For many Bhutanese entrepreneurs, the biggest challenge is not the lack of ideas, it is limited access to finance. Today, that challenge took centre stage as Bhutan hosted a two-day SDG Impact Finance Forum, aiming to provide awareness on alternative sources of financing and reshape how the country mobilises capital for sustainable and purpose-driven businesses.
While debt and equity are becoming more familiar, many entrepreneurs say they continue to struggle with limited collateral, high interest rates, short repayment timelines, and few investors willing to take risks.
Jigme Tenzin, the Co-founder of Innovest, a company that connects entrepreneurs with investors, says many entrepreneurs do not know how to source funding. “They only think about getting loans from banks. They lack knowledge on how to secure funding through other financing options.”
To address this, speakers say impact financing is a crucial step that provides entrepreneurs with diverse channels. In impact financing, governments, specialised funds, investors, and other entities provide money to businesses that generate positive social or environmental benefits alongside the financial return.
For example, you want to start a solar-powered irrigation venture to help farmers adapt to erratic rainfall. It costs Nu 1 M but the bank is hesitant because your business is new and risky. With blended financing, one aspect of impact financing, a development partner gives you Nu 250,000 grant and guarantees 40 % of the bank loan. This makes the bank more confident, and it agrees to lend you the remaining Nu 750,000 at a lower interest rate with a longer repayment period.
By combining a grant, a guarantee, and an affordable loan, you can start your project with impact financing, something you could not do with traditional financing alone.
“We cannot rely solely on traditional financing. We need to explore other financial options, which are closely linked to achieving the Sustainable Development Goals, in what we call impact financing,” said Rushnan Murtaza, Country Representative for UNICEF Bhutan Office.
“I also see a very interesting opportunity with young people in Bhutan, who are the future of this country. Supporting SDG-related enterprises and providing funding for them, while creating an ecosystem for these businesses, is a significant opportunity for Bhutan,” added Royston Braganza, CEO of Grameen Impact Investments India.
The forum comes at a defining moment, two years after Bhutan’s graduation from Least Developed Country (LDC) status. With traditional grants expected to gradually decline, the country is looking to broaden its financing landscape.
Prime Minister Tshering Tobgay emphasised that traditional models of finance alone are not enough to achieve Bhutan’s ambitious development aspirations, including the vision for a 10x economy. “Traditional models alone will not be enough. We need innovation not only in ideas and policies but also in the way we model and direct finance.”
“The problem is that traditional financing options are running out. We need to be realistic about today’s world and explore alternative sources of finance. From an entrepreneur’s perspective, traditional financing can be expensive and difficult to access. Impact financing opens new opportunities, allowing businesses to secure funding not just through bank loans or equity, but through more innovative ways,” said Olaf de Groot, an economist with the UN Resident Coordinator’s Office.
The forum also explored ways of creating an enabling environment for impact financing by bringing together government officials, development partners, philanthropists, investors, and entrepreneurs.
Kelzang Chophel & Kinley Bidha
Edited by Phub Gyem
