Belgian Investment Company for Developing Countries (BIO)
Belgium recognises the positive effects of investments in the private sector aimed at fighting poverty and supporting sustainable development. In this field our country has a unique instrument: the Belgian Investment Company for Developing Countries (BIO). If a potential investment project could impact strongly on the development of the local private sector, foster sustainable development and fight poverty, it may be eligible for BIO funding.
BIO is a development financing institution that was created in 2001 out of a public-private partnership between the Belgian state and the Belgian Corporation for International Investment (BMI/SBI). Its mission is to support the private sector in developing countries by providing long-term financing for small and medium sized enterprises (SMEs) and microfinance institutions.
BIO has a very wide range of financial tools, including direct investment in (SMEs), and indirect investment via microfinance institutions (financial institutions or investment funds). In Africa and Asia, SME-related activities account for practically the entire budget, whereas in Latin America microfinance institutions receive the lion’s share. BIO is active in around 60 countries.
Belgian expertise with SMEs
SMEs in developing countries find themselves facing structural problems such as complicated rules and regulations, a lack of infrastructure and a shortage of financial resources. BIO wants to supply SMEs with a better working environment and provide them with easier access to capital.
A considerable proportion of Belgium’s economy is driven by SMEs. As a Belgian investment company, BIO is in a strong position to pass on to developing countries its knowledge about how to finance SMEs.
60% of BIO’s portfolio is spent on SME activities; the remaining 40% goes on microfinance. BIO is directly involved in local SMEs by acquiring capital in them or awarding them loans.
Measuring the impact of development
To measure the precise impact of its activities, BIO introduced an assessment tool called Corporate Policy Project Rating or GPR (which stands for the German equivalent Geschäftspolitisches Projectrating). GPR is an instrument for assessing investment projects’ impact on development. For every project, it aims to ascertain (1) its impact in terms of development, and (2) the strategic role played by BIO. GPR is tailored to each project throughout the investment process, from the identification stage to its exit from BIO’s portfolio.