders and breakthrough ideas. Acumen Fund invests patient capital in business models that deliver critical goods and services to the world’s poor, improving the lives of millions. Since 2001, Acumen Fund has globally invested more than $75 million in 69 companies. It also works to build a global community of emerging leaders that believe in creating a more inclusive world through the tools of both business and philanthropy. Please visit www.acumenfund.org for more information.
USAID is a U.S. Government agency that provides economic, development, and humanitarian assistance around the world in support of the foreign policy goals of the United States. USAID’s Development Credit Authority (DCA) works with investors, local financial institutions, and development organizations to design and deliver investment alternatives that unlock financing for entrepreneurs in the developing world.