Kevin Carmichael: Most development agencies prefer debt to equity because it’s safer, but FinDev's first transaction was to take a US$10 million stake in a Kenyan company
Financial Post, June 22, 2018, By Kevin Carmichael
It must be the wrong place.
Google was supposed to guide me to the door of FinDev Canada, the new federal agency that will invest $300 million in some of the world’s poorest countries. Instead, I’m looking at a nameplate that says “WeWork,” the global provider of shared office space.
A woman appears and introduces herself. It is the right address. FinDev’s future offices were being built on another floor of Montreal’s Place Ville Marie, so Paul Lamontagne, the managing director, and a few early hires were getting to work amongst the young entrepreneurs and freelancers that frequent WeWork.
“Had they wanted to set up a conventional organization … they would have hired one of their own,” said Lamontagne, a former banker who made his name as a “social impact” investor in Africa.
This is new terrain for Canada; or at the very least, mostly new. FinDev — officially, Development Finance Institute Canada Inc. — is what is known as a financial development institution, or FDI. That means it’s supposed to make money, not simply give it away.
Most rich countries long ago established development banks to leverage their foreign aid budgets. For whatever reason, Canadian governments could never bring themselves to do it, even though politicians and mandarins talked about it for decades.
Harper came close, but failed to execute before he lost the 2015 election. Prime Minister Justin Trudeau took the Conservative blueprint and decided to proceed, directing Export Development Canada (EDC) to put up the seed capital and treat FinDev as a subsidiary.
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