Africa embracing alternative finance

This is one of a growing number of options becoming available to African entrepreneurs.

The Emerging World

A majority of businesses in Sub-Sahara Africa are small and medium-sized enterprises, also known as SME’s, and represent 90% of all businesses and produce 80% of all jobs throughout the continent.  Most of these enterprises lack access to finance stunting growth and business development.  The International Finance Corporation, IFC, estimates that up to 84% of SME’s in Africa struggle to get adequate financing from formal investment channels such as banks and other financial institutions, resulting in a credit financing gap of $140-170 billion annually. This has created a market need for alternative sources of financing.  Alternative financing platforms have stepped up to meet this need using crowdfunding and peer-to-peer (P2P) lending.

Piattaforme-di-crowdfunding-in-Africa

Let me first start out by explaining exactly what crowdfunding is. Crowdfunding raises capital for a project or a venture by collecting small amounts of money from a large group of people.  There are different types of crowdfunding opportunities. …

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Small Biz Challenges

In the Kokolemle section of Accra, I met a group of female farmers and entrepreneurs pondering a move into agribusiness. Their issues—access to capital, access to markets, finding affordable office space, defending intellectual property—are all issues my small business clients in Boston have wrestled with. Some of the obstacles are a bit more extreme. However, many of the same skills, along with a dash of cultural sensitivity can address these problems.

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Adventures in Ghanaian Real Estate

Time to catch up on my Ghana journaling. On my second Tuesday in Accra, my good friends and colleagues at Emos Consultancy arranged for me to meet with the managing director of NTHC Properties. This is the property development arm of National Trust Holding Company, one of Ghana’s oldest and largest investment firms.

The MD is a long time veteran of the Ghanaian property industry He pointed out that the high end of the market is not yet saturated but could eventually get there. Meanwhile there is nearly insatiable demand in the affordable segment serving the middle and lower middle of the market. This expert suggest improving existing properties to minimize cost rather than starting brand new developments. This strategy underpins NTHC Properties bear tern strategy.

The following day I met with in Asian entrepreneur regarding two vastly different ventures. One that provides affordable housing in the agribusiness sector. The other is a luxury apartment complex. Both projects have elements of risk as well as strong upsides. Thankfully, land title does not appear to be an issue. There are other challenges to work through. We are looking forward to providing our expertise to help shepherd these projects to completion under the right conditions.

 

 

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3 Things I Learned Today in Ghana

1. It’s great to have friends in country

Not only for the hospitality, or the insights and view from inside, the ability to trust people to do what they say they’ll do is invaluable.

2. Projects are not always what they seem to be

A simple capital raise can reveal a need for a variety of consulting services.

3. There’s nothing like on the ground presence.

I spent most of today with the management team of a Nigerian construction firm setting up in Ghana. Today they were looking for office space. Tomorrow they meet key decision makers whose influence can determine who wins contracts. American companies need to show this level of commitment or else be beaten to the punch by bold competitors from Africa, Asia, and Europe.

I was also reminded why I made this trip. I’m grateful for the opportunity to see first hand the changes that say much more than the macroeconomic statistics. Now I’m  better prepared to explain this exciting and growing market.

 

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Ghana Today–a Story of Growth and Struggle

I arrived in Accra yesterday morning for my first visit in several years. While I’m here to meet with partners, colleagues,  and prospective clients, I’m also anxious to see see up closely of the changes I’ve been reading about.

A different Accra greeted me immediately. The airport arrival area was cleaner and much more orderly than before. On the way to my hotel I saw several new office buildings including the brand new Octagon. There’s also the fabulous new Movenpick. This enormous building is clearly designed for big event and caters to an international clientele.I’m  right around the corner at the Accra City Hotel, which has replaced the old Novotel on Barnes Rd. The arrived of these new premium properties are recognition of Accra as one of the premier meetings destinations in West Africa.

Later that day, during my ritual stroll around the neighborhood, I could see that much of the old Ghana remains. There’s the chaotic bustle of Makola market. The tro-tros still offer dirt cheap transportation along with new City buses tant world ont besoin ont of place in DC or Mexico City.

During the next two I will explore the current state of Ghana’s development,  focusing on energy, infrastructure, and the country’s efforts to lessen its dependence on raw commodities and become a more industrialized, higher value economy. Along the way I will highlight potential investment opportunities and suggest ways Ghana’s companies and governments can become more investor friendly. Stay tuned!

AccraCityHotel

Movenpick

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Caribbean communities on the front lines of climate change adaptation

A key step is to understand how private for-profit initiatives can align with current thinking regarding resilience to maximize pro-climate impact and lead to healthy sustainable returns to investors.

caribbeanclimate

Photo Credit: Stuart Claggett

Newly-released analysis from CDKN has identified a series of approaches to help community-level organisations to increase climate resilience. The analysis focusses on the Caribbean, but has widely applicable lessons for community-based adaptation in other parts of the world. Will Bugler and Olivia Palin explain further:

The research acknowledges that the success of adaptation measures is highly dependent on local context, and shows how multi-level governance approaches can deliver locally-appropriate adaptation actions. By using approaches and methods such as network analysis, community-based vulnerability assessments and a ‘local adaptive capacity framework’, the research suggests that communities can improve the efficacy of climate action at the local level. What’s more the analysis also finds that more co-ordinated action at the local level can lead to increased influence on regional and national decision making.

The new analysis draws on outputs from three CDKN-funded projects spanning a decade’s worth of applied research…

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DEVELOPMENT OF AN IMPACT INVESTING INDUSTRY

These are issues that I believe impact investment professionals will grapple with for the foreseeable future:

Impact Measurement. There is still no clear consensus on how to measure the social impact of impact investments. A number of methodologies have been developed, each seeking to create a standard that can be used across a wide range of investments.

  • IRIS is a catalog of impact metrics managed by the Global Impact Investor Network. IRIS is intended to provide a common language for measuring social, environmental and finance performance.
  • GIIRS ratings, developed by B Analytics uses the B Impact Assessment to rate the impact of a given investment or portfolio. The GIIRS rating includes an Overall Impact Business Model Rating, Overall Operations Rating and a Fund Manager Assessment.
  • The UN Global Compact measures companies’ performance in meeting universally recognized standards of human rights, labor, the environment, and anti-corruption. The Global Compact also encourages alignment with the UN Sustainable Development Goals.

In addition, several organizations have their own impact measurement methods tailored to suit their specific circumstances. Impact investors and social enterprises will need people who can sort through these methodologies, and understand how to apply them to their organizations.

Mainstreaming” of Impact Investments. When will impact investing become the norm? Will companies ever report social results alongside financial results as a matter of course?

Based on my experience at the IBL workshop, much of impact investing mirrors the startup world, involving relatively young and small companies whose value proposition includes some form of groundbreaking innovation. One sign of mainstreaming will be when we see larger, institution-sized impact investments. In addition, one wonders if we will see established, Fortune 500 companies reporting social impact results. These are companies that have tremendous influence on the global economy, the global workforce, and on communities and municipalities. They usually discuss their interactions with stakeholders in their annual reports, but that is not the same as an objective measurement of impact. How will impact influence executive compensation? Firm value? Corporate governance? Professional recruitment? These questions are being asked and discussed but the answers are still some distance away.

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IMPACT INVESTING IN EMERGING MARKETS

Recently, I along with a group of mid career professionals participated in a 3 day workshop entitled “Break into Impact Investing.”

The workshop consisted of seminars from leading practitioners in the field. They represented organizations such as Village Capital, Accion Venture Lab, Infodev (World Bank), and the Calvert Foundation.

Impact investing is a broad category that addresses many topics of concern around the globe. This workshop devoted much attention go early stage ventures in the developing world.

  • The Village Capital seminar for example focused on a case study featuring an a successful entrepreneur turned investor who need to allocate investment dollars between two mission driven startups, and Village capital’s own investment fund and a donation to Village Capital’s non-profit entity.
  • Infodev provides funding and support to entrepreneurs in the developing world. The seminar featured a startup in Kenya and dealt with several issues faced by impact investment funds such as how to define success, fund structure, and governance.
  • The Accion Venture Lab presentation offered insights on assessing a social venture at its earliest stage.
  • The Calvert Foundation discussed fixed income investments in the impact investment context, using vehicles such as the Community Investment Note to fund several kinds of loans to social enterprises, and the Ours to Own campaign to raise capital to revitalize urban centers including Denver, Baltimore, and the Gateway Cities of Massachusetts. The Calvert Foundation is a bit of a departure in that it uses debt instruments for impact investing.

All the presenters gave us frameworks to guide the process of impact investing. They had in common the identification of a value proposition or unmet need, development of a business model, and building a strong management team. It seem the elements of a promising startup are the same regardless of whether or not social impact is a factor.

It is also interesting to note that most of the cases and enterprises discussed were in Asia and East Africa. It was pointed out that Kenya is considered one of the more attractive countries for impact investing. East Africa’s popularity among the impact investment community is largely due to the advanced startup ecosystem in East Africa compared to other parts of the continent. The concerted effort to make Nairobi an African technology hub, plus the impressive regional integration efforts of the East African Community have attracted investment of all kinds including impact investment.

Careers in Impact Investing

In addition to learning about the industry, the workshop included insights on career options in impact investing.

The workshop organizer, Impact Business Leaders is in the talent development business, so the workshop was very much about career development and creating the talent pool for the impact investment industry.

Throughout the weekend career paths were revealed both implicitly and explicitly. Some of them include:

  • Portfolio manager – working with financial statements, managing relationships with portfolio companies.
  • Analyst/CFO – Overseeing accounting and financial analysis, being a resource to management for understanding financial issues.
  • Adviser/Consultant – working directly with entrepreneurs providing advice and technical assistance.
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B2B Waste to Energy and Renewable Energy Fair

caribbeanclimate

b2b-w2e-re-fair

The Caribbean Community Climate Change Centre (CCCCC) in Partnership with GIZ and United Nations Development Program (UNDP)’s Japan Caribbean Climate Change Partnership (J-CCCP) project hosted Belize’s First B2B Waste to Energy and Renewable Energy Fair at the Belize Biltmore Plaza, in Belize City on the 9th November, 2016.

The presentation of the Potential Study on Producible biogas and renewable energy from biomass and organic waste in Belize by TNO Consultants Johan van Groenestijn, Robert de Kler and Marco Linders for GIZ / J-CCCP concluded that:

  • Large amounts of biomass resources are available in Belize that have a significant potential to produce biogas
  • All reported biomass resources have biogas production potential, but every case is different and has to be judged amongst others on its scale (amounts available), easiness of digestibility, alternative uses of the waste, location, etc.
  • For bananas, a best practice system comprises of a hammer mill and two…

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