As a development finance institution and impact investor, we measure success in two ways. First, we look at whether the businesses in which we invest can make a positive economic, environmental or social impact. Second, we look at how commercially sustainable and successful a business can be.
These two measures of success, impact and financial return, go hand in hand. To create long-term impact, a business must be financially sustainable. That means when we invest, the potential development impact and the commercial viability of the business, as well our ability to make a positive contribution, all need to be aligned. The second of these measures – financial return – also matters because we can reinvest this to help other businesses grow and generate further impact.
Because we seek to make a modest financial return on our investments, this means that we are largely self-financing, with about three quarters of our funding coming from these proceeds, and the rest coming from the part of the Official Development Assistance that is reserved for investment. This means the capital we receive from the UK Government only represents a small fraction of the overall aid budget.
We have unparalleled experience of supporting businesses and the communities that rely upon them, in some of the most challenging countries and regions in the world – places that are starved of investment. Private sector investors can often be put off by higher levels of risk caused by, for example, regulatory or political uncertainty. We are skilled at navigating those risks. We also play a key role in supporting private investors that are seeking to make impact investments in the countries where we operate.