DFI
SIFEM’s role in
Capital Market Development
A catalyst for economic growth in emerging markets
Presented by: Oqmamatova Zarnigor
What is Capital Market Development
(CDM)?
CDM builds a strong financial infrastructure to enhance business access to funding resources
in addition to encouraging investments for emerging markets. All three components of stock
exchanges, bond markets and equity financing form a vital base for sustainable economic
development.
However, the absence of fully developed capital market systems present barriers to funding for
innovative growth among businesses and particular challenge for small and medium-sized
enterprises (SMEs). In that case, SIFEM and other development finance institutions hold a vital
position by driving investment toward building essential financial systems.
Overview
The Swiss Investment Fund for Emerging Markets (SIFEM):
established in 2005;
manages by The State Secretariat for Economic Affairs
supports SMEs, financial inclusion initiatives and local capital markets development.
SIFEM invests via private equity funds, venture capital and local financial institutions to
distribute capital with business expertise to companies operating at the ground level. It reaches
more businesses through its indirect investment approach which enhances the growth of local
financial systems and develops enduring investment competencies.
Key strategies in CMD
STRATEGY OBJECTIVE IMPACT
For every $1 invested, $2
Mobilizing Private Attract additional capital
mobilized from private
Investment for projects
investors
20+ local financial
Improve governance
Capacity Building institutions improved
and risk management
Financial Develop capital Strengthened local
Infrastructure market infrastructure financial ecosystems
Its role in Building Local Financial Institutions
SIFEM undertakes investments that stabilize the operations of financial institutions
through banks and microfinance entities and insurance companies within areas with
limited services. Because, these institutions experience major funding obstacles when
providing money to SMEs due to poor governance practices, inadequate risk capital and
insufficient expertise.
SIFEM works with over 20 financial institutions, providing:
Risk capital – Enhances SME lending capacity
Governance support – Improves management and ESG integration
Training – Builds local capacity for sustainable finance
This foundation builds resilience and encourages long-term market growth
Mobilizing Private Capital: A Critical Role
The model of SIFEM functions significantly through its
capability to combine private sector investments. Through
its catalyst role SIFEM encourages other investors from
Total Capital Mobilized (USD 2)
private and development finance institutions and
multilateral organizations to support projects.
For every USD 1 invested by SIFEM, approximately USD 2
are mobilized from other investors. This multiplier effect
strengthens the available capital pool that drives market
expansion and business development in emerging
economies.
SIFEM Investment (USD 1)
Addressing Global Challenges: Climate & Inclusion
The investments at SIFEM follow the global development agenda while concentrating
specifically on climate action solutions and gender equality projects.
It dedicates at least 25% of its annual new investments to climate mitigation efforts
combined with renewable energy projects starting from 2021. SIFEM has made a
strategic investment choice which stands alongside United Nations targets like the
Paris Agreement while providing additional support for eco-friendly actions.
Gender equality makes up a significant 42% of SIFEM’s planned investments
throughout 2021–2023 which support women-led business leadership and promote
female entrepreneur programs.
Catalyzing systemic change
The main difference between SIFEM and commercial investors lies in their extended
developmental orientation. SIFEM avoids emphasizing temporary gains to concentrate on
sustainable changes that build up both capital markets and financial systems locally.
Various emerging economic markets struggle with these three barriers that limit their
capital markets development:
Political instability
Weak legal frameworks
Low investor confidence
Through its position as a trustworthy and enduring partner SIFEM enables clients to
face the mentioned barriers. Through its investments SIFEM shows market potential to
additional investors who subsequently raise capital for the development of a secure
financial environment.
Key impact and statistics
25
An analysis of SIFEM’s performance indicates substantial
evidence of its role in capital market advancement through 20
quantitative indicators.
15
USD 1.437 billion committed since inception
USD 1.002 billion active portfolio
10
170+ projects supported
4,500+ jobs created
2x private capital leverage per SIFEM dollar 5
25% climate-focused investments
0
Addressing challenges
SIFEM continues advancing but operational obstacles must be properly managed so that the program
succeeds in the long run.
Market dependence - the economic stability of local market sectors becomes threatened when they
depend too heavily on SIFEM’s investments which ultimately restricts these economies’ growth
prospects.
Political risks - SIFEM fights market instability and prevents regulatory noncompliance in shaky
political environments to defend its financial assets.
Conflicts of interest - SIFEM needs to establish thorough oversight systems to maintain transparency
alongside operational integrity when it acts as both financial investor and advisory partner.
Future outlook
SIFEM’s future strategy focuses on key areas of growth that will allow it to continue supporting
sustainable development in emerging markets:
Fintech investments: SIFEM is accelerating investments in Fintech to enhance financial inclusion and
access to financial services, particularly for underserved populations.
Sustainable investments: A focus on renewable energy, green finance, and climate action to
address global environmental challenges while generating economic growth.
Expanding partnerships: SIFEM plans to expand its network of partnerships with other development
finance institutions and private investors, increasing its impact across emerging markets.
Conclusion
SIFEM functions as a leading entity to advance capital market development across emerging market
economies. It builds robust capital markets plus drives inclusive economic expansion through local
financial institution support.
Through its enduring system-changing approach SIFEM will produce long-lasting resilient, sustainable
and financial structures in emerging markets.
References
Main sources:
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Official web-site: [Link]
And:
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[Link]
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For structure:
[Link]
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Thank you for your attention!