Interview with the founding partners of BALIM
BALIM was founded jointly by iGravity, HEKS and Somaha Foundation. What is BALIM and how does it work?
Patrick Elmer, iGravity: BALIM is an impact investing vehicle (in the form of a limited company, SA) jointly developed by HEKS, Somaha Foundation and iGravity with the purpose of providing capital and technical assistance to local companies in rural areas of Sub-Saharan Africa.
Commercial capital rarely flows into small and medium-sized enterprises (SMEs) in Sub-Saharan Africa due to high risks and transaction costs, especially in rural areas and in the least developed countries, where the local financial system is weak and inefficient.
As a result, most of these local businesses remain underfunded and can hardly grow, preventing the communities in which they operate from benefiting from employment and access to goods and services.
Bernhard Kerschbaum, HEKS: BALIM targets investments that generate a financial return while also seeking to have a positive, measurable social and environmental impact – so-called impact investments.
Christian Jaag, Somaha Foundation: Our primary objective is to ensure that our investments contribute to the fulfilment of the foundation's purpose, particularly in combating absolute poverty. To be financially sustainable, BALIM is profit-driven. Accordingly, we expect a financial return on our investment.
What impact is BALIM looking for?
Patrick Elmer: BALIM focuses on investing in companies that improve small farmers’ income, ensure local food security, reduce the environmental impact of local agriculture and create jobs in rural areas.
Christian Jaag: Borrowers in our portfolio gain access to capital and new markets. They also receive technical assistance. Loans are conditional on sustainable business practices in all areas. Our impact investing is therefore an effective tool for promoting inclusive, social and economic development that improves people's lives in the long term.
Bernhard Kerschbaum: This approach supports innovative solutions to social problems while promoting economic growth in line with social justice and nature protection.
In which countries and sectors does BALIM invest?
Bernhard Kerschbaum: BALIM is taking over an existing HEKS portfolio of loans to SMEs in Uganda and Senegal. HEKS has been active in these countries for several years and is represented there by a local office. The economic and legal conditions are suitable for granting loans. The investments focus on companies that are active in sustainable agriculture and related sectors such as water, energy and finance.
Patrick Elmer: These companies are located at a unique intersection of food security, income generation and nature protection, allowing the loans to have multiple positive impacts on a variety of stakeholders within the communities. BALIM plans to further develop and expand its portfolio to additional countries in East and West Africa in 2024.
How is it different from other impact investments?
Patrick Elmer: Impact investing is particularly used in emerging and developed markets. BALIM has a unique strategy of directly financing local SMEs in Sub-Saharan Africa that would otherwise have limited access to finance.
Bernhard Kerschbaum: BALIM specifically supports local companies that are too small for commercial or other impact investors. BALIM also differs from other investment funds in its strict loan criteria in the areas of sustainability, agroecology and biodiversity. BALIM’s focus on companies in rural areas is another feature that sets it apart.
Patrick Elmer: To reduce investor risk, BALIM also partners with philanthropic organizations that either provide a guarantee against potential defaults or trigger payments to BALIM if certain impact targets are met.
Christian Jaag: Another factor that is expected to reduce the risk of individual investments is the technical assistance that will support the implementation of BALIM-funded initiatives.
Image: © Ruth Mbabazi
Why are HEKS and iGravity the right partners for Somaha Foundation?
Patrick Elmer: BALIM is an innovative partnership between three leading and highly complementary organizations, bridging the gap between the financial world and development cooperation. iGravity specializes in selecting and financing companies in Africa that generate both financial and social returns. Eleven staff members work locally in various countries in Sub-Saharan Africa and are familiar with the local conditions.
Bernhard Kerschbaum: HEKS has more than 60 years of experience in development cooperation and humanitarian aid and contributes to BALIM with its expertise in sustainable agriculture, agroecology and human rights. HEKS' country offices and networks also ensure that investments are locally anchored.
Christian Jaag: With its experience, HEKS has the credibility to ensure that BALIM has a positive impact on local communities. HEKS has been working successfully with iGravity for several years, particularly in the areas of company selection and verification, as well as contract and payment management. This gives us great confidence in both partners.
Why is Somaha Foundation the right partner for BALIM?
Christian Jaag: We are able to bring new capital and our thematic expertise into BALIM. In addition, after spending a long time developing BALIM, we felt that our values and objectives were strongly aligned.
Patrick Elmer: Somaha Foundation is a young foundation that seeks to achieve a more effective and sustainable impact through innovative approaches and partnerships, especially entrepreneurial models.
Bernhard Kerschbaum: We are excited about the new collaboration with Somaha Foundation. It has come at just the right time for us to move into the next phase with iGravity and HEKS. We value Somaha Foundation and its staff. The words that come to mind here are competent, innovative, and proactive. The chemistry with Somaha Foundation is right. Their focus on nature protection also enriches our investment discussions.
Who can invest in BALIM and how?
Patrick Elmer: BALIM and its partners offer several ways to get involved. Firstly, donations can be used to fund key technical assistance activities for local companies, such as strengthening financial planning and governance, or introducing environmentally friendly cultivation or production practices. Secondly, qualified investors can participate directly in BALIM through loans or equity.
Bernhard Kerschbaum: We are looking for long-term investors who share BALIM's vision for rural Africa with investments starting at CHF 500,000. We have a pipeline of companies to invest in and see great potential for growth.
Christian Jaag: For grant-making foundations such as Somaha Foundation, investing in BALIM is an attractive way to combine investment with funding activities.
If you are interested in collaborating with HEKS, iGravity and Somaha Foundation to strengthen SMEs in rural areas of Sub-Saharan Africa, please contact Somaha Foundation at info@somaha-stiftung.ch.
Image: © Christian Bobst
