Great potential for job creation in the private sector and manufacturing industry

We have focused our efforts in the sectors deemed best able to achieve development, which is in line with our mission. Where we have the greatest opportunity to generate benefits depends on a number of factors, such as experience in the sector and where we can best achieve results in equality, the environment and the creation of jobs.

Swedfund’s investments in the manufacturing and services sectors are accelerating sustainable business, job growth and production.

Jobs must be created. And growth will take place in the private sector. The potential is particularly great in the service sector and in manufacturing industry.

Swedfund contributes knowledge and action plans for building sustainable business with decent and equal terms, as well as an acceptable and a good working environment.

One example from 2016 is Swedfund’s newly-signed agreement with the DBL Group as industrial partner, and with the Ethiopian Investment Bank as financial partner. The project demonstrates the importance of partnership, risk-sharing, standard-setting in respect of sustainability and knowledge exchange in our investment process.

Healthcare and risk

Investment in healthcare is central to all developing societies. At the end of 2016, Swedfund had six investments in the healthcare sector within a range of medical disciplines. In the countries where Swedfund invests, there is an increasing demand for healthcare in general and specialist medical care in particular. It requires substantial investment both in public and private healthcare provision to meet the challenges of the future, Swedfund’s portfolio company, AAR Healthcare, has grown to be one of East Africa’s largest private medical care providers, with 39 modern health centres in Kenya, Uganda and Tanzania. In East Africa, there is a shortage of good and accessible medical services, expanding healthcare providers such as AAR are vital for increasing accessibility.

Investments in the healthcare sector develop skills in a variety of ways, both in the sector and in the country. In general, irrespective of medical discipline, the opportunity for specialist education and training is often limited in the countries involved. This often means that locally-educated doctors must go abroad to obtain the necessary education and experience in their specialist field. A major challenge is that many of them are unable to obtain work which matches their qualifications and knowledge in their home country. Consequently, they often remain in North America or Europe. Initiatives which broaden the supply of health and medical care in countries with low levels of provision, increase opportunities for specialist doctors who want to return to their homelands.

Another example is Swedfund’s investment in hotels. The hotel and tourism sector is labour-intensive, and has massive potential and exciting development effects. The tourism sector is highly labour-intensive. According to UNWTO and the ILO, every eleventh job created across the world is in the tourist industry. The sector is responsible for nine percent of all the world’s total GDP, if both direct and indirect effects are taken into account, according to UNWTO. Tourism is seen as essential in reducing poverty and achieving the global goals. In addition, hotels represent a hub for tourism and drive investment within the sector. Hotel guests pay in hard currency, and consume goods and services in the surrounding area. The tourist sector is also one of the few possible career parts open to women and young with - out education. Hotels employ many people under 25 years old.

Swedfund has a number of investments in quality hotels in Africa, including Radisson Blu Hotels in both Nairobi and Addis Ababa. The investments were made jointly with the Nordic Development Finance Institutions and with Rezidor as the hotel operator. Working with Rezidor, which has a strong commitment to sustainability issues, also means that significant resources are devoted to employee education and training. The Radisson Blu Nairobi is Green Key certified with solar panels on the roof and a closed waste water system with purification, in which 95 percent of the water is recycled. The hotel creates 250 direct job opportunities, of which around 40 percent are held by women. Rezidor places a great deal of weight on labour rights issues, as well as on the continuous training of personnel, equal pay, overtime payment and parental leave.

Inclusive growth

At the end of the year, Swedfund had 28 investments in the manufacturing and services sectors. This is equivalent to around 37 percent of the total contracted amount in Swedfund’s portfolio. We provide loans and equity to companies in several sectors: tourism, medical and healthcare, retail, clothing, steel industry and several other manufacturing segments. The main objective of the investments is to create sustainable businesses, more jobs and increased value added, thereby contributing to inclusive growth with better living conditions for the individual and stable revenue for the state through, for example, customs dues, tax, VAT and employers’ contributions. This is how these investments accelerate Agenda 2030.