Day 4 – Field trip: Investment Committee

Back in Nairobi on Day 4, we had serious business to consider. The trip had not only been scheduled to learn more about digital financing, how MFIs were evolving and seeing the progress in our current investments, but was also the chance for us to hold our Investment Committee. This was a particularly special committee meeting: not only were we in sunny Nairobi among our projects, but we also had the Risk Committee joining the meeting.

Investing in Africa is something that LMDF has done rather a lot over the past years. To date, it has supported 29,791 mico-entrepreneurs across 12 African countries. In every case, the Investment Committee first approves a country note and a recommended maximum allocation to the country and then approves investment files, detailing each MFI.

Today is no exception. Our committee members, from the financial, development, government and legal sectors gathered together. After our normal portfolio review, where looked at our current projects, liquidity and other key performance indicators, we moved on to look at a country note. This time, it is an update. The political situation in West Africa is changing fast and so we want to review our allocations there. Miguel, who works in LMDF’s investment team, presented a country note looking at politics, economics, development and financial inclusion. After questions that ranged from climate change to the new ECO currency, a new allocation was approved.

We then move on to our investment files. Today was rather quiet, with only had one note on the agenda (sometimes we have as many as four!). The investment is a slightly different structure from normal as it focused on a leasing model (more on this to follow in tomorrow’s blog). The new model prompted many questions from both the investment and risk committee, ranging from anticipated social impact to the Kenyan government’s electricity agenda. After a good discussion, this investment has also been approved.

Then we move on to a more strategic review of what we had learnt from Africa and how this should be considered going forward. What is certain is that the trip has given everyone a lot of food for thought and conducting an investment committee on-site provides a very different perspective. It is one thing to hear of digital payments, challenges in harvests and Nairobi’s fearsome traffic jams, but quite another to see them in practice.