Measuring the Development Impact of Innovative Businesses

May 7th, 2012
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A key aspect of our work to catalyze poverty-reducing business growth is helping companies accurately evaluate their development impact on local communities, including customers, employees, suppliers, distributors, and the wider economy. Equipped with a better understanding of these multiple effects, businesses can use this insight to guide both business planning and strategies for deepening their effect on poverty reduction.

To make this a process that companies can easily adopt, we are now developing an IGD impact measurement framework, a draft of which will be discussed at the upcoming Frontier 100 Forum in Addis Ababa May 8. The IGD framework is being designed as a business-minded synthesis of the many different approaches that are emerging to assess business impact on poverty reduction. It focuses on four key business areas and identifies the potential development impact in each.

As part of the Forum session, moderated by Jane Nelson, Senior Fellow and Director, CSR Initiative, Harvard’s Kennedy School of Government (and a member of IGD’s Leadership Council), participants will work through the elements of the impact measurement framework in small break-out groups to test and provide feedback on its relevance and usability. Once we’ve incorporated CEO input into the framework, we will begin engaging IGD network companies in implementing the measurement tool in their businesses.

Ultimately, we hope to develop a tool that can be used widely by businesses throughout Africa and beyond, one which will help drive significant economic growth and poverty reduction. We look forward to keeping you up to date on our progress and lessons learned!

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As Africans Earn More, Purchasing Power Grows

May 4th, 2012
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While some 61% of Africa’s population subsists on less than $2 a day, a growing number of Africans are earning more each year, and they are playing an increasing role in fueling the continent’s economic growth. Over the past two decades, the number of individuals spending $2-20 per day has increased from 111 million to 313 million. This growth is projected to continue; McKinsey estimates that the number of households with discretionary income, defined as those earning $5,000 or more annually, will jump 50% over the next 10 years.

At our upcoming Frontier 100 Forum in Addis Ababa, Ethiopia May 8th, IGD will feature a session focused on this rising “consumer class” in Africa, highlighting strategies and opportunities for businesses to innovate by creating new markets and providing low-income consumers with access to life-enhancing products and services.

A recent report from the African Development Bank asserts that “the middle class is widely acknowledged to be Africa’s future, the group that is crucial to the continent’s economic and political development.” This is primarily due to clear linkages between a rising consumer class and the prevalence of progressive values linked to strong economic growth, such as greater market competition, better governance, improved gender equality, and increased investment in higher education, science and technology. And while levels of income inequality in Africa are quite high, it has been shown that growth of the middle class is associated with better governance, economic growth and poverty reduction.

Business contributes to the rise of incomes through the creation of stable, salaried jobs and is in turn fueled by the growth in consumer demand. This virtuous cycle is now driving both international and homegrown corporations to expand across the continent to meet the increasing demand for consumer-facing products such as food and beverages, telecommunications, and banking.

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Infrastructure Matters

May 3rd, 2012
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Across Africa, inadequate infrastructure remains one of the primary obstacles to economic growth and poverty reduction. An estimated $93 billion per year is needed to address Africa’s infrastructure funding gap, with the largest gap in funding for power projects. Only one in four Africans has access to reliable energy sources such as electricity and if current trends continue, the number of people without access to power will actually increase through 2030.

This fundamental gap is why IGD is striving to attract greater investment in Africa’s power sector. One key effort is our work to help link potential investors with key U.S. government development programs—such as the Millennium Challenge Corporation (MCC) and Partnership for Growth—that are focused on increasing the availability of power in targeted African countries. We also highlight the experiences of companies that have made successful investments in Africa so that others can learn from their experiences.

One such company is ContourGlobal, led by IGD Frontier 100 participant Joseph Brandt. In Rwanda, which has few local energy resources, ContourGlobal, has launched a groundbreaking project to extract naturally-occurring methane from Lake Kivu, providing a local source of power while simultaneously reducing the possibility of a dangerous gas eruption that could affect millions who live nearby. The project plans to eventually reach 100 MW of electricity generation capacity, doubling the amount currently generated domestically and providing the potential for exporting electricity to neighboring countries.

Highlighting the challenges and opportunities for businesses investing in power, particularly in East Africa, will be a major focus of IGD’s Frontier 100 Forum in Addis Ababa in May. Executives from Symbion Power and Kenya Electricity Generating Company Ltd. will discuss significant African power projects they have been involved in and what their experiences mean for power investments currently in under development. We look forward to reporting out on the meeting next month, and will be tracking this topic throughout the year.

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World Bank Commits $100 Million to Support Agricultural Development in Ghana

April 26th, 2012
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The World Bank recently approved $100 million in credit to support the Ghanaian government’s efforts to improve food security by expanding commercial agriculture throughout the country, connecting smallholder farmers to markets and strengthening key value chains. The Commercial Agriculture Project focuses on facilitating access to land, strengthening Ghana’s investment promotion infrastructure in order to attract agribusiness companies, and promoting public private partnerships and smallholder linkages in the Accra Plains and the northern SADA Zone.

USAID is co-financing some of these activities, in particular the push to promote partnerships and linkages to smallholder farmers in the northern region. As part of our efforts to improve public-private alignment in development initiatives—including our work to connect agribusiness companies to U.S. Government priorities and opportunities in Feed the Future countries—IGD’s Jeri Jensen and Helen Mant have been in discussions with the project teams at USAID and the World Bank to understand the project’s goals, and to identify companies whose businesses align well with these initiatives.

According to Chris Jackson, Senior Economist and project Task Team Leader: “This project reflects the Bank’s continued support for Ghana’s agricultural development. By focusing on ‘socially inclusive commercial agriculture’ it will improve the enabling environment for farmers while also making sure that local communities can participate in new agriculture based opportunities. By strengthening the arrangements by which investors secure land, it will reduce investor risks and promote benefit sharing arrangements. The geographical focus promotes a balanced development between the high-potential Accra Plains and underexploited areas in northern Ghana.”

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Business for Better Development

April 20th, 2012
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IGD is pleased to announce the launch of “Business for Better Development,” a new project to promote effective, business-driven global development. Business for Better Development’s dual goals include helping companies deepen the development impact of their core business activities while working to maximize the long-term success and sustainability of U.S. development efforts.

Greater alignment between public and private investments—especially in transformational sectors, such as agriculture and infrastructure—can provide more sustainable business opportunities to companies that have long-term interests in the local economies where they operate. It also yields larger-scale and more effective development results, including poverty reduction and broad-based economic development.

Seven companies, including Boeing, Chevron, Cummins, FedEx, GE, IBM and Standard Bank, participated in an initial meeting for this effort and a number of others have expressed their support. These companies understand the catalytic role the private sector plays in the process of economic development and have witnessed the positive impact of their investments, operations, sourcing and trade in the communities where they do business.

Moving forward, Business for Better Development will work with companies to articulate the business case for development, outline what a business-driven approach means for government programs seeking to engage the private sector in development, and explore how this new approach could be applied to the next generation of innovative development initiatives like MCC second compacts, Partnership for Growth and Feed the Future.

Future activities include:

  • • Creating a series of original papers that 1) support a growing body of knowledge on the business case for global development, and 2) articulate how a more inclusive business case can contribute to sustainable development outcomes.
  • • Engaging in policy discussions to help increase the sustainability of U.S. global development outcomes through greater alignment between companies’ core business activities and U.S. development priorities.
  • • Collaborating with other organizations and leveraging social media to create platforms for further discussion and promotion of the role of business in sustainable development.

Ultimately, Business for Better Development will be a resource to companies seeking to learn from one another how to measure and deepen the social value of their investments, as well as to the U.S. government as it seeks to achieve more sustainable development outcomes. Stay tuned for notice of future events, including opportunities to learn from other companies and engage with key government officials, as this effort takes shape in the coming months.

 

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Emmanuel Katongole Featured on BBC Africa

April 18th, 2012
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General Powell, Mr. Katongole, and Secretary Albright at the IGD Leadership Council meeting in December, 2011

Fifteen years ago, IGD Frontier 100 participant Emmanuel Katongole and five other Ugandan entrepreneurs each invested $5,000 in a pharmaceutical import business. The company, Quality Chemical Industries Ltd. (QCIL), has since transitioned from importing anti-retroviral and anti-malarial drugs to manufacturing them, becoming the first African World Health Organization certified manufacturer and training local professionals to work at the company’s Ugandan headquarters. The company is currently building a second factory that will produce enough drugs to supply the entire East African market.

In an April 9th interview with BBC Africa, Mr. Katongole said that QCIL has “been able to achieve our first objective, to be able to manufacture medicines that meet international quality [standards] and right now our immediate next target is to invest further and meet the growing demand within the East African Community region.”  Read BBC Africa’s full profile on Mr. Katongole.

Earlier this year, we profiled Mr. Katongole on our blog:

Mr. Katongole has high expectations for economic expansion in Uganda and throughout Sub-Saharan Africa. He states that Africa is the place “where so little investment can lead to such big margins and returns and yet, at the same time, touch the lives of so many people.” He advocates for profits from natural resources to be invested in infrastructure and agriculture development, which will result in lowered costs of production, increased household incomes and improved food security.

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AICO CEO Speaks on Business Opportunities in African Agriculture

April 12th, 2012
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Image via Secret TenerifeExpansion of Africa’s agriculture sector holds enormous potential to feed the world’s growing population and create sustained economic growth where it is most needed. IGD Frontier 100 participant Patrick Devenish is CEO of AICO Africa Limited, a Zimbabwe-based agribusiness company built around smallholder farmers. In a recent interview with Afribiz, he discusses the success of AICO’s seed business and the opportunity for expanded food production on the continent.

“Step one is helping African countries to feed themselves, thereafter we see much bigger opportunities in helping the growing African middle class to get what they want out of life and a lot of that is eating better and eating more protein….The last and biggest opportunity is harnessing Africa’s potential to feed the world, India and China in particular.”

Find the full interview here.

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