Supporting entrepreneurs for global solutions

Innovations Against Poverty

Addressing the underserved markets

1.4 bn people living below the poverty line, $1.25 a day

A challenge to the private sector

• A programme within Sida’s Business for Development

• Mobilising resources and encourage companies to develop their core activities in ways that benefit poor

• The triple bottom line

Partners being key to success

• Some companies leading the way

• Examples of how to

» bring local suppliers into value chain» empower women» innovate in products and services» new ways of doing business

Investing in INNOVATIVE and GOOD IDEAS to fight poverty

• Support to create and develop commercial opportunities in underserved (developing) markets

• Funding and financial assistance

• Exchange of experiences and knowledge in a global network

FUNDING & FINANCIAL ASSISTANCE and ADVISORY SUPPORT

Who can apply?

• Companies and other commercially driven organisations

• Any origin of company – but project should benefit poor in developing country

• Not involved in weapons, tobacco or gambling industry

• Environmentally and socially responsible

For business and project ideas with…

• Potential for commercial viability

• Positive development effects

• Innovative aspects

• Additionality - would not have happened without IAP support

Financial Assistance

• Large grants (up to Euro 200,000) – application process in two steps

• Small grants (up to Euro 20,000) – simplified application process

The IAP grant covers up to 50% of the cost - should be matched by equal amount from applicant.

Large grants

Small grants

Sida guarantees

• Separate Sida scheme to share risks and enable financing solutions for projects with developmental impact.

• IAP will support companies in elaborating inclusive business ideas, but applications for guarantees are administered by Sida.

Reporting, monitoring and audit

• Baseline• Completion report

• Progress reporting• Annual financial reporting• Annual project audit

Advisory support

• When developing IB projects and applications for grant funding

• For fine-tuning IB projects after having been selected for IAP grants

• “Stand-alone” advisory support to businesses who are not applying for grant funding

Important dates

Each year, two opportunities to apply for grants.

For 2011:• First cycle deadline: May 31• Second cycle deadline: November 25

Inclusive Business

What is “Inclusive Business” all about?

• Profitable core business activities that generate development impacts

• Creating win-wins• A common concept but an

array of different terms and definitions

IFC

IBLF

WBCSD

BIF

wikipedia

UDNP

IAP defines IB as…

…“profitable core business activity that also tangibly expands opportunities for the poor and disadvantaged in developing countries. Such business models can engage the poor as employees, suppliers, distributors, consumers and/or innovators”.

How is IB different to ‘business as usual’?

INNOVATION

Inclusive business usually goes further than ‘business as usual’ in creating new economic opportunities for people living in poverty.

IB in practice

IB in practice: 3 examples

Afri-Nut

Afri-Nut: Improving productivity and farmer’s income

Company Region (Country) Industry Sector Poor people mainly benefit as…

Afri-Nut Malawi Agribusiness (Peanuts) Producers

Key objective(s)

Establishing Afri-Nut as an inclusive pro-poor peanut processing business

Key challenges/ questions

• New start up business based on a blend of commercial and social investors • How to pay farmers more while remaining competitive with consumers• How to establish direct and reliable relationships with farmers• How to achieve quality levels required for export into international markets

For business• Established profitable groundnut processing and

distribution business

For development• Expanded market opportunities for Malawian producers• Increased income for smallholder farmers/ organisations• Increase in Fairtrade certified cooperatives• Environmental and health benefits through Aflatoxin

management

What are the benefits?

The Coca-Cola Company: Enabling jobs and opportunity

Company Region (Country) Industry Sector Poor people mainly benefit as…

Coca-Cola Sub-Saharan Africa(Multiple)

Agribusiness (Beverages) Distributors, Retailers

Key objective(s)

Implement a manual delivery approach ‘Manual Distribution Centres’ working with small-scale distributors to deliver products to remote areas difficult to reach with traditional distribution models.

Key challenges/ questions

• How to reach local entrepreneurs and foster business and entrepreneurial skills? • How to assess the needs and locations for MDCs?• How to develop appropriate finance and financial services models?

What are the benefits?

For business • Increased sales and delivery in areas hard to serve with

conventional trucks• Reduced costs associated with distribution• Better customer service by supplying products on

demand to meet the needs of retailers

For development• Income and job creation• Women empowerment

Oando: Providing households with affordable and accessible clean cooking fuels

Company Region (Country) Industry Sector Poor people mainly benefit as…

Oando Marketing PLC

Nigeria Household Energy Consumers

Key objective(s)

Develop a low cost Liquefied Petroleum Gas (LPG) cooking stove to provide Nigerian households with affordable and accessible clean cooking fuels

Key challenges/ questions

• Profitability depends on scale • How to change consumption patterns of consumers?• How to realise a wider industry drive for fuel switch whilst realising first mover advantage?

What are the benefits?

For business• Reach low income households with an innovative

product in the currently underserved gas market• Realise first mover advantage

For development• Access to affordable and accessible clean cooking fuels

as an alternative to conventional fuels such as kerosene, firewood, electricity or charcoal

• Reduced negative health and environmental impacts

Some lessons…

IB models– provide opportunities for win-win– can be developed anywhere in the value chain– can be implemented across different sectors/ industries , countries and businesses

But often…– involve higher risks and/or higher initial transaction costs than normal business– face challenges on how to reach low-income groups at scale

The IAP team at the Sida exhibition stand