Social Merchant Bank Approach^SM

Through its Social Merchant Bank Approach^SM (SMBA^SM), S³IDF provides financing, technological know-how, and business training to enterprises and projects that supply pro-poor and pro-environment infrastructure and productive-use services. By working locally and providing bundled services, S³IDF not only addresses the need for infrastructure but does so in a way that leads to healthier and more self-reliant communities. S³IDF also empowers other institutions and groups to implement the SMBA^SM through its dissemination initiatives. S³IDF specifically designed the SMBA^SM to be widely applicable across technologies and geographies so that pro-poor and pro-environment infrastructure and productive-use services can be scaled more quickly and have larger community impacts. The SMBA^SM addresses the problems facing the poor by simultaneously overcoming their lack of access to financing, knowledge of technologies and/or business experience. It addresses this lack of access by using innovative co-financing mechanisms and on-the-ground support. Most importantly, S³IDF’s SMBA^SM leverages philanthropic and development capital to mobilize local private capital to finance or co-finance viable enterprises. As a result, entrepreneurs are able to receive financing for viable projects that are often non-bankable under “business as usual” practices. Combining this financial leverage with S³IDF’s business development, supply-chain assistance, and technology knowledge, enables the poor to gain access to basic services, employment, and asset-creation opportunities. These benefits often also help to improve standards of living and stimulate local economic development. The salient features of the SMBA^SM are:

Explicitly Pro-Poor: The investments S³IDF supports through its SMBA^SM must explicitly benefit the poor as customers, employees, and/or asset owners.

Financial Viability: The enterprises incubated by S³IDF operate in a financially sustainable manner, including the payment of loans, from implementation onwards.

Leverage: S³IDF catalyzes participation by local financial institutions in its enterprise investment projects through innovative financing mechanisms (e.g. debt, equity, partial guarantees, margin money financing). Every dollar that S³IDF invests in micro-, small- and medium enterprises typically leverages at least two dollars in capital injected by local entrepreneurs, banks, and, in some cases, by government subsidies and equipment suppliers.

Partnering and Linkage Approaches: S³IDF works extensively with technology providers/equipment suppliers, financial institutions, local nonprofits and other groups, including government agencies. Through these partnerships, S³IDF provides financing, technological know-how and capacity building assistance to small, pro-poor projects and enterprises.

Highly Replicable: The SMBA^SM is designed to be widely applicable geographically and to be widely adaptable across various financial and infrastructure conditions. The investment deals it prioritizes are ones that are highly replicable, requiring only minor modifications to adjust for location particulars.

Environmentally Responsible: S³IDF promotes technologies and supply-chain improvements that produce local public heath benefits and local and global environmental benefits, including carbon offsets.