Impact Policy Tracker Policy

European Social Fund Plus Social Innovation+ initiative



The Emerging Markets Impact Investment Fund (EMIIF) is a development financing mechanism launched by Australia’s Department of Foreign Affairs and Trade (DFAT) in 2020 to unlock capital for early and growth-stage small and medium enterprises (SMEs) in regions where risk-adjusted returns are typically too low to attract commercial finance alone. EMIIF operates by investing in regional SME-focused funds across Southeast Asia, using tools such as equity, loans, and blended finance to mobilise private capital into underserved markets.

Highlights

  • Innovative use of ODA funding: EMIIF is considered Australia’s first impact-focused development finance mechanism. Rather than using ODA funding for grants, the EMIIF uses ODA for investment funding, while testing the business and development case for ODA impact investing. In other words, EMIIF uses impact investment as a development tool, by providing equity and debt to intermediaries that support SMEs, with the dual goal of achieving both financial returns and measurable development outcomes.

  • Blended finance, impact-first approach: the EMIIF uses public concessional and first-loss capital to attract private investment into high-impact SMEs, investing through local funds using equity, debt and hybrid instruments. Its concessional terms help de-risk investments and mobilise private co-financing, making it easier for commercial capital to enter challenging markets. While EMIIF seeks financial returns to ensure sustainability and recycling of funds, its primary objective is developmental, including gender equality, financial inclusion, and resilient local economies.

  • Private capital mobilisation: according to its first impact study, the Fund has been able to mobilise over five dollars from the private sector for each dollar invested, a rate way above the benchmark for the region.

  • Technical assistance: the Fund complements its investments with a capacity-building component aimed at SME funds and their investees, to improve their governance, financial management, gender inclusion, and impact measurement. This technical assistance is provided pre- or post-investment, helping to strengthen the pipeline quality and readiness, making investees more attractive to future investors.

Government’s Role:
Market Participant


Country:
Australia

Policy Type:
Funding Programmes

Year: 2020

Responsible Institution:
Department of Foreign Affairs and Trade (DFAT)

Funding Programmes

What are funding programmes?

Funding programmes - which provide financial resources in the form of grants, loans, equity, and guarantees - can be used by governments and public institutions to address financing gaps and attract private sector participation, often through dedicated funding windows, government-backed funds, and public-private partnerships, towards businesses that place social and/or environmental impact at their core. By doing so, they help grow a pipeline of mission-oriented organisations capable of addressing systemic challenges while contributing to inclusive and sustainable economic development.

This support can take various forms: capital provided directly to enterprises to meet early-stage or growth financing needs; investments channelled through intermediary funds to reach a broader range of businesses; or blended finance models where public or philanthropic actors absorb higher risks to make investments viable for private investors. The design of these mechanisms is often catalytic, helping to build investor confidence, promote financial inclusion, and strengthen the resilience of social enterprises across diverse sectors and geographies.