UNCDF: Funding the missing middle

Bringing finance to small and medium-sized enterprises with big potential

There is a lack of investable projects and commercially viable markets in the last mile. This is a refrain we hear time and again when the following question is posed: ‘Why does investment finance frequently pass over markets in developing and least developed countries?’

The reality is that not only are there investable projects, but the existence of these projects proves the commercial viability of the markets in which they operate.

However, these enterprises often do not receive the right type of financial solutions to grow. They are usually too large to receive funding from microfinance institutions, but simultaneously below the radar for classic local commercial banks, development finance institutions and impact investors. This is what is commonly referred to as the ‘missing middle’ challenge.

To appreciate the profound reality of this challenge is to understand the potential and the pain-point around impact investment in frontier or last-mile markets.

Read the full comment in ESG Clarity‘s July digital magazine here.

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Natasha Turner

Natasha is global deputy editor at ESG Clarity, part of the Bonhill Group, and has been a financial journalist for six years. She has been shortlisted for Story of the Year and Investment Journalist of...