Over the last few months, two sobering statistics should have caught the attention of all working in the impact investing and international development sector.  

  1. There is a US$4.2 trillion per year financing gap to achieve the SDGs in emerging markets
  2. There is a US$5.2 trillion per year financing gap for micro, small and medium sized businesses in emerging markets.

While not a perfect circle, the Venn diagram here has significant overlap – to achieve the SDGs we have to invest in micro, small and medium sized enterprises (MSMEs)

It is well understood that MSMEs are the lifeblood of any economy. The UN Capital Development Fund (UNCDF) points out that MSMEs create jobs (7 out of 10 jobs in emerging markets), drive economic growth (40% of emerging market GDP) and innovation, and deliver vital goods and services in communities. The links to the SDGs here are clear, whether it be SDG 1 (No Poverty), SDG 5 (Gender Equality), SDG 9 (Industry, Innovation and Infrastructure) or, of course, SDG 8 (Decent Work and Economic Growth). 

However, these SDGs are unachievable without fueling micro, small and medium business activity in emerging markets through catalytic and appropriate funding.

This clear synergy between MSMEs and the SDGs is not rocket science, novel or even new! Yet the financing gaps grow, the missing middle in impact finance persists, and the potential of MSMEs to deliver meaningful community development outcomes remains unrealised. 

The UNCDF summarises the key barriers to addressing the ‘missing middle’ as:

  •     Transaction and due diligence costs
  •     Risk perception
  •     Investment readiness

On the surface, each of these barriers seem sensible and rational when it comes to deploying capital. The hesitancy of capital owners to invest in MSMEs is understandable if the primary outcome they are looking for is to maximise risk adjusted returns over the short to medium term.

For us at LendForGood, this underlying worldview, whereby investors are working with a narrow and short term view on risks, is at the heart of these barriers Crucially, these barriers are also often compounded in an international development context: whereby investing in foreign markets can be perceived as adding a further layer of administration or risk to investors. While we believe it’s also possible to address the barriers through capital innovation and use of new social and digital technologies (as we are doing), such initiatives need to be combined with a shift in mindset to prioritise impact outcomes and an understanding that in a highly interconnected world, local risks are global risks. 

This brings us back to the point that achieving the SDGs means investing in MSMEs. 

How might capital flow differently to MSMEs when our first analysis is on the potential contribution it may make to closing the SDG achievement gap and avoiding the downsides at a local and global level of missing these goals by a wide margin? How might such a perspective change the calculus of capital owners regarding transaction and due diligence costs, perceptions of risk, and the investment readiness of the MSME?

Asking – and answering – these critical questions is a core part of our mission at LendForGood. Across 22 impact loans so far, we’ve presented the capital needs of MSMEs around the world in the context of the SDGs that they help to achieve. We’ve been able to mobilise AU$1.55m from our expanding global community of individuals and organisations lending their support to unlock the potential of these enterprises.  

Two examples that illustrate this clear opportunity include:

Sarvaguna Foods & Kitchen in Nepal borrowed AU$90k on a 36 month term to fuel their mass catering business, providing over 75 direct local jobs already, feeding 1000s of school children nutritious meals, and purchasing more than 10,000 kgs of local produce from farmers – helping to achieve SDGs 1 (No Poverty), 2 (Zero Hunger), 3 (Good Health & Well-being) and 4 (Quality Education). 




Tanwaste in Tanzania has 3 impact loans totalling US$100k on 24 month terms to provide some of the first formal waste collection and management services in urban Tanzania. They are creating meaningful, safe and secure jobs (compared to the informal and dangerous livelihoods traditionally on offer from waste scavenging), providing cleaner urban environments and improved community health outcomes. Tanwaste’s business delivers on many SDGs, including 1 (No Poverty), 6 (Clean Water and Sanitation), 8 (Decent Work and Economic Growth), 9 (Industry, Innovation and Infrastructure), 11 (Sustainable Cities and Communities) and 12 (Responsible Consumption and Production).


Investing in MSMEs can be transformative, creating value far beyond risk adjusted returns for capital owners. 

For those of us committed to international development and achieving the SDGs, investing in MSMEs is a powerful tool. 

However, to close the trillion dollar investment gaps that persist, we need to collaborate, innovate and catalyse a shift in mindsets that puts our shared humanity and a livable planet as the primary purpose of capital. 


Cameron Neil is co-founder and Director of LendForGood.
He lives in Naarm and works globally on capital innovation for the next economy.

LendForGood is a joint venture between the teams at Red Hat Impact and StartSomeGood. LendForGood enables anyone to easily lend capital to support enterprises that solve social and environmental challenges. Every deal is endorsed by our vetted partners. Between them, they have decades of experience working with impact enterprises around the world, and understand their challenge in accessing capital at the right time, on the right terms, to fuel their growth and meet business needs. They also share a belief in, and commitment to, the power of the crowd and community and that democratising participation in impact investment is necessary to create lasting community wealth.

*Feature image credit: Tanwaste, Tanzania.