Impact investments in Myanmar gather momentum but still to scale up


Philanthropic institutions and impact investors are slowly but steadily increasing their presence in frontier market Myanmar, which elected a civilian government in 2016 after decades of military rule. 

International Finance Corporation, Omidyar Network, Base of Pyramid Asia (BOPA), Danish Investment Fund for Developing Countries (UFU), Insitor Impact Asia Fund of Insitor Management and  Asia Impact Investment Fund are among the players who have committed capital and expertise in some of Myanmar’s high social-economic impact sectors. 

Some of the data available from the state points out to pressing need for capital – debt, equity, grant, aid and knowhow – across a range of sectors that impact lives of a vast population. According to the 2014 Myanmar Population and Housing Census (undertaken by the Ministry of Immigration and Population with UNFPA), nearly 32 per cent of households in Myanmar use electricity for lighting and the rest use other sources like kerosene, battery, generator for lighting. 

Over 90 per cent of the 54 million population is estimated to be unbanked. A report by Livelihoods and Food Security Trust Fund (LIFT) in 2014 stated that in Myanmar, while 37 per cent of farmers made use of formal credit, 25 per cent borrowed from unregulated parties and the rest 38 per cent had no access to financing. 

So clearly, Myanmar is at a stage where it has the capacity to absorb patient capital leading to sustainable development across sectors. 

Some global players have responded to the market potential and need to step up their presence in the country. In May 2017, Omidyar Network, a global philanthropic investment firm, said, they were looking at increasing their investment quantum in Myanmar. To date, Omidyar has invested about $5.4 million over the last three years in Myanmar in the form of grants. It is also open to make debt or equity investments in the near future. 

World Bank arm, International Finance Corporation (IFC), that is working with the government in advisory capacity as well as investing in private and public projects, has exceeded the $1 billion mark for its accumulated investments, including those that it helped mobilise. As of July 2017, IFC has invested in 18 private projects in telecom, tourism and energy. It is also keen to invest in agriculture and education going forward. 

Impact investments in 2017 
While institutions like IFC account for the major size of the impact investment pie, some significant deals in the space in 2017 include Mandalay-based Alliance for Microfinance in Myanmar Ltd raising $5 million equity from Base of Pyramid Asia (BOPA), Danish Investment Fund for Developing Countries (UFU), Insitor Impact Asia Fund of Insitor Management and new investor, Asia Impact Investment Fund. 

This is a follow-on investment made by Insitor Management in Alliance and the investment was part of the $35 million Insitor Impact Asia fund which was raised in 2013. The fund invests from $250,000 to $3 million in social impact ventures. 

Last year also saw Proximity Designs, a Yangon-based social enterprise, receive back-to-back funding from Yoma Bank mainly to support its microfinance arm. 

Also, Japan ASEAN Women Empowerment Fund and Microfinance Initiative for Asia (MIFA) Debt Fund financed a total $4 million to VisionFund Myanmar. 

Rockstart Impact, an accelerator programme, is currently open to Myanmar entrepreneurs. The programme is looking to support 10 companies with a social impact idea. Furthermore, One to Watch, a Dutch asset management firm which manages Rockstart Impact, is hopeful to find investible SMEs in Myanmar. 

Corporate activity and CSR projects see a fillip 
Early 2017 saw Asian Venture Philanthropy Network (AVPN) holding a Myanmar Social Impact Forum to emphasise the opportunities in the space. 

AVPN is supporting a number of stakeholders who are keen on the impact investment space. 

Aung Naing Oo, director general of the Directorate of Investment and Company Administration mentioned that the Myanmar Investment Commission puts serious consideration to enhance responsible businesses. 

MIC is thinking of ways to help the community benefit from investments. Since 2013, MIC has been encouraging investors to deploy 2 to 5 per cent of their net profit into CSR activities which includes developing local businesses. However, to have a stronger impact on the development work, Oo said, “we are considering linking local SMEs with foreign direct investments.” 

Myanmar has seen some sporadic activity by overseas corporates who are scanning the possibilities in sectors like energy, healthcare and education. 

Some of the recent developments include local firm Parami Energy looking at a bigger play in alternative forms of energy in Myanmar. Rockefeller Foundation, a private philanthropy foundation based in the U.S, is keen to explore investment opportunities in the renewable energy mini-grid market both in Myanmar and Thailand. 

Nippon Foundation, the largest private foundation in Japan, is eyeing number of projects in Myanmar including healthcare as well as  energy . 

Kyaw Kyaw Hlaing, chairman of Smart Group of Companies has supported many of his employees to start their own business. And, Li Ka Shing foundation is noted to be interested in the medical sector in Myanmar, looking at setting up hospitals.

Source: www.dealstreetasia.com

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