Private Sector Investment Finance

Ex-Ante Evaluation Report
Overseas Investment and Loan Division
Private Sector Partnership and Finance Department
Japan International Cooperation Agency (JICA)
1. Name of the ProjectCountry: Asian countries1
Project: Covid-19 Emerging & Frontier Markets MSME Support Fund
Signing Date: November 5, 2020
Investee: COVID-19 Emerging & Frontier Markets MSME Support Fund
2. Background and Necessity of the Project(1) Current State and Issues of the MSME Sector in Asian Countries
It is expected that the number of unemployed people in the world will increase byup to about 25 million owing to the pandemic of the Coronavirus disease 2019
(hereinafter referred to as "COVID-19"). In particular, COVID-19 has had a large
impact on micro, small and medium enterprises (hereinafter referred to as"MSMEs") with a weak business base (International Labor Organization (ILO),
2020). In the Asia-Pacific region where MSMEs account for 96% of enterprises
and 62% of employment (Asian Development Bank, 2018), they underpin theeconomy and employment in the region. Those MSMEs are facing cash flow
issues due to the decline in revenue, which was caused by the deceleratingeconomic activities. In particular, female-run businesses have been significantly
affected because they traditionally have poor financial access in a more
vulnerable situation, (UN WOMEN, 2020). In addition, the employment situation is
becoming worse for women who often work in informal sectors with lower wages
than men. Under these circumstances, it is an urgent issue to meet the financial
needs of MSMEs focused on female-run businesses and support women’semployment. Against these backdrops, financial institutions such as microfinanceinstitutions (hereinafter referred to as “MFIs”) play an important role as fundproviders to MSMEs (ILO, 2020)
The Project aims to improve financial access as well as maintain employment forMSMEs with a specific gender lens on female run businesses, by providing funds
through MFIs that are financed by the Covid-19 Emerging & Frontier Markets
MSME Support Fund (Hereinafter referred to as the "Fund"). The Fund ismanaged by BlueOrchard Finance Ltd (hereinafter referred to as "BO"), who has
been actively working on women’s financial access and empowerment as anexperienced fund manager in the microfinance space.
1The Fund targets “Global” while JICA fund will be earmarked for Asian countries.

(2) Japan’s and JICA's Cooperation Policy for the MSME Sector
The Japan's FY2019 Priority Policy for Development Cooperation for Asia andOceania prioritizes providing support in the area of women. In addition, theDevelopment Strategy for Gender Equality and Women’s Empowerment (May2016) formulated based on the Development Cooperation Charter (February2015) advocates women’s economic empowerment through supporting women
entrepreneurs, providing small-scale financial services such as microfinancewhich may provide deposit and insurance services, and promoting women’s
participation in local industries and the “One Village One Product” initiative.
Furthermore, in the Position Paper on Goal 5 of the SDGs announced in 2017,
JICA prioritizes women's empowerment that includes improvement of access tofunding for their economic activities.
The Project strives to improve financial access as well as maintain employment
for MSMEs with a specific gender lens on female run businesses. This isconsistent with the assistance policies of Japan and JICA and can contribute toGoal 5 (gender equality), Goal 8 (improvement of access to financial services),and Goal 17 (partnerships) of the SDGs.
3. Project Description(1) Project Objective
The Project aims at improving financial access, maintaining employment andsupporting MSMEs affected by COVID-19 in Asia, by expanding financing to MFIs
with a focus on the empowerment of women.
(2) Project Site / Target Area
Asian countries(3) Project Components① Investment amount:
US$35 million② Project description:
The Project aims at improving financial access for MSMEs in Asia under theCOVID-19 pandemic focused on female-run businesses and maintainemployment in the region, by providing funds through the MFIs that are
financed by the Fund.
③ Estimated project cost:
US$350 million (estimated at the completion of final closing)(4) Schedule
The first closing was completed in December 2020 and final closing is scheduled
for the end of December 2021. The fund is to be terminated seven years after thefirst closing (can be extended by up to two years).
-Investment period of five years (December 2020 to December 2025)-Redemption period of two years (December 2025 to December 2027)(5) Environmental and Social Consideration / Poverty Reduction / Social Development
1) Environmental and Social Consideration① Category: C② Reason for Categorization:
This project is considered to have minimal undesired impact on the environment
according to the Japan International Cooperation Agency (JICA) Guidelines forEnvironmental and Social Considerations (promulgated in April 2010).
2) Promotion of Poverty Reduction
Poverty reduction will be accelerated by expanding financial services including
deposits and borrowings for the poor.
3) Classification of Gender Related Projects【Gender related projects】■GIPs (Projects that mainly benefit women)
Reason for Categorization
The Project will expand financial services for women and encourage them toparticipate in economic activities. In addition, it will promote the improvement ofeconomic and social welfare standards as women use financial services.
4. Targeted Outcomes(1) Quantitative Effects
Indicator

Baseline(Actual Value in 2020)

Target Value (2027)【Fund closing year】

Number of MSMEs
served by MFIs in the Fundin Asia (Unit: million)

02.8

Number of jobs maintainedin Asia(Unit: million)

060

->=75

Average percentage ofwomen clients of MFI served
through the Fundin Asia (%)(2) Qualitative Effects
Improving financial access for MSMEs, maintaining employment and empoweringwomen

5. Lessons Learned from Past Project
We have learned from the ex-post evaluations of JICA’s past investments in fundprojects that it is necessary to confirm through reviewing investment pipelines of thefund that there will be enough investment opportunities. Through the due diligenceprocess, we confirmed that there are sufficient amount of pipelines, half of which
consists of existing BO clients.
6. Evaluation Results
The project is relevant to the issues of improving women's financial access indeveloping regions and is consistent with the Japanese Government’s and JICA’sdevelopment cooperation policies. It will also contribute to achieving three of theSDGs: Goal 5 (gender equality), Goal 8 (improvement of access to financial services)and Goal 17 (partnerships). Therefore, the Project is of significance and needs to beimplemented.
7. Plan for Future Evaluation(1) Indicators to be Used
As described in the Section 4 above(2) Timing
Immediately after the end of the Fund (2027)
END