AFRICA – The United States Agency for International Development (USAID), through its Office of Private Capital and Microenterprise (PCM), has awarded Palladium a USD 250 million contract known as CATALYZE.
CATALYZE is a project by USAID aimed stimulating impact investments in frontier markets and social sectors – such as education – which remain largely left out or underserved.
According to the USAID, a major barrier to impact development in frontier markets is the risk involved, as there is a lack of evidence that investments in social services in fragile states can generate a risk-adjusted rate of return.
But there are pilots and models that show promise – such as a microfinance bank that provides student loans in Sub-Saharan Africa, and a for-profit private education model in India.
USAID argues that private capital can help develop and scale such models for the greater benefit of the people living in developing nations.
The agency said that it awarded the CATALYZE contract which will facilitate the mobilization of USD 2 billion in blended finance for developing countries over the next eight years.
According to Erin Endean, Vice President of Economic Growth at Palladium, the company’s “current work mobilizing private capital in Ghana and Kenya serve as models for the types of blended finance initiatives that could be implemented under CATALYZE.”
The project will help investors to explore and find commercially viable opportunities and approaches to creating jobs, developing sustainable social services, tightening and rationalizing supply chains, and advancing inclusive growth.
CATALYZE will also seek to optimize the efficiency of blended finance deployment by broadly sharing lessons and insights, introducing common tools and approaches, and connecting advisors with potential investors and investees.
It will also ensure the policies and laws that govern investment make it as reasonably easy as possible for people to put their capital in and get their returns out of these new places.
USAID hopes that the new contract with pallidum will accelerate the attraction of sustainable sources of capital to initiatives and investments with promising ideas for improving the lives of poor and disadvantaged communities around the world.