DGGF – Dutch Good Growth Fund
The purpose of the Dutch Good Growth Fund (DGGF) is to stimulate and support development related investments in low- and middle-income countries through trade and investment support. For this the DGGF provides alternative financing and export insurance to SME companies wanting to invest in or to export to low- and middle-income countries.
The DGGF program is available for activities in 66 countries in Africa, Asia, Middle East, Eastern Europe and Latin America. You can check the DGGF-country list. The DGGF is a revolving fund and therefore does not provide grants, but financing. The DGGF works along 3 tracks:
- Financing of activities of Dutch SME
- Financing of investments of local SME
- Export credit insurance and export financing (see DGGF export facility)
A company with less than 250 employees and a balance sheet total less than € 43 million or turnover less than € 50 million is considered a SME. Larger, non-SME enterprises can apply in case they can indicate a positive effect on the activities of SME.
DGGF- financing investments Dutch SME (1)
This part of the DGGF facility aims at supporting development related investments in development countries and emerging markets. This part of the DGGF is implemented by the “Agency for Entrepreneurs” (RVO). A Dutch SME company with plans to invest, can receive financing in different ways:
- A direct loan to the Dutch SME company
- A loan through a local bank in the DGGF country
- A loan through a financial institution, like a participation fund that is registered in a EU-country (Fund-in Fund financing)
- A guarantee to a financial institution in a EU-country
- A guarantee to a bank registered in a DGGF-country.
Starting point is that the investment is a result of co-financing with participation of the Dutch SME company and/or the local SME company and/or other co-financers. Only in exceptional cases this starting this is not applied.
The fees for the loan are market conform. Besides a fixed (interest) fee, a variable component can be included. There is a possibility to insure, additional to the political risks, the commercial risks.
Important criteria to be eligible for financing are:
- The application for financing cannot exceed € 10 million
- The business case should be solid, shown by a good business plan that shows commercial feasibility and with a good risk analyses
- Commercial financing cannot be obtained
- The investment should have development impact:
- Creation of jobs and employment
- Transfer of know-how and skills
- Transfer of technology or innovation
- Increased productivity
- With special attention to the development of female entrepreneurship and young entrepreneurship
- Conducting a thorough policy of Corporate Social Responsibility (CSR) is a requirement.
- The profitability and continuity perspective of the Dutch and local SME company should be satisfactory.
- In case of a loan to a Dutch SME business, the company should be financial strong enough to fulfil the obligations.
- It is not a refinancing recently and no substantial funds were withdrawn from the company.
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With the Dutch Good Growth Fund (DGGF)- country list you can assess whether your target country is included.