Summary

Launched
2022
Estimated duration
8 Years
Estimated total value
$4,000,000,000.00
Regions
Africa, Asia
Locations
Bangladesh, Ghana, India, Indonesia, Kenya, Nigeria, Pakistan, Philippines, South Africa, Sri Lanka, Tanzania, Thailand, Uganda, Vietnam

Finance or protect 25 million emerging enterprises that support 100 million jobs

Summary

In 2022, LeapFrog Investments committed to scale its work to invest in and support 25 million micro, small, and medium-sized (MSME) businesses in emerging economies by 2030. By both increasing the amount of impact capital directed toward MSMEs and by working across its portfolio companies to support targeted interventions to grow this sector, LeapFrog will drive a massive effort to expand this critical engine of sustainable job growth and economic opportunity. Through this effort to directly support MSMEs, it is expected that 100 million jobs will be supported by 2030.

Approach

In 2008, LeapFrog Investments launched at CGI by committing to enabling 25 million emerging consumers with essential financial services. LeapFrog has now reached 250 million emerging consumers, 10x that commitment, and is on track to reach one billion by 2030.

Through this new commitment, LeapFrog will apply this same rapid scaling and purpose driven determination but focus instead at the enterprise level providing micro, small and medium enterprises (MSMEs) with access to the capital and business support they require to grow. Through this commitment, LeapFrog will expand its current support from 13.7 million MSMEs supporting 55 million jobs to 25 million MSMEs supporting 100 million jobs.

To achieve this growth by 2030, LeapFrog will both scale its impact investing platform to act as a magnet and conduit for capital seeking to drive impact in global growth markets, and also drive a number of targeted interventions across its businesses to accelerate MSME growth. Recent and ongoing activities along these lines include:

– earmarking of substantial amounts from investments into banks and payment platforms to be used specifically to finance and support MSMEs including LeapFrog’s recent investment in Vietnam’s HD Bank.

– inclusion and expansion of support for MSMEs in the Key Performance Indicators for a number of LeapFrog companies to ensure management of these companies have clear focus and targets to achieve these goals.

– collection of quarterly data on MSME activities in diverse portfolio companies in order to track interventions, products, and strategies that work, and enhance and scale those strategies across broader populations.

Taken together, this empirical, targeted approach to support MSMEs, alongside major commitments of capital and expertise, position LeapFrog to meet this significant commitment.

LeapFrog was one of the first global investment firms focused on meeting the essential financial needs of low-income people in developing countries. Its companies are some of the world’s largest microinsurance and microfinance providers, delivering innovative and scalable solutions for emerging consumers. The firm was created and is led by some of the world’s foremost experts in health and financial inclusion and is supported by a global roster of partners who are leading technical experts, investment professionals, actuaries, and advisors in financial services and healthcare.

*All definitions for MSME size and reach multiples are from an International Finance Corporation (IFC) report Accessing Private Sector Contributions to Job Creation which estimates a 4.6 multiple for MSME job creation.
– earmarking of substantial amounts from investments into banks and payment platforms to be used specifically to finance and support MSMEs including LeapFrog’s recent investment in Vietnam’s HD Bank. – inclusion and expansion of support for MSMEs in the Key Performance Indicators for a number of LeapFrog companies to ensure management of these companies have clear focus and targets to achieve these goals. – collection of quarterly data on MSME activities in diverse portfolio companies in order to track interventions, products, and strategies that work, and enhance and scale those strategies across broader populations. Taken together, this empirical, targeted approach to support MSMEs, alongside major commitments of capital and expertise, position LeapFrog to meet this significant commitment. LeapFrog was one of the first global investment firms focused on meeting the essential financial needs of low-income people in developing countries. Its companies are some of the world’s largest microinsurance and microfinance providers, delivering innovative and scalable solutions for emerging consumers. The firm was created and is led by some of the world’s foremost experts in health and financial inclusion and is supported by a global roster of partners who are leading technical experts, investment professionals, actuaries, and advisors in financial services and healthcare. *All definitions for MSME size and reach multiples are from an International Finance Corporation (IFC) report Accessing Private Sector Contributions to Job Creation which estimates a 4.6 multiple for MSME job creation.

Action Plan

1. LeapFrog plans to include MSME KPIs in its Financial Services investments where relevant, to track quarterly progress and identify areas of innovation and focus, with new MSME focused impact metrics due to be rolled out across our proprietary FIIRM impact reporting process by Q1 2023. These metrics will focus on the number of MSMEs reached. Where possible, LeapFrog will also work with portfolio companies to track financing provided to MSMEs led or owned by women.

2. LeapFrog will continue to earmark capital specifically to support MSME’s where relevant, across the life of future funds (2023-2030) , with targets to reach:

– 20 million MSMEs and 80 million jobs by 31 December 2026

– 25 million MSMEs and 100 million jobs by 31 December 2030

Background

Micro, small and medium-sized enterprises (MSMEs) are the backbone of emerging market economies. According to the World Bank, small and medium enterprises “represent about 90% of businesses and more than 50% of employment worldwide.” In many emerging economies, they contribute up to 40% of GDP.

MSMEs can serve as critical enablers for the transition to more inclusive and greener economies. As major employers, MSMEs have the potential to drive gender equality through the hiring and engagement of more women in economic activity. MSMEs can also support the transition to decarbonized technologies in emerging markets as both users and distributors of clean and renewable products.

Yet MSMEs often exist in a grey market outside of formal financial and business service systems. Rather than having access to traditional institutions for banking, insurance, business advice and support, and other critical services, these organizations rely instead on money lenders, family networks, and ad hoc arrangements in order to sustain their businesses. Consequently, many MSMEs struggle to grow, to offer reliable wages, and to support the health and wellbeing of their employees.

Expanding financial inclusion for MSMEs in emerging markets is critical to enabling the next four billion consumers to rise out of poverty and to giving them the tools to create safe, healthy, clean and inclusive futures for their families and communities.

Progress Update

Partnership Opportunities

LeapFrog is seeking the support of a range of partners to accelerate MSME growth. This includes investment support from sophisticated LP investors, advocacy from media partners with a focus on the MSME sector, and grant and development assistance from philanthropies and government agencies committed to job creation in emerging markets. The resources needed will be based upon evidence from across its portfolio on what drives MSME growth. For example, providing financing for women-owned and/or led MSMEs; training on specific topics that enable MSMEs to grow in the modern economy, including digital skills; or financing to support the deployment of green technologies

LeapFrog will partner with a range of organizations to deliver this commitment. It will work with sophisticated LP investors to deploy capital targeting the growth of MSMEs and job creation. It will support new and existing portfolio companies to innovate products and services that help MSMEs grow their businesses, and review and develop frameworks for collecting information on the number of MSMEs reached. LeapFrog’s distinctive value-add initiatives will enable these portfolio companies to amplify their impact on the MSME sector, through improved skills capacity (Talent Accelerator) , enhanced customer experience (CX Launchpad) , guidance to access grant capital (Impact Labs) , and media and marketing support.

NOTE: This Clinton Global Initiative (CGI) Commitment to Action is made, implemented, and tracked by the partners listed. CGI is a program dedicated forging new partnerships, providing technical support, and elevating compelling models with potential to scale. CGI does not directly fund or implement these projects.