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The needs of the financial institutions which DID supports are increasingly expanding beyond technical support. These institutions now need to strengthen their capital base to increase growth, open up new market segments and remain competitive in the constantly evolving financial market.
In recent years DID has begun establishing financial partnerships with certain foreign financial institutions, helping them consolidate their activities or grow. DID has three intervention tools: the Investment Fund for International Development (FONIDI), the Partnership Fund and the Guarantee Fund.
DID takes this approach to make capital available for financing and investment to certain institutions or specialized funds with which it maintains or could eventually maintain technical partnership links.
Business goals
DID sets the following goals for its investment efforts:
- improving access to financial services and as a result the quality of life of the disadvantaged in targeted countries
- contributing to the development of locally-owned community finance institutions that produce an impact on their communities
- constituting financial leverage to enable partnership with other private or public donor agencies (multilateral organizations)
- improving governance in financial institutions
- providing a satisfactory financial return for DID and other shareholders while applying prudential rules (diversification, proper risk assessment, etc.) to management of the funds.
A partnership approach
With financial institutions
DID may act as an intermediary between a financial institution and the international community finance investment market. In such cases, DID support takes the form of professionalizing the relationship between the institution and the investors, offering access to various networks and supporting greater self-sufficiency when searching for financing.
With other investors
DID also advocates a partnership approach among external investors in order to create added value for both investors and the institution being financed. Collaboration with other investors produces the following advantages:
1) cost savings
2) risk sharing
3) ensuring better surveillance of the financial institution
4) increasing influence over governance of the institution
5) better objectivity in the investment process.
Different types of investments
DID investments in community finance institutions may take the form of equity, debt or guarantees. Investment may be direct (when the investment is directed to an institution) or indirect (when the recipient is an investment fund specializing in community finance). DID also may finance the start-up phase of institutions it is promoting. For direct investment, DID strategy is oriented towards divestment at term in favour of the local community and investors sharing the values of the institution.
An international presence
At present, DID has direct or indirect investments in Africa, Latin America, Eastern Europe and Asia.
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