The Dutch Good Growth Fund supports Dutch investors in developing countries
Entrepreneurs doing business in emerging markets and developing countries, often make a great contribution to economic and social improvements. However, banks are reluctant to finance loans in developing countries due to the high risks involved. To meet the need, the Dutch Ministry of Foreign Affairs provides loans and guarantees worth up to €10 million. Even if no other bank is willing to finance a loan, the Dutch Good Growth Fund (DGGF) can provide stand-alone finance.
The Dutch Good Growth Fund (DGGF) facilitates development-related trade and investment in 68 developing countries. The fund provides Dutch companies with financial and practical assistance to invest and expand their businesses in these countries. It is administered by the Netherlands Enterprise Agency and comprises several parts: Investment, local SMEs, Import and Exports.
Investment
Many opportunities are missed in developing countries both for local development and international entrepreneurs. The DGGF investment part provides financial opportunities to SME companies with a solid business plan and track record in the Netherlands in the form of:
- Guarantees to EU and local banks in developing countries limiting risks by 60 to 80 percent;
- Up to 10 million euros in financing or co-financing with private financers for 49% of the participation;
- Loans to private equity funds for up to half of the investment.
Local SMEs
The DGGF is a ‘fund of funds’, which builds up a portfolio of intermediary funds. It particularly targets funds reaching out to young or female entrepreneurs, thus acting as a catalyst for local economic growth and stimulating underserved markets. In doing so, the DGGF contributes to knowledge transfer, increased employment and production capacity thus becoming a driver of economic growth in low and middle-income countries.
Import
The DGGF also supports Dutch importers so that they can pre-finance their local suppliers in DGGF countries. Under specific conditions, it is also possible for Dutch importers to receive finance to directly support the growth of their local suppliers as well as receiving DGGF finance for trading goods. For instance, in the case of local farmers who need additional land or machines so that they continue to be able to meet demand.
Export
The Export part helps companies wanting to export capital goods to DGGF countries with export credit insurance and export financing, thus covering the costs of manufacture and payment risks.
The DGGF programme works both ways as it helps entrepreneurs discover new markets, while developing countries benefit from new skills and knowhow, better production processes and increased employability of their citizens.
If you are an entrepreneur interested in investing or expanding your business in a developing country, contact the Netherlands Enterprise Agency (RVO.nl) at +31 (0)70 379 80 00 or email to: lejla.vandic@rvo.nl.