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  • Before I get started, I wanted to first introduce my wonderful Verde Ventures Team and recognize them for all their hard work since joining me in the fall of last year: Adriana Madrigal and Deborah Aragao- if you would please stand so people know who to talk to when they have funding requests! Now that you see who we are.. Let’s move on to what we are..
  • Transcript

    • 1. Addressing the Challenges to Investing in Conservation SMEs in Africa ABCG Meeting March 22 nd 2005
    • 2. Verde Ventures Approach <ul><li>Corridors </li></ul><ul><li>Economic Incentives </li></ul><ul><li>Small Businesses as Conservation Partners </li></ul><ul><li>Chronic Lack of Capital </li></ul>
    • 3. Verde Ventures Overview <ul><li>$6.75 million and growing. </li></ul><ul><li>Capitalized as debt by the IFC/GEF, Overseas Private Investment Corporation (OPIC) and Starbucks. </li></ul><ul><li>Investment Goals: Biodiversity conservation, conservation-oriented job-creation and cost recovery. </li></ul><ul><li>Invest in CI’s global priority areas. </li></ul>
    • 4. Verde Ventures Overview <ul><li>Use of Funds: Infrastructure, working capital, trade finance etc. </li></ul><ul><li>Instruments : Primarily Subordinated Debt </li></ul><ul><li>Investment Size : $30,000 to $500,000 </li></ul><ul><li>Sectors: Agro-forestry/NTFPs (84%), Eco-tourism (12%) and Others (4%) </li></ul><ul><li>Geography: Latin America (60%), Asia (30%), Africa (10%) </li></ul>
    • 5. Verde Ventures Results <ul><li>100% on-time repayment ($2 million) </li></ul><ul><li>$3.9 million invested in 15 projects </li></ul><ul><li>Improving land use in 600,000 hectares containing over 95 Red-listed species </li></ul><ul><li>Supporting enterprises employing over 9,000 local people in 7 countries </li></ul><ul><li>Leveraged co-financing of over $2 million in external funding </li></ul>
    • 6. Program Expansion <ul><li>New partnership with UNDP’s Equator Initiative: Equator Ventures </li></ul><ul><li>Enterprise Development Services to ensure “bankability” of conservation-SMES. </li></ul><ul><li>Maximizing Core Competencies: </li></ul><ul><ul><li>CI- Project Selection/monitoring </li></ul></ul><ul><ul><li>UNDP-BDS and Extensive Networks </li></ul></ul>
    • 7. Day Chocolate Company <ul><ul><li>UK based fair-trade chocolate company supporting CI- partner in Ghana. </li></ul></ul><ul><ul><li>Financing for working capital to purchase cocoa from Ghanaian cooperative. </li></ul></ul><ul><ul><li>$250,000, 5 year loan plus equity kicker for 3% of the company (Jan, 2002). </li></ul></ul><ul><ul><li>Initially we had wanted to invest direct in the cooperative (Kuapa Kokoo), but CURRENCY instability prevented this. </li></ul></ul>
    • 8. Wildlife Works Kenya <ul><ul><li>Apparel manufacturer providing local employment in exchange for conservation commitment from community. </li></ul></ul><ul><ul><li>$150,000 4 year loan with fixed interest plus % of sales (March, 2005). </li></ul></ul><ul><ul><li>Secured by local collateral plus a guarantee from US-based parent company. </li></ul></ul><ul><ul><li>Initial plan was to invest $500,000, but investment committee felt the business model was too risky and financial systems insufficient-CAPACITY. </li></ul></ul>
    • 9. VV Investments In Africa <ul><li>Only 2 investments to date- One off-shore </li></ul><ul><li>Why? The 6 C’s…. </li></ul><ul><li>CURRENCY </li></ul><ul><li>CAPACITY </li></ul><ul><li>COST </li></ul><ul><li>COLLATERAL </li></ul><ul><li>CO-INVESTORS </li></ul><ul><li>COMMUNICATIONS </li></ul>
    • 10. Addressing the Challenges <ul><li>CURRENCY : </li></ul><ul><ul><li>Invest in companies with revenue in hard currency </li></ul></ul><ul><ul><li>Set aside $ to cover for exchange risk </li></ul></ul><ul><li>CAPACITY : </li></ul><ul><ul><li>UNDP Partnership and use of BDS providers such as TechnoServe and hopefully others. </li></ul></ul><ul><li>COST : </li></ul><ul><ul><li>Use BDS providers and grant funds to defray costs- We have a developmental agenda. </li></ul></ul>
    • 11. Addressing the Challenges <ul><li>COLLATERAL : </li></ul><ul><ul><li>Guarantee Facility to help cover risk. </li></ul></ul><ul><li>CO-INVESTORS : </li></ul><ul><ul><li>Regional/development bank engagement </li></ul></ul><ul><ul><li>Pilot investments </li></ul></ul><ul><ul><li>Risk Incentives and information provided on conservation SME market (IFC’s EBFP) </li></ul></ul><ul><li>COMMUNICATIONS : </li></ul><ul><ul><li>Expand networks, direct outreach through donors, BDS providers, other ideas? </li></ul></ul>
    • 12. Conclusion <ul><li>Conservation SMEs in Africa have similar challenges of other continents. </li></ul><ul><li>However, the lack of investments in conservation SMEs is worse in most of Africa than in other regions. </li></ul><ul><li>Need for incentive mechanisms and guarantee facilities as well as grant-based conservation SME capacity building funds. </li></ul><ul><li>Commercial banks and MFIs operating in Africa need to know more about conservation SME markets and if demand, develop appropriate financial products. </li></ul>

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