Business Oxygen (BO2) is part of IFC’s Global SME Ventures initiative, which supports the creation of risk capital funds in fragile, frontier, and post conflict markets. Besides IFC, UK Aid’s DFID and the Strategic Climate Fund’s PPCR along with WLC Ventures, a Nepali company are investors in the fund. SME Ventures is expanding to new markets where the need for risk capital remains high and potential for growth makes private equity an effective market solution.
Business Oxygen Private Limited is Nepal’s first private-equity fund. This sector-agnostic fund combines risk capital financing with advisory support to help investee small and medium enterprises develop fundamental financial systems, quality-assurance standards, and corporate governance frameworks.
Our IMPACT Agenda
Bo2’s mission is to support the building of small and medium sized enterprises throughout Nepal, to create jobs and support local economies. In Nepal, 28% people live below the poverty line. Eleven thousand SMEs employ 1.75 million people and contribute 22% to GDP. However, this is one of the neglected sectors due to lack of funding available to the SMEs. BO2 has been investing in SMEs for the past two years to boost the country’s economy by creating jobs, promoting environmental protection, raising livelihoods of people affected by SMEs. Only 39% of SMEs in Nepal have access to finance, we strive to be the alternative access to finance to narrow that gap slowly.
Impact investing is all about positively changing the livelihoods of communities. The importance of investments through PE impact funding goes beyond the Balance Sheet. The focus is to provide fundamental financial systems in the companies that PE impact invests in; quality assurance standards are developed along with corporate governance framework. The idea is to create entrepreneurs and companies along with the lines of international best practices that make differences in the local economy.
Two years down BO2 has made 7 investments in SMEs from different sectors, our companies are continuously making an effort to uplift the local economy. Whether it is assisting hundreds of dairy farmers down the supply chain for one of the doggy chew exporting companies or providing employment to thousands including representatives of marginalized and deprived communities to creating eco lodges in the Everest region or providing solar power system to provide electricity. Our companies have reached the lives of 60,000 people meeting their end needs and providing employment to over 2800 people, which is an increase of 131% since we commenced investments. Furthermore, an increase in female employment by 209% has taken place with indirect employment contribution of 6500 down the supply chain.
23% of the direct jobs supported by our portfolios are held by women. The figure is 250% increase for our company from the date we first invested.
CAUSES AND EFFECTS of
It is BO2’s prime priority to help become more resource efficient. This is important in Nepal because it is among those countries most vulnerable and least resilient to the impacts of climate change.
We do this in two ways – first by promoting low carbon growth by investing in solar energy, and secondly helping businesses that we invest in, regardless of sector, to become climate smart.
For example, our partner companies like Himalaya Chain Resort, Saral Urja, and Shanti engineering have been promoting the use of solar panel for electricity, harvesting rain water for other purpose, and recycling of dry and wet wastages.
BO2 and its SOCIAL
Bo2’s investment in the Himalayan Chain Resort (HCR) in the Khumbu Region is all about developing eco-tourism. The 10 lodges that are being built will improve overall hospitality standards and attract higher-paying customers to generate better revenues in the region. The accommodations will also facilitate better environmental and safety standards as well as improved medical and emergency preparedness in the region.
and Girls who have
suffered from Violence
Bo2 has been striving to promote women’s economic empowerment and especially of females from low background who are vulnerable. Bo2 through its partner companies has been providing employment to those women and is constantly looking forward for more ways to enhance women’s empowerment
Three years post-earthquake, remote communities in Nepal still face immense challenges – lack of access to water and electricity. In Nepal, 22% of people don’t have access to electricity and at least 20% don’t have access to clean water.
For Example, our investment in Saral Urja, a solar energy company is giving people energy and new hope by installing solar panels which provides 30 Kw electricity in Raksirang VDC, which is a home to Chepang, Dalit and Tamang people. These solar photovoltaic panels provide electricity to the solar generated pumps to distribute 150,000 liters of water per day to not only irrigate the fields, but also provide drinking water to each household through a network of pipes. This measure has changed the face of this small town in less than a year. Since its installation, every household has its own water tap and irrigation is now possible for 60 ropanis of land, in which villagers farm red chilies commercially.
Our portfolio companies have been promoting resource efficiency keeping in mind the adverse effect of climate change.
Le Sherpa restaurant, one of our partner company, is using solar panels for ancillary power, also harvests rainwater, and recycles dry and wet wastage separately.
Shanti Engineering, which fabricates metal products, has purchased two machineries and its relocation at Pokhara Industrial Park has made diesel consumption null from 1641 liters in 2017 resulting to 5% wastage consumption. Due to availability of 24 hours electricity, the overall efficiency of products produced has been increased by 15 -20% despite 25% reduction in working hours per kg produced.
BO2 through investing in agribusiness sector aims to help companies develop fundamental financial systems, quality assurance standards and corporate governance framework.
For example, Godavari International Pvt. Ltd., a manufacturer of Himalayan Churpi (Pet food) is a 100% natural product and a signature export from Nepal. On an average, a micro-dairy produces 300 kg of churpi per month and around 20,000 stakeholders-livestock farmers, micro-dairy personnel, collectors, cooperatives, transporters are the direct beneficiaries of this sector. This churpi is sold to local retailers and exported to dog-chew brands in US, Canada, Japan, Taiwan, Hong Kong, Malaysia and India.
“Life has become better. We don’t have to live in the dark
without the electricity.”
Ramesh was compelled to migrate to Kathmandu with his wife and two children in
search of job from Dubung, Tanahu. However, when electricity came to Dubung,
he and his family were persuaded to go back. He is currently doing his own business.