What we learned from initiatives in Africa about building an eco-system for green and social entrepreneurs
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We attended the SEED Africa Symposium on 10th-11th September in Nairobi. We also organized a workshop to gather lessons learned from initiatives like us on how to effectively enhance enabling factors such as capacity and skills building, access to finance, policy instruments.
Entrepreneurs need a suitable environment to nourish their business. Green and social start-ups require even stronger enablers to tap into the opportunities they identify. Enablers such as a favourable policy framework, financial means, partnerships, capacity and skills building opportunities should be made available. This is exactly what both SWITCH-Med Action Network and SEED Initiative are working on; helping to build the eco-system for entrepreneurs with environmental and social impact ambitions.
SEED has long years of experience in supporting innovative small-scale and locally driven entrepreneurs. The initiative was in fact founded by UNEP, UNDP and IUCN at the 2002 World Summit on Sustainable Development in Johannesburg.
In order to get to know the SEED Initiative better and to identify synergies, SWITCH-Med attended the SEED Africa Symposium on 10th-11th September in Nairobi. We also organized a workshop to gather lessons learned from initiatives like us on how to effectively enhance enabling factors such as capacity and skills building, access to finance, policy instruments.
The Safari Park Hotel in Nairobi, Kenya was abuzz as 320 entrepreneurs and business people, and representatives from government, academia, development, civil society, and support organisations from 30 countries met at the 2014 SEED Africa Symposium. Though the entrepreneurs were at the center of the attention as also mentioned by Helen Marquard, Executive Director – SEED; “There are many examples in Africa which deserve a spotlight to shine on them”. She added; “SEED Catalyzer Programme helps to network and catalyse green businesses. For example, bamboo bikes attracted the attention of policy makers at local and national level but also at international level and now it is scaling-up and creating employment especially for women and disabled people.” We couldn’t agree more, as we, SWITCH-Med have just set off to spot and highlight niche efforts in North Africa region and to help them scale up.
Ibrahim Thiaw, UNEP Deputy Executive Director and Assistant-Secretary-General of the United Nations, pointed to the huge opportunities for green and inclusive growth in Africa and urge everyone to view the lack of infrastructure and technology that prevails in many parts of the continent as a possibility for entrepreneurship. ¨Waste as such is a major issue: 2 billion tonnes of waste water are produced every day by us. It kills our fish and that fish comes back to our plate; 1/3 of the food we cook is wasted; in addition¨, electronic waste is extremely dangerous for our health¨ Mr. Thiaw said. He also highlighted ¨ we should look at these waste from the opportunity side, but to turn these opportunities in business we need to change our minds¨.
Nadia Lamhandaz, Policy Officer at the European Commission’s EuropeAid Unit Climate Change, Environment, Natural Resources emphasised the need for policy dialogues, pointing out that improved policies can remove constraints from small enterprises and generate additional opportunities. ¨SWITCH-Africa Green Programme is implementing pilot projects in six countries aiming at developing SCP policies and supporting green business development. SEED has been instrumental in our development process¨, said Mrs. Lamhandaz.
We had also the chance to meet initiatives with missions similar to SWITCH-Med:
- UN Women Initiative launched its EmpowerWomen.org Business Hub, an online business platform for entrepreneurs, companies and business institutions to share and exchange strategies and initiatives in support of gender equality and women’s economic empowerment. “The private sector is a key player in efforts to build an inclusive economy and companies that work better for women. Through the Business Hub the business community will be able to share success stories, engage in dialogue, and take empowering solutions to global scale,” said UN Women Executive Director Ms Phumzile Mlambo-Ngcuka.
- Another initiative called Green Pioneer Accelerator Program launched by Impact Amplifier, Growth Africa, VC4Africa and Hivos which is open to green entrepreneurs from Kenya and South Africa, targets green entrepreneurs looking to take their innovations to scale, positioning companies by getting their financials and pitch deck in shape, and preparing them for fundraising conversations with investors. The programme combines a rigorous curriculum with practical experience shared by successful entrepreneurs, mentors and investors. Graduates also have access to over 600 private sector investors and can tap into the combined networks and knowledge of Impact Amplifier, Growth Africa, VC4Africa and Hivos.
- Inclusive Business Action Network will be launched by mid-November in Berlin, Germany by GIZ. The network aims to bring together a core group of inclusive businesses, investors, governments, foundations, and institutions. With the setting-up of this network, GIZ is aiming at making it easier for inclusive businesses to connect with other organisations and establish new partnerships. For further news (soon), check the website of the European Venture Philanthropy Association, as the launch will be linked to their Annual Conference.
At the SWITCH-Med parallel session, our focus was on understanding how to address those factors that enable sustainable entrepreneurs to thrive. There are a number of enabling factors that are important for the success of an entrepreneur which fall roughly into four categories:
1) Factors related to policy, such as regulatory frameworks;
2) Factors that depend on the broader economic framework, such as market demand or macroeconomic trends like a national/global recession or boom;
3) Factors related to the cultural environment and traditions of the region in which the entrepreneur operates;
4) Factors that depend more on the capacity and skills of the entrepreneur.
At the start of our session, we heard from four different initiatives from Africa that address one or more of these factors. Firstly, Michael Janinhoff, Head – ICE RIHB (Responsible and Inclusive Business Hub) talked about how GIZ (German Development Agency) is working at ICE RIHB to encourage turning environmental and social challenges into green businesses. He said that RIBH acts as an information provider and promoter of inclusive and green businesses in the Middle East and North Africa (MENA). He especially emphasized that green and inclusive business models are complementary and mutually reinforcing. So their approach encourages that inclusive business models keep all sustainability aspects, especially environmental issues simultaneously in mind. Michael explained us that RIBH supporting activities aiming to build an eco-system includes trainings and awareness raising activities for skills development. He also said that they work with a wide range of partners. We found their partnership with Intercontinental Cairo quite an interesting approach, as they try to create demand for green products using the purchasing power of big corporates. Let us also mention that RIBH MENA is currently working on a Sustainable Tourism Manual, that we are looking forward. Click here to view the presentation.
Secondly, Dr. Caesar Mwangi, Africa Regional Director – GVEP International (Global Village Energy Partnership) talked about what role a NGO can play in flourishing access to energy solutions. Caesar explained that launched in 2002 as a World Bank initiative, GVEP provides support to businesses working to accelerate access to energy in developing countries and has its HQ in London (UK); field offices in East Africa (Kenya, Tanzania, Uganda, Rwanda), Senegal, and Barbados. We learned that suiting services to the size of businesses would be favorable. For exemple, GVEP’s services for micro-enterprises include business skills capacity building and mentorship; technology training; market building activities; enterprise development support to increase productive use of energy; access to micro-finance. For SMEs, advisory services include strategic planning, investment advisory, operations/logistics support, financial planning and analysis, marketing and sales support, M&E advisory/impact assessment, project development support. They also provide market research services such as research conducted and published related to cook stoves and briquettes, solar-enabled mobile phone charging, solar product demand. Another big area of their services is about access to finance including investment readiness and capital raising strategy, introductions to providers of grants, debt and equity, lending facilitated through credit enhancement in the form of loan guarantees. They even have trainings targeted at financial institutions, both MFIs and commercial banks. One major take away from Caeser’s presentation was that support needs to be tailored to suit the specific needs of each enterprise. So, despite standard training modules and tools are useful, the full scope of support for an enterprise has to be tailored to that enterprise’s circumstances. Download his presentation here.
Thirdly, Giorgio Mosangini, Team Leader Green Entrepreneurship and Civil Society – UNEP/MAP SCP/RAC (Sustainable Consumption and Production Regional Activity Centre) explained how SWITCH-Med Action Network is striving to build an eco-system. Giorgio explained the path that SWITCH-Med will be taking to conduct trainings, provide technical assistance and matching service with financing institutions. He announced that this four-year journey is about to start with the acquisition of local partners and the call has been just published. Download his presentation here.
Finally, Daniel Sorrosal, Policy and Advocacy Manager – FEBEA (European Federation of Ethical and Alternative Banks and Financiers) explained how FEBEA is working to promote ethical finance and enhance access to finance via their funds. He explained that FEBEA is an international not for profit association incorporated under Belgian law, created in Brussels in 2001 with the goal of developing ethical and solidarity-based finance in Europe through participation of European citizens, communication and advocacy. FEBEA works on access to finance through three major actions: 1) Facilitating the exchange of information and best-practices and the co-operation between national networks and practitioners of the social economy and finance in Europe and beyond; 2) Representing its members towards the EU institutions and in International fora, and 3) Creating dedicated financial and non financial instruments. Daniel mentioned one particular fund called CoopMed, which is a new impact investment fund established for promoting the development of the Social and Green Economy and Social Entrepreneurship in the Mediterranean Region. CoopMed is going to start its operations in 2015 and will invest in financial intermediaries - cooperative and microfinance banks, credit unions, savings co-operatives, etc. They will be then selecting investments based on potential for social development, green and sustainable economy, and employment creation. We are looking forward to working with our strategic partner, FEBEA (listen our interview) within the SWITCH-Med Action Network towards the same mission of increasing access to finance. See presentation here.
Following, the inputs from four initiatives, we went into a round of World Café to collect more insights from the workshop participants. We had five tables focusing on initiatives working to build an enabling policy environment hosted by Michael from GIZ, initiatives working to build capacity and technical skills hosted by Giorgio from SCP/RAC, initiatives focusing on enabling access to finance hosted by Daniel from FEBEA, initiatives helping to build market links and finally a table to elaborate on the synergies between initiatives. Our table hosts facilitated discussions around two major questions; firstly, what initiatives participants know, and secondly, what successes and failures they have experienced so we can learn from them. After two rounds of 20 mins discussions, we have gathered the highlights of the discussion from the tables.
Michael, hosting the ‘policy’ table told that programmes like SWITCH-Med, SWITCH-Asia, SEED, IFC-HIA (on health issues) were listed and especially public procurement policies such as the PPOA in Kenya were emphasised in response to the first question. The second question was the focus of discussion on this table. There were different opinions about how to successfully implement the process of policy making. The participants saw it from a private point of view and against the background of their specific region. Few lessons learned that participants mentioned were:
- From a private perspective, one should not wait for policies to come ‘just start!’;
- Sheer legislation is not sufficient, it depends on the implementation of a policy;
- Local initiatives are quite often successful;
- Experimentation and learning from failures is essential;
- Private companies’ position statements pose a good start (e.g. Woolworths South Africa);
- Enable others to join/cooperate in policymaking, e.g. by creating (sectorial) networks by ecosystem (e.g. tech sector Kenya);
- Either you push policies very openly (raising public awareness) or secretly, thus informal or formal strategies apply, and
- Policies that protect all players in the value chain should be tapped in (e.g. Fair Trade).
Our table host, Michael from GIZ told us that the core finding was, also due to certain mistrust in the capabilities of the state, that private and even local initiatives are often successful. An important precondition is to have a driving force, preferably from the private sector (companies) or in networks (like the tech network in Kenya).
Giorgio hosting the ‘capacity’ table saidthe ‘capacity’ table said their discussion also focused more on the lessons learned. Before that, in response to the first question of what initiatives work on capacity and skills building, the participants responded that a long list can be made and they gave a few examples of initiatives addressing directly entrepreneurs such as the Challenges World Wide or initiatives that target trainers or mentors for entrepreneurs such as the Acumen Global Fellowship Programme.
Participants told us that the initiatives with capacity and skills building ambitions should pay attention to these lessons learned:
- A mix between formal and informal trainings should be done.
- These services should be reach rural areas and for this communitarian structures could be used;
- Evaluation and assessment schemes need to be built into the programmes and skills application should be followed up;
- Various skill sets should also be linked;
- Contents are repeated among a wide range of programmes so needs assessment is needed to respond to the real gaps;
- Finally, how trainings can be sustained should be thought through right from the start and market should be well assessed.
Host of the ‘access to finance’ table, Daniel explained that the participants shared their experience about a range of financial solutions that entrepreneurs require and current examples in the market responding those needs. Take-home lessons learned mentioned were as follows:
- There is a need for grants and seed funding that build skills for sustainability allowing entrepreneurs to fail at times. The examples are the incubation centres that provide a risk free environment to experiment, work on the eco-system for entrepreneurs, provide skills building and mentoring services and visibility to them.
- Public procurement (e.g. 1/3) can be directed to social entrepreneurs.
- Financing instruments such as factoring (i.e. selling invoices to a third party at a discount) can enable access to finance (i.e. cash) when most needed. This can be effective in trade of cotton, fish, and coconut.
- New instruments like crowd funding (e.g. Eco-Gas in Malawi campaign upcoming on indigogo) can facilitate worldwide pool of funds with high-risk tolerance and patient capital.
- Saving and credit cooperatives (such as the Jamii Bora Bank) can support saving and planning skills and are inclusive i.e. they bring impact to many people simultaneously.
- Producer associations (such as Milk producers in Malawi) can also work on capital creation, help share risk and skills building.
- Most interestingly, civil society organisations can play a key role in credit enhancement. For example, ‘first loss’ capital’ in the form of a ‘guarantee’ can be provided by the civil society organisations reducing the risk for investors. ResponsAbility Energy Access Fund is a recent example of credit enhancement schemes that will provide working capital to low-income communities. The pilot has catalysed the sale of over 800,000 solar lights and 100,000 clean cookstoves.
At the table focusing on the issue of ‘market pull’, moderated by Caeser, the participants firstly brainstormed on the initiatives they know and then listed several recommendations they have from experience. The major suggestions we heard were:
- Securing credibility of partners;
- Partnerships to cut cost and increase affordability and provide flexible payment terms (e.g. M-KOPA providing off-grid energy services have partnered with Safaricom for offering the mobile instalment method of paying for solar energy and with Google for mapping and monitoring the system);
- Putting emphasis on convenience (such as SIDAI does by bringing livestock treatment services to the keepers, where they are) and
- Increasing accessibility and making the market transactions real time via ICT applications (e.g. Shop Soko that allows artisan to sell handmade jewellery online at a virtual market place and e.g. MPESA allowing money transactions on mobiles and e.g. M-FARM giving up-to-date market information to farmers)
Finally, at the ‘synergies’ table, one big conclusion that we heard was that there is a big gap what is needed on the ground and what is going on at a higher level.
We have taken much from our SWITCH-Med session at the SEED Africa Symposium. The outcomes are significant assets for us as we are just designing our work on the ground for building a supportive eco-system for entrepreneurs that like to create economic, social and environmental value at the same time.
We look forward to our collaboration with the SEED Initiative. We would like to provide visibility to the SEED Award winners in the North African region (such as the Recycling for Environmental Recovery project) at our workshops and events, learn from the SEED business development services and continuously exchange on trends and solutions in linkage to the SEED Research activities.