Transformation Strategy
SDG builds value by providing hands on support to its investees and transforming them to become successful banks with strong leadership, performance culture, strong governance, high profitability and efficient operations that service the Missing Middle. SDG team includes operational experts who have over 20 years experience working in financial institutions in Africa and internationally. The team has extensive experience building and transforming financial institutions in East, West and Southern Africa, with a particular focus on MFIs, SME banks, culture change, HR development, management strengthening and board effectiveness.
Typically over a 18-24 month period of transformation the FIs, in which SDG invests, will be built into leading local players in their countries. Transformation will be in three areas:
- TRANSFORM FIs to realize the market opportunity in the Missing Middle where significant un-met demand exists within the financial sector of most sub-Saharan African countries.
- TRANSFORM the lives of staff in SDG group companies to realize their human potential by providing a professional environment in which staff can grow - particularly in the area of leadership.
- TRANSFORM financial markets and economies to realize economic growth through increasing savings, having an inclusive banking system and encouraging a dynamic SME sector creating jobs and wealth. This can be achieved through financing, supporting and mentoring of SME owner-managers, increasing the ability of SME employees and the un-banked to save and provide education and health services for their families, increasing access to financial services and increasing the number of decent housing stock and home owners.
Social Development Strategy
Fundamental to our long-term value proposition for social development is our belief that SMEs have an important role to play in contributing to the well-being and sustainability of the communities they operate in.
SDG is unique because its core activity is transforming financial intermediaries, the banks, to provide finance to SMEs and the unbanked. By targeting banks instead of providing finance directly, SDG can leverage local resources and networks to reach more SME and unbanked customers and strengthen the financial structure in the country to provide a sustainable source of Missing Middle finance.
Through the investment and the transformation process, SDG will provide FIs with a market focus and transfer knowledge on SMEs, unbanked and housing finance. Separately, a Technical Assistance (TA) Facility will disburse grant funding to investee FIs for specific projects that enhance the FI capabilities as a leading Missing Middle bank and that strengthen the performance of their SME clients. The TA Facility consists of two programmes:
- FI Support Programme: Grant funds to provide targeted support and capacity building to FIs. This includes building SME finance capacity, leadership, culture change, mentoring, development of programmes and support structures for SMEs.
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SME Support Programme: Grant funds to provide mentoring and training to SMEs. SMEs will contribute towards the cost of such service provision thereby replenishing the SME Support Programme so that the pool of TA funds is sustainable over a longer term. Support SME development of customer SMEs of investee FIs in specific countries in the following areas:
- Financial literacy
- Retention / reward of staff
- Operational efficiency improvements
- Governance and mentoring
SDG aims to deliver development returns through:
- Expansion of access to finance for lower and middle income groups
- Deepening of financial market and enhancing country financial structure
- Strengthening capacity of FIs and SMEs
- Creating new jobs through FI expansion and SME growth
In this manner, SDG provides a holistic approach to building the "Missing Middle" market. To illustrate, SDG provides investment capital to financial institutions seeking to expand into SME markets. Through targeted technical support, these financial institutions develop stronger operations, more reliable sources of funds and appropriate products that deliver value to SMEs and unbanked customers.
Through access to a range of financial services and products, SME and unbanked customers can build assets, including savings, and better manage cash flows. Households can pay for education, better food and other consumables, which in turn fuels the economy through spending, taxes paid, SME growth, job creation, and the development of housing and construction markets.