SDG Impact Finance Initiative

The financing gap in view of reaching the SDGs is estimated to be at least USD 2.5 trillion per year in developing countries. Moreover, the implementation of the Paris Climate Agreement will require nearly USD 23 trillion of investment over 25 years. Philanthropy and government aid cannot cover these huge gaps, and there are increased expectations that private investments shall play a more prominent role. Switzerland is one of the major financial centers of the world and has become the leading global hub for impact investments in developing countries and other innovative financing initiatives over the past years.

While investors increasingly recognize and tap into opportunities with development impact, there are still several factors that hinder their ability to reach scale and expand the geographic focus of the investments to Least Developed Countries (LDCs) and Low Income Countries (LICs). These include the high level of real or perceived risks, the considerable transaction costs and the relatively small investment volumes (ticket sizes), but also the lack of bankable investments as well as widely recognized impact measurement and management standards and rating systems. All this calls for an increased level of public-private collaboration in order to overcome the existing market failure.

SIFI might become an important element in underpinning Switzerland’s ambitions to strengthen its international leading role in the areas of impact investing and sustainable finance. This is in line with Switzerland’s interest.

The overall goal of the SDG Impact Finance Initiative (SIFI) is to contribute to the achievement of the SDGs in developing countries by enabling innovative and scalable impact investment solutions.

Through its contribution, the SDC wants to ensure i) SIFl’s orientation towards SDC’s thematic priorities, ii) a strong focus mainly on LDCs and LICs and, with lower priority, Low-Middle Income Countries (LMICs) as well as iii) particular attention to rural areas within these countries, in order to reach out to poor, disadvantaged or vulnerable population groups. With this orientation, SIFI shall benefit its target groups through the achievement of concrete results in line with the SDG targets of their countries. 

Direct beneficiaries are appIicants under the innovation and product windows as well as other partners (such as academic actors or associations) with whom SIFI will collaborate on framework conditions.

End beneficiaries are individuals (incl. poor, disadvantaged or vulnerable population groups) in developing countries that will benefit from concrete results achieved by impact investments in their countries.

Outcome 1 (to be reached via SIFl’s Innovation Window): Selected public and private organisations elaborate and successfully test innovative impact investment products, which propose new solutions for addressing socio-economic and environmental constraints of poor, disadvantaged or vulnerable groups in different developing contexts.

Outcome 2 (to be reached via SIFl’s Product Window): Selected impact investors undertake more and better scalable impact investments benefitting also poor, disadvantaged or vulnerable groups in different developing contexts and addressing specific – incl. underserved - SDGs.

Outcome 3 (to be reached via SIFl’s Framework conditions Window): Selected organisations such as academic actors or associations contribute to improve the framework conditions for impact investing in Switzerland.

Principaux résultats attendus:  

• One to two calls are launched during the period 2022- 2025 annually under the innovation as well as under the product window, awarding at least 21 winners under the innovation window and 14 winners under the product window
• 4 projects are selected to improve framework conditions in impact financing
• The co-operation between SIFI and SDC is established allowing the SDC to decide on its possible future engagement with SIFI and impact investors at large 

Principaux résultats antérieurs:   SIFI is a new initiative, therefore no previous phases have been financed by the SDC. However, SDC’s contribution to SIFI will draw from the experiences in related programmes such as the contribution to the Swiss Capacity Building Facility (SCBF), a platform of Swiss financial sector actors aimed at providing Technical Assistance to financial institutions in developing countries, or the experience in providing impact-linked finance to social enterprises in order to attract impact investments.