ADA launches impact financing tool to support innovative entrepreneurship in developing countries

• First Société à impact sociétal (Societal Impact Company, SIS) dedicated to financial services opens new way of development financing for institutional and private donors
• Financing Innovation Tool will support innovative and impact-oriented SMEs, microfinance institutions and business support organisations in developing countries 
• Government-backed tool will re-invest all profits. The funding will be complemented by technical support from the Luxembourgish NGO ADA

ADA launched the first Société à impact societal (SIS) dedicated to financial services with the support of the Directorate for Development Cooperation and Humanitarian Affairs of the Ministry of Foreign and European Affairs. 

The Financing Innovation Tool (FIT) meets a strong demand for a secure, government-backed channel for ESG financing which benefits from an NGO’s longstanding experience. 

Helping innovative businesses thrive

The Financing Innovation Tool (FIT) will contribute to closing a development gap by supporting innovative and impact-oriented SMEs, microfinance institutions and business support organisations in developing countries.

 “We regard entrepreneurship as key to creating employment and to improving living conditions in developing countries. However, many innovative enterprises and business support organisations are stifled in their development by a limited availability of funding. While public grants are insufficient to take them to the next level, international impact investors shy away from the risk of supporting them. The FIT will help to close this gap and support these entities in their transition to full financial autonomy by preparing them to access funding on the market.”

 — Franz Fayot, Minister for Development Cooperation and Humanitarian Affairs

Funding complemented with technical support

Flexible FIT financing solutions will be complemented by ADA’s support on the ground.

This will reduce risks and make the supported entities more attractive for further financing by impact investment fundsor financial institutions.

 “We will analyse the individual needs of each eligible SME, microfinance institution and business support organisation and combine a tailored financing solution with expert coaching to strengthen their internal governance and investment readiness in a holistic and sustainable manner.”

 — Patrick Losch, Chairman of ADA’s Board of Directors

Innovation as a key funding requirement

Innovation and a strong sense of initiative are key selection criteria for FIT investees. This can take the form of a service, product or business model, which constitutes an innovation for the institution itself, the sector, the market or the final beneficiaries.

FIT will build on ADA’s longstanding experience in helping entrepreneurs in developing countries to identify promising and innovative companies with a strong social mission for its investments. For example, ADA is currently carrying out due diligence assessments in preparation of FIT investments in an accelerator supporting female entrepreneurship in West Africa and a risk-sharing loan facility for students from poor areas of Rwanda.

Opportunity for institutional and private donors

While ADA and the Luxembourgish government are providing initial funding of EUR 5.5 million, FIT aims to increase this amount to EUR 10 million by 2025 with donations. All profits will be re-invested with the aim of achieving a lasting impact, thus maximizing the effectiveness of donations.

“As a Societal Impact Company, FIT presents a transparent, sustainable and long-term financing channel which complements existing philanthropy and wealth management offers such as foundations, trust funds or once-off donations. We are excited to present institutional and private donors with this unique possibility of directly supporting innovative, social enterprises in developing countries.” 

 — FIT Chairman Axel de Ville

Institutional donors and private individuals wishing to support FIT can consult the webpage www.fit-sis.lu or contact info@fit-sis.lu. 

All donations are fully tax deductible.