Social performance at the heart of the investment process

A strong vision and mission

Our actions are guided by a strong vision:

LMDF aims to contribute to the alleviation of poverty by supporting organisations that empower people and stimulate entrepreneurship, with a particular focus on the most excluded. The Fund facilitates access to responsible finance by building sustainable links between investors, microfinance institutions and ultimate beneficiaries.

In order to realize our vision, LMDF:

  • Constitutes an attractive investment proposition by balancing stable financial returns to investors with the provision of responsible financial services to the poor.
  • Specializes in facilitating the growth of promising emerging microfinance institutions which address the financial needs of marginalized communities and individuals in developing countries.
  • Enables the development of micro-entrepreneurs in areas where unmet needs are largest, particularly among women, youth and rural populations.
  • Is accessible to public, institutional and retail investors and is accountable for reaching both social and financial objectives, and transparent in its reporting.

From objectives to results: The social performance process

We understand social performance as the degree to which our investees translate their vision and mission into operations, day-to-day decision making and ultimately achieving impact on the ground.

This is the reason why:

  • LMDF is collaborating with a not-for-profit organisation as the investment advisor, ensuring in-depth social performance analysis
  • the Fund’s governance structure gives special governance rights to impact first investors
  • a detailed and propriety due diligence tool was developed to cover both financial and social dimensions

Measuring results

Beginning of 2015, LMDF published a detailed impact report analyzing to what extend our investment portfolio lives up to our objectives. Although methodologically challenging, the report covers eight indicators in two areas: (1) the extend of the Fund’s focus on poverty and exclusion and (2) the quality of services microfinance institutions provide and their responsible behavior towards clients and staff.

The results are encouraging. LMDF is performing strongly regarding poverty focus, both in terms of the countries where we are active but also the MFIs we chose to finance. Financing of smallholder agriculture and women is relatively high compared to other microfinance investment funds.  MFIs in LMDF’s portfolio offer a broad range of services, which they provide efficiently. Most subscribe to the Client Protection Principles, a set of emerging standards in microfinance establishing what constitutes fair and equitable treatment of clients.