GUBERNA Alumni Sparkles - Loïc De Cannière


Discovering the true soul of the impact investment economy: enabling people to flourish on the back of economic activity.

Today we would like to introduce you to Loïc De Cannière, founder and Chairman of the Supervisory Board at Incofin Investment Management.

He takes us on a journey into the fascinating world of Impact Investment, or how an economic principle can have a highly social conviction, and what requirements all this makes of directors and good governance.

Tap into a fascinating argument from an impassioned and inspired entrepreneur.

Loïc De Cannière
Founder and Chairman of the Supervisory Board at Incofin Investment Management
Tel +32 474 29 15 62
Contact by E-mail

Loic De Canniere

Hello Loïc De Cannière, founder and Chairman of the Supervisory Board at Incofin Investment Management. Welcome to GUBERNA’s Home of Governance. You witnessed the birth of microfinance in Belgium and developed a group of worldwide stature, but today Incofin is certainly not on everyone’s lips. Can you briefly explain the group?

Incofin Investment Management (Incofin IM) is a developer and manager of impact investment funds. I have been the CEO for 20 years and have now taken up the position of Chairman of the Supervisory Board at Incofin IM.

By impact we mean: investments that deliberately aim for a positive social impact to help people at the lower end of the social pyramid (“Do good”) rather than using purely exclusion criteria (“Do no harm”).

At Incofin IM we work on financial inclusion and agri-food and water while offering three different solutions: private equity, private debt and technical assistance.

We now manage 14 funds representing one billion euros in resources.

We do this with some 70 employees and a worldwide office network (Colombia, Kenya, India, Cambodia).

The investors include: Development Finance Institutions (public development banks), pension funds, funds of funds, High Network Worth Individuals, family offices and private individuals.

What is your personal CV for this pioneering role that we would today call ‘Global South social profit’?

AluSpark LDC

As you know I prefer to call it “impact investment” rather than “social profit”. The reason for this is my strong conviction that entrepreneurship and business solutions are the key to involving low income groups in the economic process (economic inclusion). In 2001 I made the switch from the DEME group. There I was responsible for Structured Finance, with projects in Africa (Nigeria, Ghana, Tunisia) and Asia (Philippines, Bangladesh, Taiwan).

Development cooperation as we know it today has limited possibilities. Take Africa as an example: 20 million new jobs are needed there each year. In this context we focus our investments on low income groups and on the informal economy, that with its micro-businesses and SMEs is an indispensable source of employment.

Integrating the impact investment approach among investors is not such an easy matter. We are still often associated with development cooperation.

On the other hand the microfinance concept has now become more widely known, but also sometimes criticised too. Impact investments cover more and a wider spectrum including agriculture, power, water, renewable energy, health and education.

It is also not easy to keep the North/South topic high up the agenda for reasons including the climate question that also has a North-South dimension but claims almost all the attention.

In Europe and North America the public development banks (including the European Investment Bank, the German ‘Kreditanstalt für Wiederaufbau’ (KfW) or BIO in Belgium) are important financers of impact investments. It is my ambition to make the general public enthusiastic about impact investments as a specific own asset class and to also attract private money for this besides public funds. When we look at the challenges in the developing countries it’s essential to mobilise private capital for impact investments. The budgetary restrictions of the authorities indeed restrict the potency of the public development banks.

The main challenge for me over the course of the years has been: the aspiration to get the business model working and... finding new paths to follow in a scenario without any pointers.

I’m now happy to see that large mainstream asset managers – at the request of their customers - are also starting to show interest in impact investments. Some are setting up specialised impact investment teams. Asset manager Schroders recently took over a Swiss sector partner from Incofin IM.

As regards governance Incofin IM is on the face of it a complex affair: first you have manager level, below you have the managed funds and finally there are the portfolio companies participated in. Can you explain what specifically stands out as regards governance at each of the three levels? I mean: is the balance between shareholders – board of directors – and management the same at each level?

We do indeed make a distinction between three layers of governance:

  • Incofin IM is the fund manager with an AICB licence (alternative establishment for collective investments). We have recently renewed and adapted the governance system.
  • The funds managed by Incofin IM each have their own governance structure.
  • The funds in turn invest in portfolio companies. The governance of these underlying portfolio companies is crucial.

Let me clarify this a little:

The AICB manager:

  • Incofin IM is 70% in the hands of the management. That gives the team strong ownership. But AIFM law does impose strict capital requirements. The growth of the capital must stay in proportion to the growth of the assets under management. This is a challenge. 
  • We are a limited company with dual board model (Supervisory Board and Board of Directors).
  • Considering we map out our route in a scenario without pointers, the Supervisory Board (with external parties in addition to myself) is responsible for challenging the management (priorities, content strategy, commercial, operations, digitisation) while also encouraging it. We have an international Supervisory Board with strong, experienced figures.

The funds:

  • We make a distinction between two types: the funds can be (i) self-governed and have their own decision structure or (ii) they are managed by Incofin IM such as AICB (as in our private equity funds)
  • Responsibility for investments is different in both cases: the self-governed funds have their own separate investment committee; with the AICB-managed funds Incofin IM takes the investment decisions.
  • As we manage different funds, possible conflicts of interest may occur between funds. These require strict disclosure procedures.

The portfolio companies:

  • We usually act as minority shareholder with our funds.
  • Founders and promotors are often the initial majority shareholders and are growth companies.
  • The big challenge here is to make the transition from a charismatically controlled to a professionalised management and governance structure. The growth of the portfolio companies unavoidably leads to a diversified shareholder structure. I myself am a director at Finance Trust Bank in Uganda. This microfinance bank was set up by the Women's Movement of Uganda to give women with a low income better access to financial services. With Incofin IM we enabled the transformation of this former NGO to a fully-fledged bank and professionalised the management.

I read in the reports that besides the Board of Directors there is also often an Investment Committee operating: does this not entail a risk of overlapping authority?

That may indeed be the case for funds that are self-governed. The Board of Management of the fund in question sets out a framework for the Investment policy, while the investment committee takes the decisions within this framework.

The advantages of this are as follows:

  • The external investment committee acts as the “challenger” of the investment proposals from Incofin IM that does not act as final decision maker but as adviser.
  • This structure gives the investors ‘comfort’. Investment proposals are critically analysed.

We then see as possible disadvantages:

  • The potential for differences of opinion between the investment committee and Incofin IM as adviser.
  • It is theoretically conceivable that the members of the external investment committee adopt an extremely risk-avert attitude so no more decisions are taken. Alignment is then disturbed. I know that this has happened at others operating in the sector.

What role does ESG (Environmental – Social – Governance) play in the structure at all levels and not in the least in the credit analysis of the projects on the ground?

Each investment is subjected to thorough ESG screening beforehand meaning that:

  • An impact thesis is drawn up for each individual investment: we examine what positive impact we can achieve from the specific investment. The impact thesis is quantified: for example number of new jobs, increase in agricultural production, increase in income.
  • The ESG performance of the portfolio company is scored using an internationally approved methodology. Once we have invested, this scoring is repeated annually.
  • Thanks to our intervention capacity (the Technical Assistance) we can act upon shortcomings at the portfolio company, for example regarding environmental awareness.
  • We periodically measure the output of our investment (number of assigned micro-credits, number of women reached, etc.). We now also put more of an emphasis on outcome measurement: we use surveys and statistical measuring techniques to try see if the welfare of the end users of our portfolio companies has benefited.

We always report our impact according to the Sustainable Development Objectives and work in accordance with the “Operating Principles for Impact Investments” developed by the World Bank Group.

Under the philosophy of the new European Directive “Sustainable Finance Disclosure Regulation” our funds qualify as “dark green” funds: the ESG objectives of our funds are indeed prominent.

Some aspects such as our Western ideal of gender equality seem to be unachievable aims in the ‘Global South’. Is that right, Loïc?

AluSpark LDC1

Some of our portfolio companies attach great importance to gender equality or even positive discrimination.

At Finance Trust Bank – set up by the women's movement in Uganda – women pay lower interest than men. Special financial products are available to women. The bank branches also have a special facility where young mothers can care for their babies.

AMK in Cambodia, another Incofin participation, developed a special pension product for single women. AMK actively promotes gender equality among its clients and personnel.

We have many young people at Incofin. More than half are women. Our female colleagues continue to fight for the promotion of gender equality, also at our portfolio companies.

Many societies in which we operate are “macho”. Raising awareness relating to gender is a just thing to do. 

But I do sometimes see dismay in the eyes of men in the local environments when you bring the subject up. I recently experienced this again in Congo.

How is Incofin and its partners getting through the Covid crisis? I particularly mean the current situation in India and the risk of vaccine supply difficulties in Africa?

It has been a difficult year, and the problems are not yet behind us.  We have suffered most in Latin-America. The economy has been hit extremely hard there with 21 million Covid infections. This is much more than elsewhere.

Our portfolio of financial institutions in Latin-America has had to cope with significant write-offs.

The customers in our agro-portfolio are confronted by logistical problems: delays in shipments, difficulties in finding workers for the harvest, etc.

The German development bank KfW asked us to develop a special Covid facility worth 40 million euros (ALF or agri-finance liquidity facility). We set it up in the shortest time possible. It is fantastic that KfW acknowledges our unique expertise in agriculture financing in developing countries and came to us for this.

Many countries put a moratorium on the banks and microfinance institutions. In most countries the due date is falling around this period. Only now will it become clear how seriously the crisis has hit.

Our own teams have barely been able to travel. In Colombia our team will only be able to be vaccinated in 2022. This also means our own investment activities have not grown as expected.

That we have been able to set up a new fund (IPF) in these circumstances purely by digital remote communication is a wonder.

What would you say to young people today who want to shape ESG in the Global South?

I believe impact investment has a good future ahead of it.

It offers an answer to numerous challenges in the South (employment, agriculture and food, renewable energy, health care and education).

Impact Investment gives entrepreneurship and creativity every chance. It is not patronising: it is a partnership with business owners from the South who are not seen as “beneficiaries” but as partners. Neither does it make a claim on the public budget.

I would advise young people to themselves – even if only for a while – get experience of impact companies on the ground. It will give them a real global vision. It will also enable them to discover the true soul of the economy: allowing people to flourish on the back of economic activity.

About the interviewer

This interview has been realised by Hubert De Peuter
Senior Account Manager KBC Real Estate, KBC Groep
Mobile 0477/34.92.66
Contact by E-mail

Hubert De Peuter

Background information

Incofin Investment Management is a Belgian enterprise that sets up impact funds and develops and manages them. Impact funds invest in companies which bring about a relevant social impact on low income groups while at the same time providing a financial return. Impact investors attach importance to the convergence of social impact and financial return, even if the risk involved in these investments is considerable. Incofin IM has an AICB licence from the FSMA. Incofin IM can distribute its funds in Europe with this European ‘passport’.

The impact funds from Incofin invest in less developed countries in Africa, Asia and Latin-America. Incofin has its own local teams in these regions (for instance in Colombia, Kenya, India, Cambodia). Incofin concentrates on investments in companies in two sectors:

  1. financial inclusion particularly in rural areas (microfinance institutions, small financial institutions for small enterprises) and
  2. companies in the agriculture and food chain.

With each investment it is investigated beforehand to see how these companies can have a maximum impact for micro-enterprises, small enterprises and small farmers and how the impact can be improved with the support of Incofin. The impact of the Incofin investments is constantly gauged with periodic reporting to the impact fund investors. Incofin endeavours to strengthen the economic fabric in these sectors because this results in more social-economic resilience for low income groups.

Incofin now has 20 years of experience and has grown to become one of the larger impact investors. Incofin IM manages 14 funds that together represent a portfolio of approximately 1 billion euros. The funds invest in private equity and private debt.

Investors in the Incofin funds of consist of public development banks such as IFC/World Bank Group, the European Investment Bank, Kreditanstalt für Wiederaufbau, AFD group, FMO, international pension funds and fund of funds, asset managers, banks, family offices and private individuals.   

Want to contribute to GUBERNA Alumni Sparkles?

GUBERNA wants to be a true community in which each member can perform his/her role as director in the best conditions. To encourage the exchange of experiences and knowledge, the GUBERNA Alumni have launched an interview series: GUBERNA Alumni Sparkles. Through the stories of experienced directors, we want to inspire our members.

We would like to invite the GUBERNA Alumni to provide topics and people to be interviewed. In 2022 we want to focus on the following topics:

  • How can the board of directors contribute to a better climate?
  • From fact-checking to process-driven risk management overseen by the board of directors?
  • The role of the board chair in digital transformation.
  • How to strengthen your company to grow through acquisitions and partnerships and get your corporate governance right.
  • The young generation of board members.

Would you like to contribute to GUBERNA Alumni Sparkles or do you have suggestions for interviewees or topics? Please send an email to Danny Vandevyver.