CDC, FMO, SDC launch Nepal investment platform
European development finance institutions CDC Group and FMO and the Swiss Agency for Development and Cooperation (SDC) have jointly launched a market building platform in Nepal.
It is described as the first initiative of its kind in Nepal. The idea is to support foreign direct investment by providing flexible capital, partnering with other development banks, and promoting local entrepreneurs and private innovation activities.
The platform, known as Nepal Invests, was initially coordinated in January 2020 by SDC and the Swiss Investment Fund for Emerging Markets. Participants at the time included CDC, FMO, the EU, the World Bank, International Finance Corporation, Asian Development Bank, and France’s Proparco.
The investors identified several priorities around increasing investment flows into the country, improving business standards, and supporting the small to medium-sized enterprise (SME) sector. The first 18 months of operation have been planned as a discovery phase, with a larger market-shaping phase to follow. Much of the current strategy is focused on pandemic recovery.
“The COVID-19 pandemic has challenged the world. For Nepal, it is clear that there will be significant economic pressure as a result of potentially volatile remittance inflows, and a surge in demand for finance at a time when the crisis has significantly reduced access and option of capital for SMEs,” CDC, FMO, and SDC, said in a joint statement.
London-based CDC hired Rabi Rayamajhi last year as its first country representative for Nepal. He will be based in Kathmandu and support a recently announced South Asia investment drive. CDC made its first investment in Nepal in 2019 with a $15 million commitment to NMB Bank, one of the leading local lenders with more than 100 branch locations.
The Hague-based FMO describes itself as a pioneer of development finance in Nepal. Its previous activity includes an LP commitment to the Dolma Impact Fund, which raised $37 million for a top-up vehicle in 2018, extending a $26 million close in 2015. FMO has also invested in NMB directly with a view to professionalizing operations and making it the country’s first digital bank.
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