Tuesday, December 20, 2022

JICA, Dolma Impact sign $10 million investment pact to aid growth

Japan International Cooperation Agency (JICA) today signed a $10 million investment agreement with Dolma Impact Fund II, focusing investments in renewable energy, technology and healthcare in Nepal.

The fund also contributes to gender equality and fulfills the criteria in the ‘2X Challenge: Financing for Women’, an initiative adopted by the G7 development finance institutions, including JICA, on the occasion of the G7 Leaders' Summit in June 2018, according to a press note issued by JICA and Dolma Impact Fund, jointly. 

According to Dolma Impact Fund, the project will contribute to sustainable development goals – Goal 5 (Gender equality), Goal 7 (Affordable and clean energy), and Goal 8 (Decent work and economic growth).

Chief executive officer of Dolma Impact Fund Tim Gocher, while addressing the signing ceremony in Kathmandu through the virtual medium, said Nepal would see a huge increase in foreign direct investments in the coming future that would create more jobs, prosperity and stronger industrial development.

The Dolma Impact Fund has $100 million under management and has invested in 12 companies across energy, healthcare and technology.

“Nepal needs more aid in hospitals, trained doctors and nurses and medicines manufactured domestically, so that the country can support itself in a future crisis,” Gocher said, adding that Dolma is further investing in renewable energy apart from the existing 46.5 megawatt project (MW), with JICA. “We just do not promote and build renewable energy, we promote the capital markets too, so that more investors come into the sector.”

The Fund has invested in companies like CloudFactory, Fusemachines, Sastodeal, Upaya City Cargo, and Foodmandu. “About 15,000 employees have been created in companies that the Fund has invested in,” said Gocher.

“This is our first partnership with an investment partner in Nepal,” senior deputy director-general of the Private Sector Partnership and Finance Department of JICA Jin Wakabayashi said, adding that Dolma Impact Fund is a leading private equity fund and JICA is excited to partner with such a fund and contribute to the development of Nepal.

JICA has been supporting the Investment Board of Nepal to strengthen sources for investments, he said, adding that JICA has also been in technical cooperation for hydropower projects. “Recently, JICA has started a new technical cooperation project to support entrepreneurs in Nepal.”

JICA's investment will be mainly utilised for equity investment in healthcare companies, IT and digital companies, and renewable energy projects in Nepal. JICA’s investment is part of the final close of Dolma Impact Fund II, which brings the fund corpus to $71.96 million.

“Nepal is facing the challenge of a hollowing out of industry caused by the increased number of migrant workers, which, in turn, is due to a lack of promising domestic industries and job opportunities in Nepal,” the press note reads, adding that the fosterage of promising industries such as healthcare and the IT and digital sector, therefore, is urgently needed in Nepal. 

Dolma Fund Management contributes to the development of the stock market and the private equity fund market in Nepal.

Although Nepal experienced a temporary economic downturn due to the earthquake in 2015, the economy has revived since then and the country is now expected to graduate from the Least Developed Countries (LDC) category by 2026. On the other hand, Nepal is facing the

challenge of a hollowing out of industry caused by the increased number of migrant workers, which in turn is due to the lack of promising domestic industries and job opportunities in Nepal.

Therefore, the fosterage of promising industries such as healthcare and the IT/digital sector is urgently needed in Nepal, the press note reads. “In some areas, however, Nepal has a natural advantage, being blessed with abundant water resources and an economically viable hydropower generation potential estimated at around 42,000 MW. Hence, Nepal is expected to expand its renewable generation capacity to contribute to the reduction of greenhouse gas emissions in South Asia.”

DFM manages impact investment funds that promote industrial development, employment creation, and renewable energy development.

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