Our Vision
SDG seeks to build Missing Middle markets through its investments in financial institutions ("FIs") and facilitation of skills training and knowledge transfer to both financial institutions and their SME clients.
Our vision is to:
- Create a pan-African network of FIs dominant in the provision of financial services to Missing Middle markets.
- Invest over $200m in investee companies in 10-15 countries and generate attractive commercial returns to our investors
- Develop "Missing Middle" markets in the countries in which we invest to create efficient and healthy economies, and a thriving SME sector.
- Create a professional environment and structure so that untapped potential may be realized at multiple levels so that:
- Investee FIs: may realize their full economic and market potential focusing on key value drivers: revenue and earnings growth, efficiency improvements, and effective capital structure.
- SME Clients can realize their aspirations: owning their own homes, generating wealth to purchase education and health services, and increase the ability of their families to cope with emergencies and adverse events
- Investee management and their staff can realize their full professional potential, particularly in the area of leadership.
- Generate economic, environmental, and social benefits that:
- Add to stronger economies,
- Create more developed markets,
- Build a larger and stronger SME sector, and
- Develop better standards of living for individuals and households
- Facilitate creation of 4 million jobs over 7 years in Sub-Saharan Africa
"Missing Middle" Focus
With traditional banks servicing the higher end of the market and microfinance institutions ("MFIs") servicing the poorest of the poor, there is a gap in providing financial services to unbanked and under-banked individuals and SMEs that fall between them - the Missing Middle. There is a clear market opportunity to invest in FIs that provide affordable, appropriate and accessible financial services to meet the neglected demand of the Missing Middle. SDG looks to build value by strengthening and refocusing FIs to service this market segment with a range of financial services including credit, savings, money transfer, and other transaction-based services.
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Small and Medium Enterprises (SMEs):
SMEs have a clear role to play in economic growth and development by becoming major employers of labour and generators of wealth in Africa. While high income countries see faster growing and more numerous SMEs, Africa sees fewer, more static SMEs as a result of business climate barriers and small local markets. More African enterprises report that access to and the cost of finance are major constraints on the operation and growth of their firms than do entrepreneurs in other regions.
In our target markets, few SMEs have access to formal finance. While the SME market holds significant opportunity, few FIs have skills and knowledge to compete successfully. As a strategic investor, SDG provides technical expertise to FIs to become dominant market players in missing middle markets.
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Unbanked: According to the World Bank, less than 20% of African households have any access to formal finance. The use of ICT, new business models, and alternative distribution channels, offers new opportunities for FIs to reach this segment of the population effectively and profitably with saving, transaction banking, and credit products. As a strategic investor, SDG works with companies to bring the unbanked onto a financial grid with a particular focus on unbanked individuals employed by SMEs.
- Housing Finance: Sub-Saharan Africa lacks affordable long-term housing finance for middle and low income segments. "Missing" housing finance relates to the fact that Banks have limited access to long term, local funding to structure mortgage products and limited housing stock. As a strategic investor, SDG works with investees to 1) structure medium and long term financing, 2) develop housing finance products and 3) collaborate with developers to create housing stock.
