Four European development finance institutions (DFIs) recently sold their debt holdings in Plantations et Huileries du Congo (PHC), a palm oil business in Democratic Republic of the Congo, to Maku Holdings, an affiliate of Kuramo Capital Management, which has offices in Kenya, Nigeria and the US. The DFIs are the Belgian Investment Company for Developing Countries (BIO), the UK-based CDC Group, Deutsche Investitions-und Entwicklungsgesellschaft (DEG) and Nederlandse Financierings-Maatschappij voor Ontwikkelingslanden (FMO).
The DFIs began investing in PHC between 2013 and 2015 out of concern that the firm would fail and thus deprive the country of thousands of jobs and a significant source of cooking oil. They since have concluded that PHC “has been brought back from the brink of collapse.” To acquire the DFI funding, the firm agreed to be bound by an Environmental and Social Action Plan (ESAP), and the firm has spent USD 7 million since then on access to clean water as well as education and medical services. Based on complaints filed via DEG and FMO in 2018, a group of PHC’s neighbors acquired funding for mediation regarding the ongoing impact of PHC’s practices on human rights and other social concerns. Both the ESAP and the mediation process are to continue into the future, the latter with additional funding from DEG and FMO.
The goal of BIO is to “inves[t] in small and medium-sized enterprises, financial institutions, and infrastructure projects, contributing to socio-economic growth in developing countries.” As of 2020, it reports a portfolio of 144 investments, with total assets valued at EUR 1.1 billion (USD 1.2 billion).
Established in 1948, CDC was formerly known as the Colonial Development Corporation. It issues debt, equity and “fund-of-funds” investments with the aim of fostering growth in “sustainable” businesses to raise living standards in Africa and South Asia. During 2020, CDC reported issuing new commitments worth GBP 1.75 billion (USD 2.47 billion), ending the year with an investment portfolio of USD 6.2 billion.
DEG is a member of the KfW Group, a development finance institution formerly known as Kreditanstalt für Wiederaufbau. KfW, which deployed funds totaling EUR 107 billion (USD 122 billion) during 2021, was founded in 1948 and is owned by the federal and local governments of Germany. DEG reported 2020 income of EUR 547 million (USD 625 million) on assets totaling EUR 6.34 billion (USD 7.24 billion).
Established in 1970, FMO is 51-percent held by the Dutch government and 49-percent by private investors. The institution works toward the UN’s Sustainable Development Goals by funding capacity development and placing debt and equity investments in sectors such as agribusiness, financial institutions and energy. For the first half of 2021, FMO reported a net profit of EUR 198 million (USD 224 million) on a portfolio valued at EUR 12 billion (USD 14 billion).
By Sheen Gupta, Research Associate
Sources and Additional Resources
FMO press release
https://www.fmo.nl/news-detail/d2b81cca-3eac-44d2-aaa7-211b5b154c10/european-dfis-sell-debt-in-plantations-et-huileries-du-congo-sa-(phc)
PHC website
https://phc-drc.com/
Kuramo Capital Management homepage
https://www.kuramocapital.com/
BIO homepage
https://www.bio-invest.be/
BIO 2020 annual report
https://www.bio-invest.be/en/annual-report
CDC Group homepage
https://www.cdcgroup.com
DEG homepage
https://www.deginvest.de/
Previous MicroCapital article on BIO
https://www.microcapital.org/microcapital-brief-bio-investing-1-5m-in-finca-malawi-for-microfinance-sme-lending/
Previous MicroCapital article on CDC
https://www.microcapital.org/microcapital-brief-commercial-bank-of-ceylon-combank-secures-50m-loan-from-cdc-group-to-promote-sme-lending-climate-projects-in-sri-lanka/
Previous MicroCapital article on DEG
https://www.microcapital.org/microcapital-brief-banco-santander-deg-idb-invest-itau-bba-loan-150m-to-banco-pan-to-boost-digital-financing-of-vehicles-microenterprise-consumption-in-brazil/
Previous MicroCapital article on FMO
https://www.microcapital.org/microcapital-brief-fmo-lends-5-7m-to-finelle-of-groupe-cofina-to-support-women-led-msmes-in-agriculture-sector-of-cote-divoire/
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