Target Impact Sectors

Business, when done responsibly, is one of the central drivers for the development of human civilization. Advances in technology and other innovations are creating more opportunities and business models directed to the vast market at the Bottom of Pyramid. When done responsibly, these businesses can be an important and profitable tool for development. Microfinance, the mother ship of impact investing, started to bring business concepts to development at the grassroots level only about 30 years ago. Institutional investors only started to see the opportunity in impact investing about a decade ago.

Within this relatively short period, microfinance has seen tremendous growth and innovation and has been the basis for development of impact investing, which has helped create hundreds if not thousands of businesses that meet social objectives. SIMA is focused on Energy Access, Financial Inclusion, Affordable Housing, and Education in sub-Saharan Africa and South Asia.

Off-Grid Solar Energy Access

Off-grid solar is a sector at the intersection of financial access and energy access. It is fast changing and developing. Ultimately what interests SIMA is the end customer and that they are served with a quality product to improve their lives. The hard work that our Fund I portfolio companies do on a day to day basis helps provide this access.

There are 1.4 billion people in the world without access to electricity and off-grid solar is the lowest cost means of bringing hundreds of millions of these people access. Affordable lighting brings immediate benefits of having more economic and educational opportunities, better health, and improved safety. Today, the off-grid solar lighting products market is currently estimated to be an annual $200-250 million industry.

We see three important trends in the sector which is helping scale and profitability:

First, companies are becoming more efficient.
Second, the sector is disaggregating from vertically integrated into specialized businesses focused on one piece of the value change (e.g. manufacturing, distributing, or financing).
Third, companies are focused on asset quality.

Financial Inclusion – Microfinance

Microfinance has a 30-year history, reaches over 150 million people, and demonstrates that socially responsible institutions can produce financial and social returns. Even so, an estimated nearly 2.5 billion people, representing an enormous market, are without access to financial services. In 2013, CGAP estimated financial inclusion to be a $17.5B market poised for growth. The IFC’s SME Finance Forum estimates the credit gap for formal and informal micro- and SMEs worldwide to be upwards $3.2-3.9 trillion, of which $2.1-2.6 trillion is in emerging markets.

SIMA targets responsible microfinance and financial inclusion institutions that are expanding their product range, including SME’s, and use financial technologies to increase scale, reduce costs, and improve social outcomes for customers.

Musoni Financial inclusion – Microfinance

The First Pakistan Microfinance Fund lends a portfolio of microfinance institutions who focus on promoting financial inclusion for women and addressing youth unemployment.

SIMA’s Fund I has a carve out for microfinance institutions who, in addition to their traditional business lines, are increasing energy access by financing off-grid solar products for their customers.

Education

Developing countries are more reliant on the private sector because of dysfunctional government institutions in most sectors. In particular, private schools are the hallmark of quality education in these countries. We are seeing increasing growth in private education because the government has failed to deliver, especially targeting the low income population. We bring capital to grow these private sector schools.

Portable Solar Lighting System at Home - Happy Kids
Affordable Housing

Affordable Housing

Shelter is the most basic human need yet the majority of the world’s population live in sub-standard housing. Quality housing as direct effect on the health, wellbeing and security of families. Most developing countries do not offer mortgage financing especially for the low income segment however there is an increasing trend to create such financing structures that SIMA seeks to be a part of.

SDG - Sustainable Development Goals

Our target sectors impact many of the Sustainable Development Goals including:

Gender Equality
Quality Education
Affordable and Clean Energy
Good Health
Good Jobs and Economic-Growth
Innovation and Infrastructure