BELGIUM INVESTMENT COMPANY FOR DEVELOPING COUNTRIES
In 2019, BIO joined the AfdB, CDC, FMO and Propraco in the working group in charge of developing a common approach to measure indirect effects of their investments. For a smaller DFI like BIO, with limited resources, this collaboration was also a unique opportunity to learn and access the potential of economic modelling.
Before the Joint Impact Model, BIO already reported on direct effects of investments. However, financial institutions and energy production projects - two types of investment for which indirect effects are at the heart of the development thesis - represent a large part of BIO’s portfolio. The use of JIM now allows an estimation of the magnitude of the enabling effects associated with these investments and more generally indirect effects of all investments.
BIO used JIM for the first time on the data relating to its 2018 portfolio, in an ex-post manner. The input data needed to run the model are basic and easily accessible data, which BIO had already been collecting for several years for all investments. Although a little formatting of the data was required, the first implementation of JIM went off without a hitch, facilitated by a friendly-user interface, a simple user guide, and an on-demand support provided by Steward Redqueen.
The first estimates from JIM confirmed the relative importance of the indirect effects associated with BIO's investments. They show that for every direct job in a client company, BIO would support an additional 15 indirect jobs. Not surprisingly, most of this effect does come from the finance and power enabling effects. The results also give some insights about the country-sector combinations that are the most impactful. For example, BIO’s investment in food manufacturing companies in Africa appear to be among the most important in terms of direct and indirect jobs supported.
BIO plans to publish first figures in 2021 and to pursue its collaboration with other JIM members to further develop the model. Improvements in several dimensions should be implemented in the next years and make the model even more reliable, comprehensive, and easy to use. If jobs, added value and CO2 emissions are the few key indicators covered at the moment, the model could in the near future be extended to additional impact dimensions such as for example the quality of jobs supported.