European funds to invest $ 300 million in local SMEs
The Morning: Infrastructure funds backed by the European governments aim to invest at least $ 300 million in small and medium enterprises (SMEs) in Asian emerging markets like Sri Lanka in the next four years.
According to a report by Bloomberg, The Emerging Africa and Asia Infrastructure Fund plans to back small and medium-sized enterprises in locations including Sri Lanka, Cambodia, Laos and Bangladesh.
“These funds aim to deploy a total of $ 1 billion across Asia and Africa over the next four years,” Cape Town-based Ninety One PLC investment Director Esther Chan told Bloomberg.
“Our mandate for developmental impact is very, very important – making sure that we are in spaces where other lenders are unwilling to go,” she said. EAAIF is part of the Private Infrastructure Development Group, funded by the World Bank and seven donor nations, including the UK, Germany and Switzerland.
Small and developing countries have traditionally encountered major difficulties in accessing sufficient climate finance, a recurring pain point in global negotiations, and now have additional challenges as some large economies trim development budgets or shift priorities to defense spending.
The Asia Pacific region alone faces a shortfall of at least $ 800 billion, the International Monetary Fund calculated last year.
EAAIF recently made its first Asia investments – into a sustainable aviation fuel facility in Pakistan and rooftop solar developments in Vietnam – after expanding its mandate in October.
The fund has committed $ 1.7 billion since 2002 and co-invested in more than 100 projects across 22 countries, raising debt capital from entities including Allianz SE and Standard Chartered Bank.
“In the current climate, EAAIF will continue to leverage its convening power and position in the market to bring more private investors into backing African and Asian infrastructure projects,” Chan said. In Asia, the fund aims to invest in sectors including renewable energy, electric mobility and battery storage.
OSL take:
Sri Lanka’s ongoing economic activities and the overall economic expansion have opened up many business/investment opportunities in all economic sectors. The country’s SME sector has shown great business potential given the ongoing economic expansion in-line with Sri Lanka’s target of achieving regional hub status. Given that Sri Lanka is on a steady growth path supported by the country’s strategic positioning in the Indian Ocean and the strong trade agreements as well as trade concessions enjoyed by the country with many foreign countries have all helped boost local businesses in all key economic sectors while also creating opportunities for further expansion. With the increasing business potential in the country, apart from the many business/investment opportunities in Sri Lanka’s economic sectors, foreign businesses/investors could explore the opportunities in funding the start-up and expansion of local SMEs. Sri Lanka’s SMEs sector could serve as catalysts for growth and regional expansion for many foreign businesses/investors on the lookout for lucrative business ventures in the Asian region. After all, the Asian region boasts the highest number of fast-growing economies in the world and Sri Lanka’s geographical positioning makes it the ideal destination for foreign businesses/investors to set up bases to do business with countries in the region.
| Article Code : | VBS/AT/20250324/Z_3 |