About the Collaborative for Frontier Finance

The Collaborative for Frontier Finance is a multi-stakeholder initiative that aims to increase access to capital for small and growing businesses in emerging markets.


WHY FRONTIER FINANCE

Small and growing businesses (SGBs) create roughly 80% of formal employment opportunities in frontier and emerging markets, making them an essential part of every economy and an important lever for social and environmental impact. However, SGBs face an estimated $940B financing gap in appropriate capital they need to grow.

SGBs are often called the “missing middle” because few investment models are tailored to their needs. They are too big for microfinance, too small for private equity, too risky and lack sufficient collateral for commercial banks, and lack the growth trajectory that venture capital seeks. Additionally, because SGBs require small amounts of capital to grow, the cost of conducting the transaction is often disproportionately high relative to the size of the investment.


THE IMPACT OF SGB FINANCING

Increasing appropriate capital available for SGBs will directly contribute to achieving the Sustainable Development Goals:

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JOB CREATION

Create new, quality, and long-term jobs that increase incomes

(Goals 1, 8, and 10)

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GOODS AND SERVICES

Provide access to essential goods and services like health, education, transportation, and more

(Goals 2, 3, 4, 6, 7, and 12)

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VALUE CHAIN

Provide access to essential goods and services like health, education, transportation, and more

(Goals 2, 3, 4, 6, 7, and 12)

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INNOVATION

Catalyze new approaches to serve customers in frontier markets in business model, strategy, and distribution

(Goals 2, 3, 4, 6, 7, and 12)


OUR BACKGROUND

BUILDING ON PROGRESS

While these challenges are difficult to solve, recent efforts have made progress in helping SGBs overcome their financing challenges. These include new investment structures, mobilizing capital from asset owners in frontier and emerging markets, financing instruments, technical assistant models to build capacity of SGBs, technological innovation to improve efficiencies and access to information, and regulatory reform to build investor and SGB-friendly environments. CFF was designed to build on existing progress and help it scale. CFF works across sectors – including climate, agriculture, health, education, among many more – and aims to increase focus on cross-cutting themes including gender and youth employment.   

OUR VISION

A sustainable, diverse, and robust financing ecosystem for early, small and growing businesses (SGBs) in emerging markets.

OUR MISSION

Over the next five years, the Collaborative aims to catalyze a significant amount of appropriate capital from local and international investors and, through partnership, significantly scale or develop relevant interventions that address core pain points in the system.

WHO’S INVOLVED

CFF’s founding partners include the Dutch Good Growth Fund, Omidyar Network, and the World Bank along with incubation partner the Global Development Incubator. It is guided by a Steering Committee including its founding partners as well as funders including Argidius Foundation, DFAT, MacArthur Foundation, and Small Foundation. See more on partners behind the effort here.