Conduits of Capital

equity funds. These efforts could be encouraged by coupling
onshoring with introduction of a ‘sunset clause’ on investment
in foreign domiciles.
Where the microfinance revolution provided short-term loans
to microenterprises, the next revolution in development finance
could well be in the realm of providing risk-capital to small
enterprises. The potential impact could indeed prove to be
highly significant.
In terms of impact measurement of greater investment in PEfunded
SMEs, the focus will be on measuring employment
generation. Care will need to be taken to develop an M & E
framework that facilitates accurate attribution of the impact
of PE fund investments. It will be important to measure
employment on a net basis as well as average wages
paid, given the PE investments often are associated with
enterprise restructuring. The impact of employment created
by PE investee enterprises will need to be measured
against appropriate benchmarks, such as employment of
comparator, similar enterprises within the same sector of
the economy.
It will also be advisable to set up from the outset methods
by which to assess the efficacy of advisory services using
randomised control experiments. Such more rigorous project
evaluation methods will be difficult to implement unless
data collection routines are established prior to committing
resources. 24 Information will need to be collected on a regular
basis as to whether supported enterprises are able to access
outside funding and on which terms (comparing with a control
group). Eventually value at exit will provide an important
outcome metric, although clearly more granular results
measurement is also called for.
24
David McKenzie and Christoffer M. Woodruff, “What Are We Learning from Business Development and Entrepreneurship Evaluations around the Developing
World”, IZA Discussion Paper no. 6895, 2012.
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