Kathmandu, Nepal, June 12, 2017—IFC,
a member of the World Bank Group, is investing another $7.3 million into
Business Oxygen (BO2), Nepal’s first private equity fund. The investment
is being made through two funds managed by IFC, financed by the Climate
Investment Funds and United Kingdom’s Department for International Development
(DFID). This investment will help BO2 increase its financing for small
businesses to help them cope with climate change.
BO2, makes equity investments in Nepal’s high-growth SMEs, helping them
achieve their potential and create more jobs. IFC has previously provided
$7 million of its own funds to BO2 in 2015. In this fresh round of financing,
DFID brings in $3.7 million while the Climate Investment Fund’s Pilot
Program for Climate Resilience contributes $3.6 million.
The BO2 investment is part of IFC’s SME Ventures program for low-income
countries where such funding is not available because of the risk profile
and difficult operating conditions. For instance, only 39 percent of Nepal’s
SMEs have access to finance, leaving a gap for funds such as BO2 to bridge.
“IFC’s increased support to Business Oxygen will boost our ability to
engage with more small businesses,” said Siddhant Raj Pandey, Chairman
and CEO of WLC Ventures, which manages BO2. “It puts us in a position
to use innovative products and services to provide opportunities for farmers,
create quality jobs, and promote energy efficiency.”
Small and medium enterprises (SMEs) are
vital to Nepal’s economy. The country’s 111,442 SMEs employ 1.75 million
and account for 22 percent of the gross domestic product.
“Business Oxygen will help demonstrate
the viability of climate-resilient investments in Nepal to other investors,
helping to boost the market for similar investments here and in other frontier
markets,” said Mohammad Rehan Rashid, IFC’s Resident Representative for
Nepal. “The fund’s ability to provide risk capital to SMEs in Nepal provides
a vital solution for firms too small or too new for traditional commercial
“The fund has the potential to create jobs and support economic growth.
We know how important SMEs are in Nepal and we at DFID Nepal are committed
to supporting them to achieve their growth potential,” said Gareth Weir,
Deputy Head of DFID Nepal.
IFC aims to double its climate-related investments between 2016 and 2021
to 28 percent of its financing. A recent World Bank study showed that climate
change could push more than 100 million people back into poverty over the
next 15 years.
IFC, a member of the World Bank Group, is the largest global development
institution focused on the private sector in emerging markets. Working
with more than 2,000 businesses worldwide, we use our capital, expertise,
and influence to create markets and opportunities in the toughest areas
of the world. In FY16, we delivered a record $19 billion in long-term financing
for developing countries, leveraging the power of the private sector to
help end poverty and boost shared prosperity. For more information, visit
About the Pilot Program for Climate Resilience
The Pilot Program for Climate Resilience (PPCR) is a funding window of
the Climate Investment Funds for climate change adaptation and resilience
building. Using a strategic programmatic approach, the PPCR assists national
governments in integrating climate resilience into development planning
across sectors and stakeholder groups. It also provides additional funding
to put climate resilience plans into action and pilot innovative public
and private sector solutions to pressing climate-related risks. For more
information, visit www-cif.climateinvestmentfunds.org.
The United Kingdom of Great Britain and Northern Ireland’s Department
for International Development (DFID) leads the UK’s work to end extreme
poverty. Its objective is tackling the global challenges of our time including
poverty and disease, mass migration, insecurity and conflict. Through targeted
assistance, DFID is working to build a safer, healthier, more prosperous
world for people in developing countries and in the UK too.