By supporting the ASEAN Frontier Markets Fund (AFMF), Business Support is creating significant impact by providing Techincal Assistance to local SMEs in Cambodia and Laos, enhancing their financial performance and ESG efforts through the Business Improvement Facility (BIF3).
Empowering SMEs in Frontier Markets: The Impact of AFMF’s Business Improvement Facility III
The ASEAN Frontier Markets Fund (AFMF) is one of Norfund’s many fund investments, primarily providing growth capital to local SMEs in Cambodia and Laos. While building out the nascent private capital markets in frontier ASEAN countries, they maintain rigorous ESG standards in their investments. Both at time of investment, and throughout the holding period, AFMF enables their portfolio companies to enhance their financial performance, as well as improving their efforts on ESG. This is achieved through their technical assistance facility “Business Improvement Facility III”
The Business Improvement Facility III (BIF3)
BIF3 is a vital component of EMIA’s managed funds including AFMF, designed to support portfolio companies in enhancing their performance and adopting sustainable practices. In their preceding funds, the fund manager EMIA successfully launched BIF1 and BIF2, and mobilized around US$2.4M of which about US$1.8M were from its LPs’ TA grants and US$0.62M directly co-funded by its portfolio companies. The funds have supported 17 SME portfolio companies with more than 60 projects. With this matching grant approach, the companies demonstrated financial commitment, reinforcing their ownership and dedication to continuous improvement. The impact of BIF1 and BIF2 has been evident, and thanks to these initiatives, the companies have achieved significant milestones such as the formulation of long-term business strategies, successful new product launches, improved performance efficiency, implementation of environmental and social impact assessments, and enhanced adoption of ESG standards as well as certified carbon trading scheme, among others. While 30% of the projects in BIF1 and 2 were targeting ESG improvements, BIF3 will have an even greater focus on climate, gender equality and social impact.
“BIF3 not only continues the impactful work of its predecessors but also places a stronger emphasis on ESG, ensuring that climate, gender equality, and social impact are at the forefront of our initiatives,”
Savin Mao, EMIA, CIO and chair of ESG committee
Norfund’s support to TAFs is particularly crucial in markets like Cambodia and Laos, where the private capital ecosystem faces significant challenges. These markets often struggle to attract private capital investors due to gaps in the ecosystem, such as limited growth-stage funding and a lack of established financial markets. In ASEAN, research has shown that firms that disclose their ESG practices have been found to attract more investment and achieve higher profitability. By enhancing the sustainability and financial viability of AFMF’s portfolio companies, BIF3 makes these businesses more attractive to potential investors. This targeted support helps bridge the gaps in the private capital ecosystem, attracting much-needed investment in these challenging markets.
Enhancing safety and quality at Full Well Logistics
Full Well Logistics, a Cambodian company incorporated in 1998, offers dry and cold storage along with trucking services. As part of the Business Improvement Facility III, AFMF has initiated and co-financed two critical projects to enhance Full Well Logistics’ operational safety and quality standards.
Full Well Logistics is undertaking a comprehensive fire safety audit for its warehouse facilities. This audit aims to ensure compliance with both local and international fire safety standards. By identifying and mitigating potential fire hazards, the audit will significantly enhance the safety of employees, visitors, and the surrounding community, ultimately protecting lives and property and derisking the company for potential international investors.
In addition to the fire safety audit, Full Well Logistics is also focusing on developing a robust Quality, Health, Safety, and Environment (QHSE) management system. This project involves establishing comprehensive QHSE policies and procedures, conducting risk assessments, and providing training for staff. These initiatives are designed to ensure that Full Well Logistics not only complies with regulatory requirements but also adopts best practices in safety and quality management. The impact of these efforts will be seen in improved operational efficiency, reduced risks, and a safer working environment for all employees.
Through these proactive steps under BIF3, Full Well Logistics is setting a strong foundation for safety and quality, ensuring a secure and efficient operation that benefits both the company and its stakeholders.
Intervention facts
Norfund’s support: USD 100.000
Norfund’s cost share: 19 %
Intervention period: Mar 2024 – Mar 2027
Why Norfund supports Technical Assistance Facilities (TAFs)
Norfund leverages TAFs to enhance our impact and utilize local expertise. In 2024, 49% of our total project funds were allocated to TAFs. Our fund’s TAFs receive grants from Norfund, which are then reallocated to the fund’s portfolio companies to boost their capacity, performance, and impact. This approach allows us to:
- Strengthen our fund managers.
- Enhance their capacity for providing Technical Assistance.
- Utilize their local expertise in specific sectors.
- Extend our reach to a growing number of companies, beyond our direct capacity.
By supporting TAFs, Norfund can effectively amplify its impact, ensuring that our investments are not only financially successful but also contribute to sustainable development in the regions we operate.