Macquarie bets impact investing can fill an Asian financial access gap for the ‘missing middle’

Macquarie bets impact investing can fill an Asian financial access gap for the ‘missing middle’

Macquarie has committed 1 million Australian dollars to an impact investing fund developed in partnership with the NGO Good Return, focusing specifically on financing opportunities for female small-business owners in regions such as Cambodia.

Globally, many women entrepreneurs face significant barriers to accessing essential financing. The Women Entrepreneurs Finance Initiative, a partnership anchored by the World Bank, estimates that approximately 400 million female business proprietors encounter difficulties securing loans. Addressing this challenge could potentially add as much as $6 trillion to the global economy.

In the Asia-Pacific region, traditional banking institutions often exhibit reluctance to lend to women entrepreneurs. This reluctance is influenced not only by prevailing stereotypes but also by lending criteria that fail to accommodate the operational dynamics of female-led small and medium-sized enterprises. Diana Tjoeng, head of Asia for Sydney-based Good Return, highlights that many women business owners may lack formal identity documents and established credit histories despite successfully managing their businesses for extended periods.

“The specific barrier is capital,” states Lisa George, global head of the Macquarie Group Foundation. “Without access to capital, it becomes exceedingly challenging to achieve social mobility and educational advancement.”

Earlier in the year, the Macquarie Group Foundation made a significant commitment of 1 million Australian dollars (approximately $696,000) to the impact investment fund managed by Good Return. This initiative is designed to broaden financial access for women-led enterprises throughout the Asia-Pacific region. The collaboration between the two organizations dates back to 2022 when Macquarie participated in a proof-of-concept guarantee fund aimed at supporting women-led small and medium enterprises in Cambodia and Indonesia.

Good Return’s inaugural impact investment fund successfully raised 1 million Australian dollars. This foundational capital was utilized as loan guarantees for local financial institutions, catalyzing 5 million Australian dollars (about $3.5 million) in loans to over 600 small businesses. The fund specifically targets the "missing middle," providing loans ranging from approximately $1,000 to $100,000.

“Macquarie was thoroughly impressed with the outcomes generated by the first fund,” remarks Shane Nichols, CEO of Good Return. “Their team offered pro bono assistance in designing and structuring our new fund.”

Tjoeng, serving as Good Return’s head of Asia, recounts the success story of a female farmer in Cambodia who successfully secured an $8,000 loan from a commercial bank without needing collateral, due to the support of Good Return’s initial fund. This funding enabled her to construct two greenhouses, thereby increasing her cabbage harvests alongside her rice production and subsequently enhancing her income.

The second fund established by Good Return is structured as an evergreen vehicle, meaning it recycles proceeds back into new loan guarantees rather than returning capital to investors at a set termination date. The organization anticipates that this model could facilitate 50 million Australian dollars ($35 million) in loans for women-led businesses every five years.

Corporate philanthropy

For Macquarie, the partnership with Good Return is part of a broader legacy of corporate philanthropy. The Macquarie Group Foundation was founded in 1985 by David Clarke, who was then the executive chairman of Macquarie.

“As a company is a member of the society in which it operates, it follows that one of its important duties is to work in a multitude of ways for the betterment of society,” Clarke articulated at the foundation's inception. Since its establishment, the foundation has contributed a cumulative total of 698 million Australian dollars ($487 million) to community organizations.

“Our founding chairman recognized a company’s responsibility to support the communities in which it operates,” explains George. “This belief extended not only to the corporation as a whole but also to the individuals within it.” In the most recent fiscal year, more than one-third of eligible global staff participated in community service initiatives, which George notes include activities such as conducting interview and CV workshops for young Australians and refugees.

“The most significant return we garner from corporate philanthropy is in employee engagement,” she adds. “This creates a positive halo effect for our most vital stakeholders—our employees.”

While a majority of the foundation's efforts are concentrated in Macquarie's home country of Australia, focusing on employment support for Australians, George notes that “Good Return is likely an exception rather than the standard." The foundation integrated impact investing into its operational strategy five decades ago to enhance its traditional grantmaking approach, aiming for a model that yields returns to reinvest in further initiatives.

This approach diverges from attitudes observed in the United States, where the principle of stakeholder capitalism—which asserts that corporations owe responsibilities to employees, customers, and communities in addition to shareholders—faces political resistance. Prominent U.S. corporations like BlackRock, Meta, and Bank of America have subtly retreated from their commitments to diversity, equity, and inclusion.

Conversely, George perceives a different trajectory in the Asia-Pacific region, where increasing wealth is fostering a new generation of business leaders inclined to formalize their social commitments, akin to practices established by their European and North American counterparts.

Microfinance’s fall from grace

The premise that small amounts of credit have the potential to elevate nations from poverty was once held in high regard within international development discourse. Popularized by Nobel laureate Muhammad Yunus with his Grameen Bank in Bangladesh, this model rapidly gained traction across South Asia, sub-Saharan Africa, and similar regions.