Private Equity Eyes Inclusive Growth Amid Digital and Market Transformations – Entrepreneur

Private Equity Investment Driving Sustainable Development Goals in Emerging Markets

Executive Summary

Private equity and impact investment firms are increasingly channeling capital into emerging markets, leveraging digital transformation to address critical service gaps. This strategy directly supports the achievement of several United Nations Sustainable Development Goals (SDGs), particularly in financial inclusion, healthcare, and economic growth. Analysis of recent market trends and investment strategies reveals a strong alignment between commercial returns and tangible social impact, driven by technological innovation and robust capital markets.

Advancements in Financial Inclusion and Healthcare Access

Contribution to SDG 1, SDG 8, and SDG 10

The expansion of essential services in developing economies is accelerating progress towards key SDGs. Access to financial tools is fundamental to poverty alleviation (SDG 1: No Poverty), fostering economic growth (SDG 8: Decent Work and Economic Growth), and bridging wealth disparities (SDG 10: Reduced Inequalities).

• According to the World Bank’s Global Findex 2025 survey, financial inclusion has seen significant growth, with 40% of adults in developing economies now utilizing financial accounts for savings.
• This represents a 16-percentage-point increase since 2021, indicating rapid progress in providing formal financial services to underserved populations.
• Mobile-money adoption has been a critical catalyst, with 10% of adults in these economies using such accounts for savings, highlighting technology’s role in closing service gaps.

Investment in sectors like healthcare, including diagnostics and pharmacy platforms, directly addresses SDG 3 (Good Health and Well-being) by improving the availability and quality of medical services for low- and middle-income communities.

The Role of Technology and Innovation in Service Delivery

Aligning with SDG 9: Industry, Innovation, and Infrastructure

The convergence of technology and entrepreneurship is enabling the development of scalable solutions for essential services. This trend is a core component of SDG 9, which focuses on building resilient infrastructure, promoting inclusive and sustainable industrialization, and fostering innovation.

Key technological drivers enabling this transformation include:

• Widespread digitization and the application of Artificial Intelligence (AI).
• High penetration rates of smartphones.
• The establishment of public digital infrastructure.

These elements empower entrepreneurs to create and deploy low-cost solutions for financial services and healthcare, reaching large, previously unserved customer bases.

Impact Investment Strategy and Market Dynamics

Fostering SDG 17: Partnerships for the Goals

The role of “patient and operationally active equity capital” is crucial for nurturing businesses that deliver both financial returns and social impact. This model of private-sector engagement exemplifies SDG 17 (Partnerships for the Goals), which calls for multi-stakeholder collaborations to advance the sustainable development agenda.

The investment strategy, as articulated by Leapfrog Investments, involves:

1. Partnering with high-quality management teams.
2. Funding and executing growth strategies that are resilient through economic cycles.
3. Aggressively leveraging technology to improve operational economics and scale.

Market Viability and Exit Opportunities

A mature capital market that allows for successful exits is essential for recycling capital back into high-impact sectors. Recent data from India underscores the increasing sophistication of emerging markets.

• Bain & Company reported that in 2024, India was the largest exit market in the Asia-Pacific region, with IPO exit values increasing by 78% year-on-year.
• S&P Global data showed a 156% jump in private equity exits in India over the same period.

These trends confirm that growth-oriented capital can be deployed and exited efficiently, encouraging deeper and more sustained investment in businesses aligned with the SDGs.

Case Studies: Tangible Contributions to SDGs

Real-World Impact on SDG 3, SDG 8, and SDG 10

Recent successful exits by impact firms demonstrate the viability of a dual-objective strategy. These investments have provided essential services while generating commercial returns.

• Fincare Bank: An exit via block deals from this financial institution highlights successful investment in expanding financial inclusion, contributing to SDG 1, SDG 8, and SDG 10.
• Goodlife Pharmacy: The sale of a majority stake in East Africa’s largest pharmacy platform to CFAO shows a direct investment in strengthening healthcare infrastructure, a key target of SDG 3.

These examples validate the thesis that backing resilient business models that serve low-income populations and small businesses can achieve the twin goals of commercial success and measurable progress on the Sustainable Development Goals.

SDGs Addressed in the Article

1. SDG 1: No Poverty

   • The article directly addresses financial inclusion for low- and middle-income populations, which is a key component of poverty alleviation. It highlights that “40 per cent of adults in developing economies now saving through financial accounts,” which helps build resilience and economic security for the poor and vulnerable.

2. SDG 3: Good Health and Well-being

   • The article mentions investment in and demand for healthcare services. It specifically references “diagnostics” and the successful exit from “Goodlife Pharmacy, East Africa’s largest pharmacy platform,” indicating a focus on improving access to essential healthcare and medicines.

3. SDG 8: Decent Work and Economic Growth

   • The article discusses promoting economic growth by providing capital to entrepreneurs and small businesses. It notes the demand for “small business loans” and the strategy to “back businesses that deliver… tangible social impact to the underserved population and small businesses.” It also covers expanding access to financial services, a key driver of economic development.

4. SDG 9: Industry, Innovation, and Infrastructure

   • The role of technology and digital infrastructure is a central theme. The article states that “expanding digital infrastructure” and trends like “digitization (and now AI), smartphones, and public digital infrastructure” are enabling entrepreneurs to serve demand at a low cost, thus building resilient and innovative infrastructure for service delivery.

5. SDG 17: Partnerships for the Goals

   • The entire article is framed around the role of private equity and impact firms like Leapfrog, which represent private sector partnerships. It describes how “Patient and operationally active equity capital” partners with “quality management teams” to achieve both “commercial returns alongside achieving tangible social impact,” embodying the spirit of multi-stakeholder partnerships for sustainable development.

Specific Targets Identified

1. Target 1.4: By 2030, ensure that all men and women, in particular the poor and the vulnerable, have equal rights to economic resources, as well as access to basic services… and financial services, including microfinance.

   • This target is directly addressed through the article’s focus on financial inclusion. The World Bank data showing a “16-percentage-point increase since 2021” in adults saving through financial accounts in developing economies demonstrates progress towards this target.

2. Target 3.8: Achieve universal health coverage, including financial risk protection, access to quality essential health-care services and access to safe, effective, quality and affordable essential medicines and vaccines for all.

   • The investment in “Goodlife Pharmacy, East Africa’s largest pharmacy platform,” is a clear example of an initiative that works towards this target by expanding access to essential medicines and pharmacy services. The mention of demand for “diagnostics” also aligns with increasing access to essential healthcare services.

3. Target 8.3: Promote development-oriented policies that support productive activities, decent job creation, entrepreneurship, creativity and innovation, and encourage the formalization and growth of micro-, small- and medium-sized enterprises, including through access to financial services.

   • The article highlights the provision of “small business loans” and the strategy of private equity firms to “back businesses that deliver… tangible social impact to… small businesses.” This directly supports the growth of SMEs and entrepreneurship.

4. Target 8.10: Strengthen the capacity of domestic financial institutions to encourage and expand access to banking, insurance and financial services for all.

   • The discussion on “mobile-money adoption” and the increase in adults in developing economies using financial accounts for savings are direct outcomes related to this target. The investment in and exit from “Fincare Bank” is another example of strengthening financial institutions to serve the underserved.

5. Target 9.c: Significantly increase access to information and communications technology and strive to provide universal and affordable access to the Internet in least developed countries.

   • The article emphasizes that “expanding digital infrastructure,” “smartphones,” and “mobile-money adoption” are key drivers of change. It states that technology is bridging “service gaps for low- and middle-income populations,” which aligns with increasing access to and leveraging ICT for development.

Indicators for Measuring Progress

1. Indicator 8.10.2: Proportion of adults (15 years and older) with an account at a bank or other financial institution or with a mobile-money-service provider.

   • The article provides precise data relevant to this indicator. It states, “40 per cent of adults in developing economies now saving through financial accounts” and “10 per cent of adults using such accounts [mobile-money] to save.” These statistics directly measure progress.

2. Implied Indicator: Availability of affordable essential medicines on a sustainable basis. (Related to Target 3.8)

   • While not a formal UN indicator number, the article implies this can be measured. The investment in and expansion of “Goodlife Pharmacy, East Africa’s largest pharmacy platform,” serves as a proxy indicator for progress in making essential medicines more accessible in that region.

3. Implied Indicator: Private capital mobilized for sustainable development. (Related to Target 17.17)

   • The article describes how “patient, growth-oriented capital can now be recycled more efficiently, encouraging deeper investment in high-impact sectors.” The data on private equity exits in India, such as the “156 per cent jump,” and the specific exits by Leapfrog, serve as indicators of private capital being successfully mobilized and reinvested for social and economic impact.

4. Implied Indicator: Access to loans/credit for small enterprises. (Related to Target 8.3)

   • The article points to a demand for “small business loans” and a strategy to support “small businesses.” The amount of capital deployed by firms like Leapfrog for this purpose would be a direct, though not explicitly quantified, indicator of progress toward this target.

Summary Table: SDGs, Targets, and Indicators

Source: entrepreneur.com