In today’s hyper-connected world, many people assume that everyone can surf the web and message their friends and family online — but this is not necessarily true. More than a third of the world’s population still live in the digital dark, having never used the internet. As online technology becomes integral to day-to-day life, closing the digital divide is becoming increasingly urgent. Internet access is essential if we hope to unlock human potential and drive economic growth in underserved communities. But while mobile network operators (MNOs) have made significant strides in expanding their coverage, an unacceptable number of people — particularly those who are poor, less educated, rural, disabled and/or female — remain unconnected.

So, what exactly is the digital divide? At the most basic level, it’s the gap between people who have internet access and those who don’t — but there’s more to it than a simple lack of access. The problem has many layers and is driven by various factors, including affordability, users’ knowledge and skillsets, and access to essential facilitators of internet connectivity, such as electricity and a means of proper identification. Typically, these limitations are more apparent in least developed countries (LDCs).

Putting this in context, the International Telecommunications Union reported that in 2022, up to 17% of the population in LDCs lacked any access to fixed or mobile broadband networks, and almost two-thirds did not use the internet. Without internet, people lack access not only to entertainment and communications tools, but to information and services that can improve their quality of life. To take just one example, consider how hard it must be to get an education today without using the internet: These students face a huge disadvantage that could potentially hinder them for the rest of their lives — and the digital divide can cause similar obstacles across other common activities, from shopping to running a business.

It’s clear that this issue needs to be addressed, and we have the global capability to do so. To solve the problem, many mobile network operators in LDCs are focusing on innovations that support their customers’ ability to afford internet access, such as social tariffs, payment instalment plans, handset rentals and loans. These MNOs are also looking to extend their network coverage through infrastructural enhancements, including domestic roaming, while working with governments to expand the available mobile spectrum.

For instance, Airtel recently launched 5G in Nigeria — the third MNO in the country to do so — a promising sign of the growing investment in mobile access in Africa, and another encouraging step in the global 5G rollout. Meanwhile, according to Ericsson’s June Mobility Report, global 4G subscriptions hit 5.2 billion in the first quarter of 2023, and global 5G subscriptions are predicted to hit around 4.6 billion by the end of 2028, making it the leading mobile access technology.

MNOs and other stakeholders are achieving these goals through a number of tactics, including co-creation, open standards for radio access networks, technological access to more radio bandwidth, and regulatory support. Let’s take a closer look at these areas.

Collaborating to Bridge the Digital Divide

Collaboration is an essential element of infrastructure creation and the development of digital skills. Providing a telecoms infrastructure and creating affordable high-speed connectivity is expensive, particularly in sparsely populated rural areas. Focussing on innovation and co-creation by investing in shared infrastructure (where MNOs team up to reduce infrastructure ownership costs and deliver wider access) can offer a scalable and affordable solution.

This partnership model is becoming well-established in many regions, as cooperation between public, private and community partners provides access to technology and boosts the skills of everyone involved. To take one example, the UNDP’s Istanbul International Centre for Private Sector in Development and the UN Technology Bank for the Least Developed Countries jointly launched the Frontier Tech Leaders Programme earlier this year. The programme aims to address the digital divide by upskilling young tech specialists in LDCs and equipping them to combat local challenges that are limiting connectivity.

Open Standards for Radio Access Networks

In the broader tech sector, open standards ensure that various digital systems work together seamlessly, allowing for greater compatibility and interoperability between different technologies. In the telecom industry in LDCs, a limited choice of technology providers and a lack of flexibility has made it challenging for MNOs to manage their networks nimbly. However, that’s changing as these operators embrace open standards, and Open Radio Access Networks (Open RAN) provide one example of this shift. The shift to Open RAN involves disaggregating network hardware and software, which is traditionally bound together and supplied by a single telecom equipment supplier. Interfaces between different parts of the radio access network — the component of a wireless telecommunications system that connects individual devices to other parts of the network through a radio link — are standardized in an open network, facilitating a greater diversity of equipment vendors within the supply chain.

An Open RAN reduces the costs of deploying and operating mobile networks, which makes this approach well suited for rural and remote areas. However, mobile operators in advanced markets are also looking at the technology to enable innovation and increased flexibility when upgrading networks.

Leading MNOs are already making commitments to upgrade their networks through this technology. For instance, Vodafone aims to have 30% of its European network in Open RAN by 2030. Momentum is also building in regions such as Africa: In 2022, a range of MNOs, including the African MTN Group, signed an Open RAN Memorandum of Understanding to accelerate the adoption of this technology. In that partnership, MTN and mobile telecom industry business-to-business service provider Rakuten Symphony are working with Accenture and Tech Mahindra on Open RAN proof-of-concept trials in South Africa, Nigeria and Liberia, drawing on Rakuten’s network automation and orchestration solutions.

Boosting Internet Speed Through a Broader Radio Spectrum

Mobile network operators are also developing technology to harness a broader radio spectrum to provide faster download speeds and data transfers. One such innovation is millimeter wave technology, which uses very high frequency radio waves (30 GHz to 300 GHz) to deliver fibre optic-like speeds over the air. In urban and suburban use cases, this technology allows unparalleled mobile broadband speeds to be delivered to homes and businesses at a fraction of the cost of fibre optic cables. It has the potential to enable similar applications in remote or less developed regions where there is a lack of network infrastructure, such as fibre optic cables. 

Working with Pivotal Commware in South Africa, MTN recently concluded a 5G millimeter wave field trial which aimed to cost-effectively improve broadband service coverage and lower the price point for local network users. This innovation offers an exciting technological opportunity in developing regions, with the potential to connect communities and close the digital divide.

Regulatory Reform to Expand Internet Access

However, despite these promising developments, technology and ambition alone aren’t going to expand internet access to underserved communities. Policy reform that reduces the digital divide is also paramount if we hope to achieve meaningful change and ensure connectivity for all. New regulatory frameworks must set clear objectives to accurately measure the availability and quality of network coverage and penetration, while establishing clear goals to make further improvements.

In a sector with high costs and many barriers to entry, such as limited spectrum availability, it’s also paramount that national digital strategies encourage competition, promote investment and support network infrastructure deployment. Open networks are a pivotal step in this transition.

Progress Toward a Better-Connected Future

In today’s world, access to the internet and digital technologies is absolutely vital for education, employment, healthcare, and social and political participation. A lack of access to these resources can have significant and long-lasting consequences, especially for marginalized communities.

Fortunately, despite the complexities of bridging the digital divide, progress is being made — and the social and economic benefits are huge. For instance, 4G will account for more than half of new mobile subscriptions in sub-Saharan African by 2028, with massive implications for the region’s overall development.

But there is still work to do, so mobile network operators must not take their foot off the gas. Closing the access gap benefits and enables economic development by increasing productivity, employment, innovation and GDP growth, and it can support LDCs in developing global competitiveness. This goal must be kept front of mind as we move into an increasingly high-tech future, working to mobilize the vast potential of digital technologies to achieve a prosperous and inclusive society for all.

Andy McLean is Corporate VP of Communications and Cloud at Analog Devices.

Photo courtesy of World Bank Photo Collection.

Earlier this month, the Government of Kenya and the African Union co-hosted the very first Africa Climate Summit. They brought together 18 heads of African states as well as a range of other global leaders to discuss sustainable solutions to global climate challenges under the theme “Driving Green Growth and Climate Finance Solutions for Africa and the World.” The summit culminated in the Nairobi Declaration, a call to action proclaiming African states’ unified stance on climate action ahead of the 28th United Nations Climate Change Conference (COP28).

This was an important event that should substantially strengthen Africa’s voice in international climate negotiations and enable it to get more attention for its specific challenges and needs. Yet it also highlighted how much work remains to be done to clarify how the challenges of energy access and climate change are interlinked. For example, while the Nairobi Declaration emphasizes that 600 million Africans still lack access to any form of electricity, and about 970 million lack access to clean cooking, it fails to actually call for the delivery of universal access to energy as a key element of climate justice. This is a concerning omission in the statement, since universal energy access is an essential priority —  not only because of the benefits electricity provides to underserved households, but because it’s a key element of building climate resilience and supporting green growth in vulnerable communities.

Despite this failure to embrace universal electrification, there is still clear reason for hope in Africa’s energy access sector. For 55% of the region’s unelectrified households, off-grid solar energy (rather than grid extension or mini-grids) is the quickest and cheapest solution to gain basic access to electricity — an approach that can both address the challenge of poverty by powering small enterprises, and also enable climate resilience and adaptation.

The off-grid solar industry has reached almost half a billion people with solar energy kits already, expanding energy access at the bottom of the pyramid through the PAYGo business model and reaching rural communities through last-mile distribution: people like Jamleck, a 63-year-old reverend and farmer who has seen his crops diversify and his cows produce more milk thanks to water available through a solar water pump; Hamza, a 4th grade student who can now study at home with a solar lamp instead of breathing in toxic fumes from a kerosene lamp; and Jamila, a midwife at a rural health clinic who no longer has to hold a lantern in her mouth when delivering babies at night thanks to a solar system.

As we’ll discuss below, these individual impacts are further amplified by the ways off-grid solar can advance global progress toward our shared climate and development goals.

The Role of the Off-Grid Solar Industry in Addressing Climate Change and Poverty

As a recent paper from GOGLA points out, this transformative technology can unlock opportunity and green growth. It has become a cornerstone of the global effort to achieve universal energy access, and the industry is committed to powering 1 billion lives by 2030. Without off-grid solutions, we will simply not reach the Sustainable Development Goals related to electricity access, climate or other key areas of global development. 

The off-grid solar sector is large and diverse, with industry pioneers like Sun King illustrating how social enterprises can balance profitability, impact and scale, and around 150 innovative startup or seed phase companies hungry for investment to reach new frontiers. These innovators provide first-time energy access to those in need, and strengthen the electricity supply for weak grid customers. They also provide opportunities for these households to rise out of poverty by enhancing their connectivity, communication and financial inclusion — and also powering irrigation, cooling and agro-processing activities that can improve their crop yields and boost their incomes.

In light of these multifaceted impacts, how can we make sure the off-grid solar sector fulfils its potential to achieve its energy access and climate-related goals? 

Four Ways Funding Can Advance Progress Toward Universal Energy Access

There’s one clear answer to that question, as more and better finance will remain essential to the industry’s efforts to scale. The off-grid solar sector has already shown that public funds can leverage private capital to unlock scale and innovation, as results-based finance programs have catalysed markets such as Kenya and Mozambique. But there is much more to do. By focusing on the four actions outlined below, we can rapidly and radically accelerate the pace of change. 

1. Use targeted public and philanthropic funding to crowd in investment by expanding and enhancing existing blended finance instruments and venture-building grants: As highlighted by Chris Clubb at Convergence in a NextBillion article earlier this year, blended finance mechanisms can enable small amounts of public and philanthropic funding to “become a catalyst for system-wide change.” Within the off-grid sector, we have many examples of successful collaborations featuring innovative blended finance models. For example, the Mirova SunFunder Gigaton Strategy provides blended debt financing for clean energy projects and small to medium-sized companies that are accelerating the transition to a low-carbon economy and improving energy access in Africa, the Asia Pacific and Latin America. And Triple Jump’s Energy Entrepreneurs Growth Fund provides tailored mezzanine, equity and debt investments combined with technical assistance to early and growth-stage companies in the access to energy ecosystem in sub-Saharan Africa. 
2. Unlock greater local currency financing and engage local financial institutions: This is vital for reducing the currency exchange risk that businesses in developing economies face when they borrow working capital from lenders in currencies such as U.S. dollars. Again, there are many promising examples of this approach in the off-grid sector. For instance, the African Development Bank and Green Climate Fund’s $800 million LEAF program promises to spur local currency investments from local financial institutions to scale up the activities of decentralized renewable energy companies. And the TCX – EU Market Creation Facility will offer discounted pricing in several target currencies, with the aim of increasing debt investment by not exposing borrowers to currency risk, and creating local-currency lending capacity when and where it’s most needed. However, we need to radically expand these efforts and decrease the cost of debt if we are to get closer to the sector’s access goals.
3. Increase supply-side subsidies, consumer subsidies and other catalytic public finance mechanisms by governments and development institutions for consumers who can’t be reached with unsubsidized business models — or who are out of reach of current distribution areas in nascent markets: While there is exciting commercial potential — and emerging success stories — in the off-grid sector, to meet universal access goals, off-grid solar technologies need to penetrate the very hardest-to-reach markets. As of 2020, almost 300 million of the 733 million people without electricity were living in countries with only nascent off-grid solar markets, largely those with complex business environments. And the majority of solar kit customers live under the poverty line. Without subsidies, hundreds of millions will remain locked in energy poverty — but with them, progress can be rapid. This is exemplified by Nigeria’s Output-Based Fund for solar home systems, which has enabled 1.4 million solar home systems to be deployed from 2019 to 2022, close to four times the initial program target.
4. Accelerate climate-aligned investment into the sector: The people who lack access to electricity are also the most vulnerable to climate change. And off-grid solar solutions are a powerful tool for climate adaptation and resilience, creating green jobs, enhancing food security, unlocking income and powering disaster response. This makes the off-grid industry a natural focus for climate-aligned financing, whether it comes from the public, private or development sectors. GOGLA applauds the Paris Agreement target of mobilising $100 billion per year for climate action in developing countries, and we strongly encourage governments and development banks to earmark a portion of this to energy access. We also encourage climate-aligned investors to leverage patient capital to help ensure that the world’s poorest people, who have done the least to contribute to the climate crisis, are not left without the tools to weather its impacts. Alongside these funding efforts, carbon finance markets can also actively support electricity access through the purchase of carbon credits generated by clean energy businesses and initiatives.  

As the generational crises of climate change and global poverty continue to take a toll on communities around the world, the off-grid solar industry stands ready to innovate and collaborate in the search for lasting solutions. By properly understanding and monetising its impact, and recognising its huge climate investment potential, the global challenge of energy access can be turned into a valuable — and inevitable — global opportunity.

Laura Fortes is Senior Project Manager, Access to Finance, and Drew Corbyn is Head of Performance and Investment at GOGLA.

Photo courtesy of DIVatUSAID

Today the UN Sustainable Development Goals (SDG) 2023 Summit gets under way in New York. This summit coincides with and is part of Climate Week NYC 2023.

There are good reasons for the alignment between the two events. The SDG Summit is an attempt to provide a lodestar for humanity to navigate the interrelated and urgent crises the world is facing. And climate change is arguably the gravest crisis the world has ever seen — and one that impacts countless other global challenges, from poverty to hunger.

This year, these discussions are happening at the end of the hottest summer on record — a time when sweltering temperatures on land and sea, combined with widespread droughts and wildfires, have reminded policymakers and indeed everyone across the world of the desperate need to accelerate progress towards climate action and the other SDGs.

The location of these events also has symbolic significance. Coastal communities, like those north and south of New York City, are on the first line of defence against climate change. Coastal communities around the world bear the brunt of nature’s fury, whether that involves hurricanes, rising sea-levels resulting in flooding and erosion, vast amounts of seaweed (sargassum) washing ashore on beaches, or other climate change-related impacts. Coastal communities in the least developed countries are among the most vulnerable to these escalating impacts, as they do not have funds to build hard coastal infrastructure like sea walls and breakwaters to protect themselves. This precarious situation calls for a strategic rapid response.

I am strongly committed to channeling public and private capital towards transformative community-based projects in developing countries — including the coastal communities on the front lines of the climate crisis. Through my daily work as Managing Director at both Palladium and Bamboo Capital Partners (Palladium’s asset management arm), my central mission is to create a tangible impact while contributing to both environmental sustainability and socio-economic growth.

Palladium operates in over 90 countries, and in our work with these communities, what strikes me most is the role of social resilience, i.e., the capacity of communities to respond, recover and adapt to adverse situations. A focus on building social resilience is no longer an option in the age of climate change; it is a necessity for the survival and growth of these communities, and one that applies to at-risk groups worldwide.

But building resilience does not happen in a vacuum. It requires investment, not just in projects or businesses, but also in education, infrastructure, technology and social systems. And it requires funders to go beyond the traditional focus on making individual impact investments in various, unrelated projects to embrace a more strategic approach that directs public and private capital towards projects that generate social and environmental impact along with financial returns.

Given the scope of the climate crisis, it is crucial to mobilise and deploy different types of capital into projects that build climate resilience in the least developed countries around the world. But though this crisis has rightly been elevated to the forefront of the global development conversation, we can’t lose sight of the huge and interrelated challenges of feeding, clothing and housing the world’s growing population, while creating sustainable economic activity in the developing world.

Blue-green resilience investments represent one emerging approach to achieving these overlapping goals. A relatively nascent yet promising area of impact investing, these investments are focused on restoring and preserving coastal ecosystems while also bolstering the social fabric of these frontline communities. Their goal is to nurture both the “blue” (oceans, seas and coasts) and the “green” (land, forests and agriculture) in a way that not only sustains life but also propels it forward.

Nature-based solutions are at the heart of these blue-green resilience investments. By harnessing the power of natural solutions that have evolved over millions of years to survive extreme weather and other threats, we can help strengthen the resilience of at-risk communities. These solutions include restoring mangrove forests, which act as natural barriers against sea-level rise and storm surges while promoting sustainable agriculture that improves food security and generates economic growth.

Palladium has been working for almost 60 years with our partners and clients to mobilise capital and implement projects that have lasting positive social, environmental and economic impact. And since its inception in 2007, Bamboo Capital Partners has raised US $450 million and invested in more than 30 developing countries. But even though we positively impact millions of lives each year, our efforts are just a drop in the ocean. The scale and urgency of the challenges that these coastal communities face require global collective action. The financing gap to achieve the SDGs in developing countries is estimated to be US $2.5 trillion per year. If we still hope to achieve the SDGs by 2030, more innovative and sustainable financing solutions are required. As investors, policymakers, community leaders and individual contributors, we must all rally behind this cause.

It is our responsibility to ensure that the funding flowing to climate resilience continues to grow. We must work together to generate a rising tide of public and private investments, and to make sure that the resilience these funds build truly does lift all boats — including those in the least developed countries. As this summer’s climate-related disasters illustrate — and this week’s events in New York will surely emphasize — our time is running out.

Florian Kemmerich is Managing Director at both Palladium and at Bamboo Capital Partners.

Photo courtesy of Carsten ten Brink.

Yesterday, NextBillion launched the latest phase of our ongoing site redesign. You likely noticed some of these changes already, as we’ve been rolling them out gradually over the past year — and we will make some additional (smaller) updates in the coming months. 

Since this redesign represents one of the more significant shifts of the site’s features and functionality in our almost 20-year history, we wanted to explain the thinking behind these changes, and explore how our new design reflects both NextBillion’s ongoing evolution, and the evolution of emerging markets business, social enterprise and “impact media” more broadly.

But first, a quick trip down memory lane.

If you were among our original readers, you may recall that this is how NextBillion looked in 2005, shortly after it was launched by the World Resources Institute, its original parent organization. In those days — the heyday of the “blogosphere” — both our design and publishing process were typical of the countless independent blogs that populated the internet. NextBillion’s homepage featured lots of text but few images, and the content was freely uploaded by a community of guest posters, who came to the site to share and discuss topics related to emerging markets business and social entrepreneurship — particularly the base of the pyramid space. 

In the spirit of the time, these blog posts were generally short, and were not edited or fact checked — but they typically inspired plenty of reader comments. The site’s core goal was to provide an open forum for discussion and debate, and there were few comparable platforms for this sort of discussion. The impact media space was still in its infancy in those years, limited to NextBillion and a handful of other pioneering sites like Triple Pundit, Business Fights Poverty and the Stanford Social Innovation Review, which had also launched around that time. And social media hadn’t yet taken over the internet: Facebook was still only available to university students, and Twitter wouldn’t debut until 2006.

Here’s how the site looked in 2010, the year when the William Davidson Institute (WDI) joined the World Resources Institute as its co-manager.

Under the leadership of editor Scott Anderson (who now leads WDI’s communications team), NextBillion was beginning to move toward its current iteration. Its content was still driven by guest-written blog posts, but these were becoming longer and more formal, with Scott contributing regular articles of his own, and providing basic editing and fact-checking for guest contributions.

The site was also beginning to include aggregated content, with frequent cross-posts from the growing community of websites covering social and emerging markets business — and via a newsfeed with excerpts and links to external articles on these topics.

NextBillion had also started enabling readers to submit job opportunities for publication on the site — a feature that remains one of our most popular services.

By the time I came onboard in 2012, as editor of the short-lived “NextBillion Health Care” blog, the site’s core features were in place, with the addition of a calendar to keep tabs on the growing number of events in the sectors we cover.

With WDI as our sole parent organization, we maintained a past-paced publication schedule of two (or more) daily articles, including both originals and cross-posts. 

But the active commenting culture that had initially defined the site was diminishing, moving from several comments per article, to a handful of comments site-wide per week, as this discussion gradually became dispersed across social media and a growing number of like-minded websites.

By 2017, when I took over as the site’s editor, NextBillion had shifted to a far more photo-centric, magazine-like design. Our articles were also changing, becoming progressively longer as guest writers were increasingly submitting more detailed explorations of the challenges and opportunities of emerging markets business.

Articles also became less frequent: Instead of publishing two pieces per day, with frequent cross-posts from other sites, we’d shifted to publishing a smaller number of exclusively original articles. By that point, most of the discussion we had previously enabled had fully migrated to social networks, mainstream media sites or sector-specific publishing/networking platforms.

Around this time, we discontinued our commenting functionality, shifting our focus from fostering reader discussion and debate, to building a knowledge resource composed of original content that was thoroughly sourced and edited, and aggregated content that chronicled the broader trends and developments in our sectors of coverage.

Today, our original content inhabits the space between informal blogs and academic articles — rigorous and detailed yet accessible — with two or three original articles, typically ranging from 1,000 to 1,500 words, published each week. Our newsfeed has become one of the site’s most-visited pages, and our events calendar and jobs board continue to draw considerable traffic and reader submissions.

Now, as we launch the latest iteration of NextBillion, we’ve tried to create a design that leverages the site’s position as a pioneer in the coverage of emerging markets business and social enterprise, while streamlining and expanding our open publishing model. The key elements of the new design include:

• A new service for our core audience: Entrepreneurs in emerging markets have always been at the center of our mission. To further support their vital work, we’ve launched a new feature: Our Business Development (BizDev) page. The page will feature accelerators, competitions, funding opportunities, incubators, requests for proposals and training courses focused on (or available to) enterprises working in low- and middle-income countries. Some of these will be independently sourced by NextBillion — but we also invite readers to submit items of their own for consideration. (Like all our coverage and services, these ads are free of charge.) 
• Easier filtering by sector and topic: With almost 20 years of coverage, over 6,000 (mostly original) articles and over 19,000 aggregated news items on the site, we see NextBillion as an invaluable knowledge resource — a place where many of the top thought leaders in our sectors of coverage have published (and continue to publish) their insights, and where the rise (and sometimes the fall) of countless business and initiatives has been documented. Fortunately, the site’s original publishers had the foresight to tag their articles by topic, providing easy access to different coverage areas. We’ve pared down and clarified these tags, enabling you to filter content broadly by sector (e.g., energy), and more narrowly by topic (e.g., clean cooking). We’ve highlighted all these sectors, and a rotating selection of topics, on our homepage, and in the footer of each page. We invite you to click on them and take a look around: You’ll see both any original articles (in light blue) and any aggregated news items (in dark blue) we’ve published about those subject areas, over the entire lifespan of the site. (To zero in on original content only, go to the “Original Articles” drop-down menu at the top of the page.) This tagging functionality around sectors/topics has taken the place of the topical, time-bound series we used to publish, providing a permanent access point for exploring the site’s many focus areas.
• A longer-term publishing approach: As we’ve shifted from short daily blog posts to longer, less frequent but more detailed pieces, we’re working to keep these articles in the spotlight. Alongside the filtering functionality described above, we’re highlighting past articles focused on specific sectors and topics, updating these featured sections of our homepage regularly. We’re also highlighting the articles readers have selected as our “most influential” in our long-running yearly contest: These are now a permanent feature in our navigation menus.
• A renewed focus on our writers: Our guest writers are the beating heart of NextBillion. The original articles they share are the cornerstone of our coverage. To help draw attention to their insights, we’ve added a “Featured Authors” section to our homepage: Click on an author and you’ll see not only their profile page, but the full collection of all their NextBillion articles — a unique window into the evolving thinking of some of the key names in emerging markets and social business. We will feature new authors in this section each week, with the goal of providing greater visibility to their thought leadership. 
• A more streamlined approach to reader-submitted content: NextBillion’s “open platform” approach has always been a hallmark of our publishing model, and that reader interactivity includes not only our original guest articles, but our aggregated news items, calendar events, jobs, and now our business development opportunities. While we independently source and curate content for our calendar, newsfeed and BizDev page, we also encourage readers to submit their own items for consideration on these pages: To facilitate that, we’ve created submission forms for events, news and BizDev opportunities, in addition to the previously existing form for jobs — you can also find these links in the Contact menu at the top and footer navigation of the site.

We’re excited to bring these new features and design elements to our readers and guest writers, and we hope you’ll find them useful to your work. 

While looking through the site’s previous iterations (using the amazing Wayback Machine), I was struck not only by how much NextBillion has changed over the years, but how much its focus has remained the same: The site was initially launched as a “community of business leaders, social entrepreneurs, NGOs, policy makers and academics who want to explore the connection between development and enterprise” — and despite the many changes we’ve undergone, and the vast (and inspiring) development we’ve seen in the sectors we cover, that’s exactly what we are today. We thank you, our readers and guest writers, for engaging with NextBillion over the past two decades, and we look forward to working with you in the years to come.

James Militzer is the managing editor of NextBillion.

The global impact investment market is estimated to be worth US $1.16 trillion, but less than 2% of these investments are channeled to Africa’s health markets. This should not be the case, as the continent offers uniquely valuable opportunities for health businesses, due to overlapping trends involving both the supply of, and demand for, quality healthcare.

On the demand side, Africa’s demographic trends are likely to drive a growing need for healthcare products and services in the coming decades. The United Nations Children’s Fund estimates that four out of every 10 children globally will be born in Africa by 2050, and these deliveries — and the subsequent care needed by both mothers and children — will take place in public and private health facilities across the continent. Africa’s demographic data shows that the continent already has the largest population of young people in the world, and new insights from McKinsey & Company project that almost 800 million people will enter the African workforce within the next three decades. These workers and emerging consumers will need products and services to maintain their health, prevent and treat diseases, and raise their productivity to meet local and global demands. Additionally, Africa faces a double disease burden, dealing with still-prevalent infectious diseases along with a rising incidence of non-communicable diseases. These diseases are contributing to significant productivity losses across the continent, making the need for universal access to high-quality healthcare even more urgent.

Meanwhile, on the supply side, Africa is currently underequipped to fully provide the healthcare products and services its growing population will require. To take one prominent example, its annual demand for vaccines is projected to reach 2.7 billion doses by 2040, but there is limited manufacturing capacity on the continent to meet these needs. It also has a low health worker-to-patient ratio — a gap amplified by the mass exodus of health workers to developed countries.

As a physician and management researcher with experience in several African countries, I understand the value of timely investments to protect people’s health and wellbeing. I believe this is a pivotal moment to invest in Africa — and impact investors are well-positioned to do so. The growing impact investment space offers useful means to direct ample capital toward addressing the region’s health challenges, while maintaining effective engagement with the public sector. The untenable status quo in African healthcare should inspire impact investors to see these challenges as opportunities for a sustainable transformation of health systems and markets across the continent. Below, I’ll explore some of the ways investors and other stakeholders can contribute to this transformation.

Manufacturing Health Products

The COVID-19 pandemic exposed the over-dependence of African countries on other regions for access to vital medical supplies and health products. African leaders recognized this challenge and responded with the launch of the Partnerships for African Vaccine Manufacturing — which aim to expand the production of vaccines on the continent over the next two decades — as well as the African Pharmaceutical Technology Foundation and the African Medicines Agency. This vision requires national, regional and global reforms to support the sustainable production of vaccines on the continent. Governments must devote more resources to research and development within their limited fiscal space, while creating an enabling environment for business development and cross-sectoral partnerships that support the local manufacturing of vaccines and other healthcare products.

Impact investors interested in health markets and life sciences can play a crucial role in advancing this vision — and their efforts will not only contribute to equitable access to vaccines, essential medicines, diagnostics and other health products on the continent, but will also facilitate effective responses to disease outbreaks, non-communicable diseases and mental health issues. To that end, investors can support new biotech firms, contract manufacturing organizations, laboratories and product development partnerships to address the unmet diagnostic, therapeutic and vaccine needs of African countries. Despite the region’s “institutional complexity,” investors that enter the continent early to build the infrastructure and relationships for a robust value chain are more likely to reap attractive returns with significant impact.

Developing Africa’s Health Workforce

Expanding access to high-quality healthcare in Africa will require more health workers. Evidence suggests that the continent is in dire need of an array of community-based, generalist and specialist health workers to raise the health worker-to-patient ratio. Additionally, multiple initiatives to expand the local production of vaccines, medicines and other products are contributing to the growing need for new investments in workforce development for the emerging biopharmaceutical industry. Leaders in the public, private and social sectors can learn from the exemplary expansion of the biotech and pharmaceutical industries in China and India to create specialized educational institutes and industrial clusters that accelerate talent development for Africa’s emerging healthcare value chain. The production of more well-trained workers can also reduce the negative effects of worker migration to the West.

A number of major players are working to address this challenge. The Mastercard Foundation and Institut Pasteur de Dakar recently signed a new partnership to develop talents for vaccine production in Africa. The biomanufacturing services and technology provider Unizima has also announced an inter-university partnership for vaccine manufacturing. And the International Vaccine Institute has training opportunities which welcome African students and professionals. African colleges and universities are also responding to this need, with Nigeria’s University of Medical Sciences and Rwanda’s University of Global Health Equity providing useful models of focused medical education. These efforts demonstrate faith in Africa and should nudge impact investors to work with other stakeholders on talent development and expansion of the continent’s health workforce. An increase in the enrollment and graduation of students from accredited public and private institutions can expand the number and capabilities of workers across the value chain to address national, continental and global healthcare challenges.

Investing in Healthcare Service and Product Delivery  

Investment in Africa’s health markets is an investment in the future prosperity of the world. Although it is unclear how emerging technologies like artificial intelligence and robotics will reshape the global workforce landscape — and what their potential impact will be in Africa — there are ample reasons to prioritize investments in supply chain infrastructure on the continent, and to boost access to finance for health-related small and medium enterprises (SMEs). That’s the focus of the Medical Credit Fund, part of the PharmAccess Group — a leader in providing credit to health businesses through partnerships with context-specific financial institutions. Founded in 2009, the fund provides loans to general practice facilities, specialist centers and distributors of health products. Its technical assistance program enhances the capacity of health enterprise owners and managers to identify market opportunities, develop business and quality improvement plans, and become better positioned to access operational and growth capital. With over a decade of experience in supporting SMEs, the Medical Credit Fund offers useful lessons to established and emerging capital providers working with health enterprises.

A variety of funding platforms are emerging to serve the growing needs of African healthcare firms. One such fund is HeliumCredit — part of Helium Health. Launched in 2020, it has already provided credit to hundreds of healthcare facilities in Nigeria, with plans to reach a wider base soon. Another one is Transform Health Fund, a new platform backed by global health and development financiers, which recently closed its first round: It targets service delivery and supply chains. Additionally, the World Health Organization and development finance institutions launched the Health Impact Investment Platform in June 2023, with a focus on providing financing for primary health care. As these platforms design and refine their investment portfolios, stakeholders must pay attention to the potential risks and benefits of the blended financing mechanisms they often employ.

Although public financing remains crucial for national efforts to achieve universal health coverage, these new platforms and recent trends in investment flows highlight the role that private enterprises and investors can play in Africa’s efforts to reimagine its healthcare value chain. Synergistic investments in the sustainable production of health products, workforce development and healthcare delivery represent viable pathways for impact investors to contribute to equitable access to medical products and services across the continent.

Abiodun Awosusi is a General Management PhD student at the Ivey Business School — Western University.

Photo courtesy of IMF Photo/James Oatway.

At the beginning of the last decade, we saw businesses and investors as an untapped lever for gender and social inclusion — and for positive change in emerging markets. Back then, gender equality and inclusion efforts were seen mainly as the purview of development organizations. But we saw the potential in leveraging the vast resources of private businesses and investors to advance these goals. In the investing space, specifically, we saw a role for the full range of capital providers and asset allocators, with a focus on venture capital and private equity firms, fund managers, private debt allocators, development finance institutions, philanthropic foundations, and/or institutional investors.

We believed that these private sector players could become a powerful force for change if they had access to simple and actionable solutions tailored to the realities of businesses, finance and the entrepreneurship ecosystems. We also saw that by demonstrating the business case for gender inclusion, we could make it matter to a broader set of private sector organizations. But we understood that in order to do this, we would have to be a kind of organization that, to our knowledge, had never existed before: One that would combine development and gender expertise with business perspectives and know-how, offering hands-on support — while putting business goals first.

In response to this need, in 2012 Value for Women was launched as a social enterprise uniting deep gender expertise with equally deep business and finance experience. Since then, we have provided support to businesses, investors and financial institutions in over 15 countries across five regions, reaching 700 such organizations in the last three years alone. We’ve also seen others take up the mantle of gender inclusion in business and investing over these years, with field-building happening via organizations like GenderSmart (now 2X Global), the Aspen Network of Development Entrepreneurs, the Global Impact Investing Network, 2X Collaborative and others, while standards like the 2X Criteria and the Women’s Empowerment Principles have emerged to provide North Stars for impact-driven investors.

The result is that today, impact-driven investors more clearly see the reasons gender is relevant to business, finance and investment. And there are now terms, like “gender smart,” to help us articulate these concepts. But the biggest sign of this momentum is the reported 3.5x growth in the number of gender lens funds, from 58 in 2017 to 206 in 2021, as tracked by Project Sage.

However, while these gains are important, they are still not enough. In global private markets in 2021, only US $6 billion was raised for gender lens investing — which represented less than half of these funds’ fundraising targets and a tiny percentage of the almost $1.2 trillion raised by private markets globally. Further gains are critical if we hope to achieve gender equality anytime soon: It is currently estimated that it will take 132 years to reach gender parity globally, and accelerating that timeline will require a substantial change in funding.

As Value for Women moves into our second decade, we wanted to take a moment to assess and share what we’ve learned from our first 10 years. Below, we explore some insights that will fuel progress toward gender inclusion in business, finance and investment in emerging markets over the coming years.

Four Lessons from 10 Years of Catalyzing Gender Inclusion in Business

We’ve learned some key lessons from our gender inclusion work over the past decade, including the following:

Lesson One: As the effort to boost gender inclusion in the business, finance and investment sectors continues to grow and evolve, the space has begun to move from a focus on “changing women” to changing institutions. Solutions are no longer exclusively asking women entrepreneurs to become more investible, nor urging women employees to become more recruitable. Rather than seeing women as the problem, more and more solutions recognize that institutions, systems and processes are flawed in the way they invest in and engage women. This has been a key pillar of our work at Value for Women since 2012, and we are seeing the fruit of our efforts to help countless capital providers understand how they can increase capital flows to women, better support women in the workforce, and fund more businesses that provide services or products to women.

Lesson Two: Today, there are more holistic approaches to gender and inclusion in business. Women are still working on an unlevel playing field — and it’s not only women business leaders and entrepreneurs, but also female employees, value chain workers and consumers. To redress this, we’ve pioneered the concept of “gender-forward business practices,” which has influenced the field to look beyond only supporting women-led businesses to also capture missed opportunities to promote gender equality across customers, workforces, value chains, platforms, “gig economy” workers and other areas. This change has required a slow mindset shift, but it has become a powerful positive trend that has only been possible through work undertaken with industry partners who were willing to take risks.

Lesson Three: There is strong and growing evidence demonstrating the business case for including women and a gender focus in business, finance and investment activities, and this is fueling interest — but evidence alone has not always been enough to motivate action. Over the course of 2022, we interviewed over 100 experts, investors, businesses and enterprise intermediaries, reviewed dozens of publications and countless case studies, and reflected on our own work. The majority of experts with whom we spoke agreed: Since simply highlighting the business case — i.e., the expected commercial benefit — for gender inclusion has not always been enough to motivate change, we also need to make this business case relevant and applicable for organizations. We need to focus on small and medium-sized businesses in emerging markets: the key group of businesses for whom gender inclusion hasn’t been explicitly relevant to date. And this information needs to explicitly speak to the importance of including women in a variety of roles — not just women as leaders or entrepreneurs, which is the role this sort of effort has primarily focused on — in order to speak to the businesses that are seeking to engage women in different ways. This will require us to better communicate the business case, and to deliver it hand-in-hand with data on gender inclusion’s positive impact on society.

Lesson Four: Today, a core group of pioneering enterprises, financial intitutions and investors are convinced of the value of gender inclusion, and have moved from asking “why” gender is relevant to business, finance and investment to asking “how” they can integrate gender into their business and investment strategies. As the field has moved forward in all the ways described above, and the growing business case evidence has become more relevant to a wider diversity of players, the increasing acceptance of the value of inclusion among these “early adopters” requires us to go further. This cohort, albeit still small in relation to the broader market, is convinced and thirsty for more, creating a growing demand for guidance on how to integrate gender into business and investment strategies.

We need to provide this guidance — and we need this thirst to grow quicker and more widely among those who remain unconvinced.

Building the Momentum of Gender-Inclusive Business in the Next Decade

Our efforts over the past decade have proven that there is a vibrant cohort of businesses, financial institutions and investors operating in emerging markets, that are seeking practical on-ramps to integrate gender equality considerations into their work. Going forward, the gender-inclusive business sector needs to:

• Keep inclusion at the core: As the private sector moves further into its gender and inclusion journey, it is critical that it learns from the experiences of the development sector, seeing the full diversity of women’s experiences and considering the additional power and identity dynamics at play. Otherwise it is likely that only well-educated, well-resourced white women will benefit.
• Reach more investors, businesses and financial services providers: We are barely at the tip of the iceberg in terms of the number of organizations acting on gender inclusion. We need to make the entry points for newcomers even more accessible. And this will be particularly critical as we become more nuanced and sophisticated with intersectional approaches, because accessible entry points are the gateway to more widespread, and eventually deeper, action.
• Build together: In light of all that lies ahead for our field — including both new opportunities and inevitable challenges — it will take all our brains, hands and hearts to maximize the impact of our combined work. We need field builders to keep the on-ramps accessible, even as the field continues to evolve. We need more brokers — like consultants and other specialists who help businesses navigate the challenges of incorporating more inclusive practices — to make gender and inclusion actionable. We need innovators — and those who fund innovation — to continue finding and supporting what works. And we need to align the work of these various players, to consolidate our shared gains.

As we look toward our next chapter, Value for Women has set the audacious goal of helping to bring new opportunities and better conditions in business, investment and finance to 10 million women over the next 10 years.

To accomplish this, we commit to: going wider, to reach more mainstream audiences; going deeper, ensuring we are tackling inclusion, diversity, equity and intersectionality; going bolder with experimentation and platform building; and going together with our growing group of partners. Because we have seen that practical actions drive systemic change from within, we will continue to design and deploy practical ways for investment, finance and business to advance gender inclusion while creating value, mitigating risk and driving innovation.

If you’d like to read more about these learnings, or if you want guidance for how you can start or expand your own efforts to boost gender inclusion, check out our recently-published Insights series here. You can also subscribe for resources, tips and updates, follow us on LinkedIn, or email us to explore how we can help you achieve your gender inclusion goals.

Rebecca Fries is CEO and Co-founder of Value for Women, and Luis Marquez leads Value for Women’s advisory services.

Photo courtesy of UN Women/Ryan Brown.

At some point, every entrepreneur is asked by an investor: “Can your company scale?” In the world of traditional venture capital (VC), investors typically define scale as expanding into new geographies and serving other customer segments, thereby reaching millions of customers. If a business lacks the potential to meet these requirements, VC investors generally aren’t interested.

It is tempting for us as impact investors to try to conform to this definition of “success,” solely seeking out social enterprises that reach millions of individuals. And indeed, it’s common to see impact investors — including us at Acumen — adopt this framing, often by touting the high number of “lives impacted” by our investments, or the impressive number of individuals gaining access to our portfolio companies’ products or services. But we cannot afford this single-minded approach when it comes to agriculture in emerging markets. This focus on scale ignores the realities of agribusinesses and the urgent needs of smallholder farmers, and misses the opportunity to assess the success of a business based on its ability to expand further into value chains, deepening its impact. 

We at Acumen believe it’s time to challenge the traditional expectation that a single agribusiness ought to reach millions of smallholders — or even hundreds of thousands. If we want to transform the lives of the world’s 570 million+ smallholder farmers, we need to move beyond “lives impacted” as a measure of success, and arrive at a more nuanced understanding of scale within agriculture. 

But don’t just take our word for it. Acumen interviewed other impact investors and agribusinesses (both within and beyond our portfolio), aiming to better understand the perspectives of funders and entrepreneurs in this key sector. As part of this research, we asked: What does it mean for an agribusiness to scale? What factors limit the number of customers a company can reach? And how can a more nuanced definition of scale redefine how we think about success? 

Scoping the Potential to Scale

These conversations and our related experience show that the average agribusiness can expect to reach between 5,000 and 10,000 smallholders. The GIIN’s impact performance benchmark for agriculture, available through IRIS+, backs this up: Across investors who reported, the average portfolio agribusiness reaches 5,643 smallholders. 

One of the biggest determinants of scale potential is a company’s business model. Horizontal models that cut across value chains and offer single products or services, such as financing or insurance, demonstrate tremendous opportunities to scale. For example, companies like Juhudi Kilimo and NRSP offer loans to farmers and have reached hundreds of thousands of smallholders each. Horizontal models do have some downsides, however: According to IDH, a co-creator and co-financier of sustainable value chain solutions, “A non-holistic business (i.e. an organization focusing on only a single type of good or service) will often only be viable when coordinating with other organizations… .” Acumen has also found that horizontal models are more limited in their ability to directly impact farmer incomes and livelihoods. These types of agribusinesses can reach hundreds of thousands of farmers, but in order to achieve deeper impact, this often requires more developed markets and high levels of coordination between companies. 

The Potential of Farmer-Allied Intermediaries

Vertically-integrated, high-touch, bundled service business models, on the other hand, are better suited to address the needs of smallholders, especially in the business environments where Acumen operates. Acumen refers to these models as Farmer-Allied Intermediaries: a catch-all term for aggregators, processors, producer-organizations and vertically-integrated brands that source from smallholders. 

These companies face challenges unique to agriculture that narrow the number of farmers they can reach, or that make it difficult to scale a specific business model. These challenges include:

• Environmental factors which vary by region, like soil types, precipitation patterns and crop availability. 
• Low population density in rural areas where farming is the predominant source of income.
• Poor infrastructure, which makes transportation to and from communities difficult.
• Lack of trust from farmers, the result of years of exploitation by monopsonists — i.e., single buyers who dominate the market.

Overcoming these hurdles requires partnerships, relationship building, iteration and time, but these efforts are critical. Companies that work with and buy from farmers play a key role in improving smallholders’ lives, and in these regions, markets are often underdeveloped, forcing companies to offer multiple products and services to build them. As Yi Li, co-founder and CEO of FarmWorks stated in our interview, “We’re in a market where the supply chain is broken throughout — poor infrastructure, [and a lack of] good data, capacity and talent … FarmWorks can double the incomes of farmers, but not through a single point solution. We provide bundled services plus market offtake.” These companies may not fit traditional ideas of scale, but their impact is deep.

Stories of Deep Impact, With or Without Scale

Lizard Earth offers a good example of the importance of depth of impact. It operates in Eastern Sierra Leone, where the average cocoa yield per hectare is two-thirds that of nearby Ghana. Lizard Earth provides land access, inputs, training and market access to 2,800 cocoa farmers, and has plans to reach 5,000 farmers by the end of 2024 — an estimated 25% of smallholder cocoa farmers in the region. Despite the relatively small number of farmers reached, the company’s impact is incredible. According to a 60 Decibels study, over 80% of the farmers it works with reported a high increase in income, enabling them to afford things like education and food, and 97% stated they could not easily find a good alternative to its services. Lizard Earth may not reach hundreds of thousands of farmers or expand into other countries, but without its services, these farmers would be hard pressed to see the same improvements in their quality of life.

Agribusinesses like Lizard Earth challenge traditional notions of scale. Community-based investments take it even further. These investments typically operate through a farmer association in one specialized value chain, reaching just a few hundred farmers. For example, Acumen recently invested in CortePaz, an association of cacao producers in Colombia that provides technical assistance to smallholder farmers. In addition to increased harvest yields and improved farmer incomes, CortePaz’s impact goes even deeper. With a shared ownership model, the association is more likely to have greater autonomy over its own income and a greater ability to build community wealth. These outcomes have the potential to transform the lives of smallholders and their communities, especially in Colombia’s post-conflict areas.

However, even vertically-integrated models are not a monolith. While these businesses reach 5,000 to 10,000 farmers on average, some companies — like FarmWorks and S4S — are exceptions to the rule, and are poised to surpass those numbers by a wide margin. Both businesses operate through decentralized, hub-and-spoke models, wherein the company extends its reach through agents, entrepreneurs or trading hubs. Each hub offers bundled services, including offtake, to a cluster of 200-300 smallholders. With multiple hubs, the ceiling for lives impacted can reach hundreds of thousands of farmers.

The substantial reach of this model most closely resembles traditional notions of scale. But as an impact investor, we cannot invest solely in this model. Context matters, and other business models are better suited to reach certain markets and respond to different challenges. 

Scale the Solution, Not Just the Company

If an agribusiness can be small and still be successful, then how can we ensure more smallholder farmers can access the goods and services these companies provide? What are other ways to measure an investment’s impact, beyond the scale the company achieves? What questions should companies and investors be asking?

When we spoke to companies in the sector, a few indicators were just as, if not more, important to them as the “number of lives impacted” metric popular among investors. For instance, they reported that indicators such as year-over-year income changes for the farmer, product-market fit and market share offer a more relevant measurement of scale and success at the company level.

Along with utilizing more appropriate indicators, investors can help expand the concept of scale beyond the confines of an individual business. In cases where companies are likely to succeed at a smaller scale, investors can help bring these businesses’ solutions to the wider world. For example, community-based investments like those discussed above are not designed to reach beyond the farmer association’s community. But the model, when proven out, has incredible potential to be replicated. Replication will not come from the communities themselves, but from investors who build on the strategies and lessons from those investments and apply them to other markets and geographies. That way, though a single agribusiness itself may not scale, its impact can extend far beyond its target population. 

Another way to reconsider scale is through Azahar’s approach. Azahar provides training to smallholder farmers in Colombia and purchases green coffee beans from them at premium prices. The company has developed a Sustainable Coffee Buyer’s Guide to shift more of the value in the broader supply chain to coffee farmers. The guide informs and encourages customers and other coffee roasters to pay a price based on regional production costs, which enables farmers to make a sustainable, prosperous income. This approach extends beyond Azahar and can influence other players in the sector; the solution will hopefully out-scale the company. Strategies like these can change farmers’ lives and create ripple effects throughout entire ecosystems.

As these examples show, in agriculture, scaling the solution is just as important as scaling the company. Rather than simply asking “how many farmers can this company reach?,” investors ought to ask:

• “What are we learning about a certain business model that could work elsewhere?”
• “How can we or someone else replicate this?” 
• “What partnerships and blend of capital will enable us to scale these solutions?” 

Agribusinesses do essential work, and their impact is deep. Rural poverty is an immense challenge, and traditional ways of doing business are not suited to meet the needs of smallholder farmers. Investors need to find other ways to tackle these problems, beyond just supporting a few world-beating companies. We need thousands of smallholder-aligned agribusinesses, and we need them now. Broadening our definition of impact, and scaling the solution rather than just the company, is how we get there.

Chris Wayne is an Associate Director, and Coco Lim is a Senior Associate at Acumen.

Photo courtesy of ICRISAT.

To paraphrase Ronald Reagan’s famous debate line, “There he goes again.”

I was saddened to read Jeff Ashe’s recent NextBillion article, “Yunus Was Wrong—Savings, Not Credit, is a Human Right: Here’s How the Financial Inclusion Sector Can Shift its Focus.” In the article, Ashe, an accomplished leader in the financial services for the poor movement, continues promoting his favored approach — self-help groups and village savings and loan associations — by bashing those who emphasize other, complementary strategies. He has been doing this for more than a decade, and I have never understood why such a giant in our field has adopted such a small-minded mentality in his efforts to affect social change.

Unfortunately, it is far too common for people promoting a social innovation or a social enterprise to do so at the expense of others that are making their own positive impact. Seeing the world through an “either/or, better/worse, good/bad” lens is usually much more limiting and much less constructive than more mature and constructive “both/and” approaches. Why doesn’t Jeff believe, as I do, that savings-led strategies are powerful and compelling enough to be promoted on their own, without denigrating any other model?

Yes, among Muhammad Yunus’ many bold, sweeping statements was his assertion that credit should be recognized as a human right. His point was that instead of waiting for governments to deliver them services — or for businesses to deliver them jobs — as a way of securing their human rights, the poor could and should be given the means to secure those rights through their own efforts. He initially emphasized credit, both in his public statements and his early work with Grameen Bank, and in doing so revealed a previously invisible market for loans amongst the world’s poor women.

Yet from day one, Grameen Bank offered savings and insurance products alongside credit — something that Jeff would have mentioned if he was trying to present a balanced and holistic view of his topic. While in the 1980s and early 1990s Yunus did emphasize microcredit, from the late-1990s on he focused more on microsavings. Indeed, his savings products became so popular that, for a time, Grameen Bank had tens of millions of dollars in excess savings beyond what they could lend out to their members.

In fact, it is difficult to imagine that the formerly invisible market for savings amongst the world’s poor would have been discovered by so many influential people had Yunus not opened their eyes to the unmet demand for credit first. (For more on the evolution of Yunus’ philosophy, check out the third edition of my book, “Small Loans, Big Dreams,” that came out in 2022, along with this excerpt, and this review by Beth Rhyne that was published by NextBillion.)

In light of the impact and evolution of Yunus’ work and views — and of the broader financial inclusion industry — it seems clear that all of the tools that can help the poor, and all the methodologies for delivering those tools, should be celebrated, supported and improved upon. Those tools include credit, savings, insurance, childhood and adult education, and much more. Can we agree to not pit one effective solution against another? Can we do our best to avoid the circular firing squad trap in the financial inclusion sector?

Last year, Scott MacMillan published an excellent biography of the late Sir Fazle Abed of BRAC (a book he also discussed on NextBillion). If you have not read it, I encourage you to do so. At one point, he describes the initial uproar within BRAC — an incredibly impressive and accomplished Bangladesh-based global development institution — when Yunus and Grameen Bank were announced as the co-recipients of the 2006 Nobel Peace Prize. Many BRAC team members felt they were equally deserving, but Abed put an end to that kind of response by simply saying that Yunus deserved the prize, full stop. His wise and generous words had their intended effect.

A few weeks later, I saw Abed at the 2006 Microcredit Summit Campaign meeting in Canada, and I noticed he seemed under the weather. Someone travelling with him mentioned to me that he would normally have cancelled the trip since he was unwell, but he went through with it so that people did not conclude that he had cancelled due to sour grapes about Yunus being honored. Rather, he travelled 8,000 miles with a bad cold to see his fellow Bangladeshi feted by a global gathering of microfinance leaders.

I fear it is too late for Jeff to get in touch with his inner Fazle Abed. Hopefully a new generation of changemakers — including those fortunate enough to take Jeff’s course at Columbia University — can and will do so.

Alex Counts is the author of Changing the World Without Losing Your Mind: Leadership Lessons from Three Decades of Social Entrepreneurship, an independent consultant, an adjunct Professor at Johns Hopkins University, and the founder of Grameen Foundation.

Photo credit: Tumisu via Pixabay.

Social enterprises are increasingly lauded as an important mechanism to address development and climate challenges in low- and middle-income countries. Not only do they aim to tackle specific social and ecological issues that are at the core of their missions, but they also catalyse positive impact through their operations. For example, compared to traditional businesses, social enterprises are closer to closing the gender gap in entrepreneurship that exists in many countries. And in some regions, such as in sub-Saharan Africa, data suggests that they may create more jobs than comparable commercial entities — particularly for individuals who face barriers to labour markets, like women and people from poor communities. 

However, social enterprises also face unique challenges: To take one prominent example, they are often resource-constrained in comparison to their counterparts in the traditional business and public sectors. This can affect their ability to recruit a skilled workforce, as social enterprises must compete for talent with corporations, which can offer higher pay, and with the public sector, which offers potentially safer jobs. In response, many social enterprises leverage their mission in their talent strategy: Because they often cannot match the benefits offered by their competitors, they promise impactful work — i.e., a job that allows their employees to feel good about their work, and the difference they’re making for other people and the planet.

However, working for a social enterprise, or indeed any organisation with a social mission, does not guarantee that employees will experience their work as impactful. Sometimes, workers experience a sense of dissonance between their belief that their work will make a difference and their doubts about whether it actually does so — something I label the “subjective impact gap.” This experience is common among social enterprise workers, whose work requires them to tackle complex and overwhelming societal problems, while accepting that the impact of their efforts may often be uncertain, invisible, delayed, difficult to measure — or even negative.

The subjective impact gap is a challenge for both individuals and social enterprises. It elicits negative emotions, which can counteract the positive emotional impact of mission-focused work — something that can be compounded by the downsides of working in a resource-constrained environment, on a career path that some people feel lacks legitimacy when compared to the typical corporate world. It can cause social enterprise workers to experience doubt, disillusionment, frustration, disappointment, regret, guilt and even shame, which are difficult to navigate. Consequently, the subjective impact gap can contribute to lower motivation, engagement and commitment among an enterprise’s staff — even causing some to leave the organisation. 

For these reasons, a successful mission-oriented talent strategy requires social enterprises to close this gap to retain talent. But how can their leaders accomplish this? I’ll explore five strategies for closing the subjective impact gap below.

1. Acknowledge the subjective impact gap

The very first thing social enterprise leaders can do to close the subjective impact gap is to normalise its existence. The subjective impact gap is common. It is something that social entrepreneurs, employees and even volunteers experience. This is not surprising given the combination of the often-heroic tone of the discourse around social enterprises (which frequently base their brands on the notion that they’re “saving the world”), and the complex and uncertain nature of these organisations’ actual work. 

However, the subjective impact gap is not a topic that’s regularly discussed inside social enterprises and within the social entrepreneurship ecosystem. This means that individuals must struggle with it alone, which likely makes these negative emotions more intense. By normalising the subjective impact gap and having open conversations about it, people involved in social enterprises are likely to experience the gap with fewer negative emotions, feel less lonely, and receive emotional support from peers.

2. Understand the causes of the subjective impact gap

Social enterprise leaders can take specific actions to reduce the dissonance that their employees and colleagues experience, but first they must understand why the subjective impact gap occurs. My own research shows that this gap emerges in two distinct situations — when individuals lack feedback and when they face negative feedback — and each of these can be addressed with different tactics.

The subjective impact gap often emerges when there is a lack of feedback that confirms that individuals’ work makes a difference. For example, employees may not have day-to-day contact with the beneficiaries of the enterprise’s work, either because they work in the design, but not the delivery, of services — or because the main beneficiary is the environment, which does not provide direct and immediate feedback. Even if individuals in social enterprises have access to impact measurement that shows the enterprise’s contribution to positive outcomes, they may not necessarily see how their work relates to these positive outcomes in terms of their daily tasks. Additionally, impact reporting typically occurs too infrequently to confirm that individuals’ current work is contributing to their organisation’s broader mission. In this regard, the lack of feedback creates ambiguity and doubt about whether an individual’s work really makes an impact.

The other reason why the subjective impact gap emerges is because of negative impact feedback. Negative feedback in this context is not related to an individual person’s performance: Instead, it is related to the level and direction of impact created by the entire social enterprise and its members. Individuals in social enterprises experience negative impact feedback when they receive clear indications that the positive outcomes the organisation has generated are lower than anticipated, or when evidence of negative impact arises. When this happens, individuals have clear and objective indicators that their work does not make a difference — or at least that it doesn’t make as much of a difference as they thought.

3. Create psychological closeness

To address the lack of feedback described above, social enterprise leaders need to create psychological closeness between employees and the impact of their work. Individuals are psychologically close to events, issues or groups when they perceive them to be personally relevant, aligned with their deeply held beliefs or self-image, and present in their daily experiences. Psychological closeness is like a bridge that connects two islands: The shorter the bridge, the closer the islands — and the easier it is for the individual to visit.

How can an enterprise’s leaders create psychological closeness? They need to generate more opportunities for interactions between employees and service users. This can be through direct online or offline interactions, such as conversations, reflective sessions, events, celebrations or job shadowing other members of the team. Such interactions are particularly important for employees who do not interact with service users in their roles at the organisation — for example, those working in finance or human resources.

Indirect interactions can also create psychological closeness between a social enterprise’s employees and its impact and service users. These interactions can be fostered by sharing case studies and indicators of positive outcomes with staff when they emerge, instead of waiting for an impact report to be ready months or years later. Leaders of social enterprises can also embed physical cues of the impact made by individuals’ work in the organisational environment — for example, by posting pictures of grateful service users or “thank you” notes from them around the office. Or if the organisation has an ecological purpose, it can ensure that its physical surroundings embody and highlight that purpose: For instance, all the office furniture in a waste reduction-focused enterprise can be second-hand or upcycled, to serve as a reminder of the precious materials that the organisation is preventing from ending up in a landfill.

4. Encourage a long-term perspective

To address any negative impact feedback that social enterprise workers receive, leaders need to encourage a long-term perspective. Social enterprises often tackle wicked problems that have no easy or quick solutions. It can take decades for positive change to materialise. And importantly, a single organisation cannot solve these social or ecological issues on its own. These aspects of social enterprises’ work make negative impact feedback common. However, this feedback in itself does not need to be discouraging. 

Encouraging employees to accept that positive change takes time is an important step in closing the subjective impact gap. It is also a practical acknowledgement of the realities of catalysing and maintaining positive social change in a capitalist system. Accepting this reality is not the equivalent of giving up: Rather, it represents a pragmatic approach that enables patience and persistence, keeping the focus on learning and improvement when indicators of low or even negative impact emerge.

5. Broaden the notion of impact

Finally, social enterprise leaders can reduce the subjective impact gap by broadening the notion of impact beyond the specific mission of the organisation. This can help workers see how their work makes a difference in multiple directions. Social enterprises contribute to communities and economies not only directly through their mission, but also indirectly — for example, through their supply chains, equitable and inclusive employment practices, and support for new social enterprises. These indirect forms of impact deserve to be celebrated, and individuals should be encouraged to consider them as additional ways in which they can make a difference through their work.

Social enterprise leaders can also help employees see how their work makes an impact inside the organisation — for example, by acknowledging and celebrating how staff members help and support each other emotionally and practically by pitching in on each other’s work or brainstorming solutions together. It’s common for co-workers in social enterprises to support each other, because their shared work is difficult and their resources are limited. However, this supportive environment should not be taken for granted. By recognising and celebrating the help workers generously provide each other inside the organisation, leaders can reframe what “impactful work” really means, and provide workers with additional feedback that shows how their work matters.

When can closing the subjective impact gap backfire?

Closing the subjective impact gap can benefit both employees and organisations, enhancing employee wellbeing and giving social enterprises a way to maximise the benefits of a talent strategy that relies on the mission of the organisation for both recruitment and retention.

However, the tactics social enterprise leaders utilise to close the subjective impact gap can also backfire. For instance, creating psychological closeness and broadening the notion of impact can result in new activities for employees, such as job shadowing or events after working hours. This can potentially increase workloads for employees who are already stretched thin — and work overload can be harmful not only for employees’ wellbeing, but also for social enterprises themselves, as it can reduce performance.

Creating psychological closeness and broadening the notion of impact can also result in inefficiencies. For example, workers may be motivated to prioritise tasks that have visible impact, such as supporting colleagues or mentoring individuals in new social enterprises. Consequently, they may neglect or deprioritise tasks that do not have this immediate and visible impact — including tasks that are critical for the organisation, such as quality assurance checks or shift scheduling. Social enterprise leaders should take steps to avoid these potential downsides when working to close the subjective impact gap among their employees.

Working for social enterprises can be a way to build an impactful career, yet the focus on impact brings its own set of challenges — not least of which are the frequent doubts among employees about whether their work indeed makes a difference. Social enterprise leaders have an important role to play in closing this subjective impact gap, thus maximising the benefits of their mission-oriented talent strategy, while enhancing the wellbeing of their employees.

Andreana Drencheva is a Senior Lecturer (Associate Professor) in Entrepreneurship at King’s College London. 

Photo courtesy of Userpilot.

Cocoa is one of the world’s most prized foods, but the smallholder farmers who produce it are living in extreme poverty. The entire supply chain in Cote d’Ivoire, where 45% of the world’s cocoa is sourced, receives only about 6% of the revenue from chocolate. A recent survey by FINCA, on behalf of our investee, Meridia, found that smallholder households in cocoa-producing communities in Cote d’Ivoire live on less than 60 cents a day per capita — well below the global poverty line of $2/day.

Making matters worse, cocoa farmers often have a very precarious relationship with the land they depend on. Lack of formal land rights can affect locally indigenous communities as well as the descendants of migrants from other regions or nearby countries. More broadly, land tenure and property rights are increasingly seen as critical for eliminating poverty, due to the role of land in enabling prosperity, food production and housing. Stronger property rights can strengthen farmers’ hold over their main asset and create opportunities for leveraging it through credit, improving their financial health and resilience.

Environmental concerns add another dimension to the issue. In theory, farmers with stronger land rights should be more motivated to invest in sustainable farming practices, like planting shade trees, renovating their farms, and providing better care for their trees and soil. This can also mitigate deforestation, which is largely driven by cocoa production in Cote d’Ivoire.

To address this issue, Meridia established the Cote d’Ivoire Land Partnership (CLAP), together with the Ivorian Rural Land Agency, the German Federal Ministry for Economic Cooperation and Development (implemented by GIZ), and a consortium of global chocolate companies including Hershey, Unilever and Barry Callebaut’s Cocoa Horizons Foundation. Other industry members, such as Cargill, Ferrero, ETG and ECOM, have joined CLAP since its inception. The partnership aims to help smallholder farmers secure formal documentation of their land rights. Commissioned by CLAP, FINCA’s Research and Data Science team is constructing an evaluation and monitoring system to measure the partnership’s social impact. Working with Audace Institut Afrique, a local research firm, we recently completed a baseline survey of farmers within the CLAP target area and comparable districts. Even at this early stage, we found some encouraging signs that CLAP’s activities are starting to affect how farmers think about their land — and their hopes for the future.

Changing Attitudes — and Behavior — Around Land Rights

The starting point of our impact assessment was a comprehensive theory of change for CLAP, which we derived from expert interviews and relevant publications (see Figure 1 below). Because the ultimate outcomes, like improved farming practices, will depend on future actions by the farmers themselves, we started by looking for signs that CLAP’s land titling activities are producing positive attitudes that will lay the foundation for behavioral change over time. Among these activities are increased awareness of rights and boundaries, less incidence of (expected) disputes and illegal claims, less fear of being evicted, and improved (perceived) security. Any of these improvements in perception will strengthen smallholders’ motivation to make longer-term investments and adopt better farming practices, eventually enhancing their families’ wellbeing.

The current arrangement of informal land tenure is especially harmful for women, who are culturally regarded as farm laborers, with no property or inheritance rights of their own. Raising awareness and broadening women’s access to legally-backed land documentation could potentially help them combat this form of oppression, which perpetuates gender inequality from one generation to the next.

Figure 1. The short-to-medium term impact of sensitization and land tenure services on sustainability and wellbeing of cocoa farmers.

Source: FINCA’s Research and Data Science Team

We also believe that land tenure will provide farmers with greater autonomy and decision-making power. Taking control of their land and farming decisions can increase their dignity and confidence in their future and their children’s heritage. The formalization of property rights also has the potential to improve social relations, with neighbors working peacefully on their lands regardless of origin — instead of falling into conflict over who is the true owner of these properties.

Baseline Data Shows Promise for Better Financial Health

Our baseline survey covered 626 cocoa farmers in the early stage of CLAP’s program, along with a control group of 405 farmers from comparable areas. The results offer some interesting insights into the challenges these smallholders face, and their hopes regarding the potential benefits of land security. It was interesting — but perhaps unsurprising — to see that the most prominent initial results relate to perceptions about their financial health.

Even though they retain an extremely small portion of its market value, the households we surveyed rely on cocoa proceeds for 80% of their household income, which still leaves them well below the international poverty line. On such a tight budget, a family’s essential needs take priority, with little to nothing left over for investments in their land. Only 20% of the farmers we interviewed had sufficient resources for diversifying their crops, or other sources of income to improve their livelihoods.

With no disposable income, credit is the only viable option for investments. And indeed, the survey showed that the overwhelming majority of those who were able to access loans in previous seasons believed that credit had been very helpful to their endeavors. However, only a very small percentage of farmers (16%) had enough assets to qualify for loans. Knowing these obstacles, three-fourths of the farmers believed that their land would not serve as collateral for loans, and only one in five said they had a bank account. These results show why farmers find themselves in an impossible situation: They don’t have the income or assets to qualify for a loan, which prevents them from making the very investments that could improve their situation.

In this context, we found that even the prospect of potentially qualifying for a loan can significantly raise farmers’ hopes for a better future. Using extended regression models, we found that the first stage of land titling activities generated a statistically clean and profound impact on the expectation that formal land documentation will open future access to credit. The share of farmers who thought land documents would help them access loans was 14 percentage points higher in the treatment group, which is directly attributable to CLAP’s activities. This outcome aligns well with another significant indicator: expected improvements in the family’s overall financial situation. The percentage of farmers stating a positive change in expectations regarding their financial situation was 13% higher in the treatment group — again, directly attributable to CLAP’s awareness-raising and mapping activities.

We observed other effects, but with less statistical significance — such as farmers’ reduced fear of being evicted from their plots. These were corroborated by other promising but not yet significant indicators, such as the formulation of future plans to fertilize, prune or apply pesticides — actions farmers are less likely to take if they expect to eventually be evicted from their land. Other indicators are consistently and directionally positive, including improved processes for transferring land rights, increased value of the land itself, long-term planning and overall family wellbeing. In the follow-up survey round, which will take place in mid-2024, we might find that these impacts have increased after the formal land documents are delivered.

But regardless of what additional impacts we may discover, these initial findings, coming so early in the titling process, are encouraging. If CLAP’s efforts to strengthen land rights measurably improve conditions among cocoa farmers in Cote d’Ivoire, it’s possible that other initiatives may have a similar impact in other countries and industries.

Scott Graham is Vice President for Research and Data Science, and Anahit Tevosyan is Director of Research at FINCA International.

Photo courtesy of FINCA International.

Customer engagement has evolved over the years: While most businesses were once purely transaction-centred (i.e., focused on acquiring more customers and making more sales), their customer interactions have gradually become more relationship-based. Nowadays, successful sales efforts aim to provide superior value to customers, to build the trust and commitment that can sustain long-term relationships. That’s why, in today’s competitive business environment, it is imperative for businesses to develop and execute on effective customer engagement cycles. 

The customer engagement cycle is a cyclical relationship-building process that begins with customer acquisition and ends with a customer base that supports, purchases and promotes a business’ products. Building a solid base of engaged customers provides tremendous benefits to a business, converting customers into partners who collaborate with the business in the value-adding process, enabling it to better satisfy their needs and the needs of other customers. To accomplish this, businesses need to develop strategies that encompass the entire customer journey — instead of just focusing on acquisition and sales. 

The need for businesses to refine their customer engagement strategies — especially the communication touchpoints that support them — has been driven by technological, social and market developments. Due to the internet, geographic borders have been erased, and traditional fixed costs (such as the need for a sales force, and access to storefront locations and other physical distribution channels) have been lowered, creating new business entrants and opportunities — but also causing more competition for customers and market share. Moreover, gaining customer loyalty has become more challenging due to easier access to information about competing products/retailers, and the lower cost of switching between these different options online, among other factors.

Yet though businesses around the world are increasingly aware of the importance of effective customer engagement — and the value of digital tools in sustaining these efforts — many continue to spend the majority of their marketing budgets on acquiring new customers rather than retaining and engaging existing ones. This is a common pitfall for businesses in Africa, which struggle to foster long-term customer engagement due to the complex nuances of the market. For instance, African customers are typically conscious of their mobile data usage due to high costs, leading them to toggle their phones’ internet connectivity on and off, depending on their current needs. In addition, a significant number of African mobile subscribers employ multiple SIM cards, often changing lines to access better network coverage or to take advantage of data and voice discounts offered by different telcos. Consequently, maintaining an “always-on” approach to online engagement becomes challenging.

These common behaviours make it difficult for brands to touch base with their customers, as most enterprise solutions and digital tools are tailored for online customer interaction. With statistics showing that acquiring a new customer can be five to seven times more expensive than retaining an existing one, and that fully engaged customers are worth an average of 23% more in share-of-wallet, profitability, revenue and relationship growth compared to the average customer, it’s clear that African businesses must put as much effort into the entire customer engagement cycle as they’ve traditionally put into the initial customer acquisition phase. And as Africa remains a “mobile-only” continent, with the penetration of mobile phones far outstripping fixed line usage across the region, it’s also clear that mobile technology must play an important role in these businesses’ customer engagement efforts.  

Below, I’ll discuss the key elements of customer engagement, exploring how businesses can optimise these cycles to navigate the African market’s unique needs and challenges by using mobile technology to gain actionable insights into their customers’ behaviour, preferences and interests.

The Seven Elements of Customer Engagement Cycles

Customer engagement cycles have seven core elements, and African businesses must take each of them into account to develop a base of engaged customers over the long term.

Connection and Interaction: This stage is all about awareness/consideration. Africa-focused marketers need to think beyond the typical ways of segmenting audiences (e.g., dividing them by age, income levels, etc.) and also focus on acquiring a majority of customers who exhibit behaviours that are similar to those of their desired audience. For example, if a company is selling a web-based course delivered through video, it is effective to promote it via video platforms such as YouTube. The modalities are compatible, as viewers can envision themselves enrolled in the course because they are currently watching a video when they’re exposed to the ad. 

With this alignment in mind, the most effective outlet for advertising in Africa is mobile phones. Customers rely on their mobile phones to conduct many of their daily activities, including e-commerce and financial transactions (powered by SMS and USSD respectively), making it particularly effective to advertise these services to customers via these mobile channels.

Satisfaction and Retention: This stage is all about the purchase of products and the follow-up support provided by the business. As with the Connection and Interaction stages, mobile phones play a key role in navigating these stages with African consumers. With mobile phones and data derived from telcos, advertisers are able to obtain key insights into their customers, using this information to make tailored product recommendations. 

For instance, one insight generated by this data is that approximately 98% of African subscribers use prepaid mobile phone plans, which sheds light on the limited purchasing power of typical consumers, in contrast to the higher data usage appetites and spending capacity that postpaid plans reflect. This data can also enable advertisers to make use of “micro-moments,” in which they serve ads to customers at the exact times they know that these customers will use their devices to act on a specific need. For example, at lunch time, a person might turn to his phone to order food: If a marketer for a local restaurant serves him an ad at that exact moment, there is a higher chance of making a sale. For that reason, businesses aiming to optimise their customer satisfaction and retention efforts may find SMS text outreach to be quicker, more convenient and in some cases, more effective in engaging the African consumer — in contrast to email marketing, which may be more effective in the Global North.

Commitment, Advocacy and Engagement: In these stages of the customer engagement cycle, SMS texts can be used as an outlet to offer utilitarian, hedonic and symbolic benefits to consumers, which helps enhance and develop consumer relationships over time. Utilitarian benefits are those centred around economic savings — e.g., exclusive discounts, added convenience, gifts, etc. — and customers have been found to attach high importance to these. Hedonic benefits are where customers get individualised treatment, which could come in the form of personalised messages, entertainment options or new products geared toward their specific interests/attributes. Symbolic benefits are situations where customers are given a sense of recognition, social status or belonging by the company, for instance through special perks provided to regular customers.

Challenges and opportunities in building an effective customer engagement cycle in Africa

Service encounters and communication touchpoints are essential components of an effective customer engagement strategy in any market. In Africa, as in markets around the world, this engagement is primarily driven by the internet and digital technology, which enable brands to have conversations with customers on a constant and ongoing basis. But unfortunately, most of the digital strategies used by African businesses do not meet the specific behaviours and requirements of the African customer.

To address this, businesses must adapt their marketing efforts to the fact that people in Africa make use of their mobile phones differently than their counterparts in foreign markets. For instance, there is a prevalent use of feature phones among African consumers, which limits businesses’ ability to reach them through common digital channels like social media. Businesses must also devise solutions to customers’ tendency to switch off their mobile phone’s data to save on data charges, since this can short-circuit their attempts to establish effective customer engagement cycles in a world where customers will readily abandon a company that takes forever to reply to questions or complaints. But these customer behaviours can also generate opportunities: For example, African customers tend to check their mobile data and airtime balances often, which can provide an effective avenue to initiate the connection phase of the engagement cycle. To leverage this option, businesses can work with telcos to utilise their native channels for advertising — i.e., paying the telco to incorporate a brief personalised text ad from the business within the airtime/data balance message. 

One key challenge online marketers in Africa must navigate involves the growing focus on data privacy among internet users, businesses and regulators, as initiatives by both policymakers and prominent tech companies keep making it harder for businesses to reach and consistently interact with their audiences online. For instance, the EU’s General Data Protection Regulation (among other initiatives) has created new rules protecting internet users’ data rights, and Google has announced the eradication of third party cookies — which gather information about a user’s browsing history and online activities — from Chrome by 2024. With other prominent web browsers, like Apple’s Safari and Mozilla’s Firefox, also progressively discontinuing their support for third-party cookies, businesses worldwide will need to discover new methods for monitoring user activities and delivering tailored communication. African businesses will also be impacted by these shifts, as the impending cookie-less world is expected to disrupt digital marketing channels, making it even more difficult for companies to acquire customers and drive revenue online. 

Given these challenges, it is clear that typical strategies or enterprise solutions for customer engagement will not work — or to put it more conservatively, will soon cease to work — in Africa. To initiate an elaborate customer engagement strategy, it’s necessary for businesses to use widely adopted channels such as USSD and SMS (which facilitate communication without requiring an app or internet connection), and to leverage indigenous methods and enterprise solutions that address the continent’s specific realities. 

Terragon has spent almost a decade building technology capabilities that allow businesses to merge their customers’ online and offline data, digital footprints and activities, in order to gain a better understanding of each customer, their preferences and their propensity for product uptake. This gives businesses the ability to deliver more relevant messaging to their customers, thereby enabling better efficiencies and ROI on marketing spend. 

One of our proprietary technologies, Adrenaline, leverages artificial intelligence and machine learning to accurately segment customers and enable personalised engagement with them through the entire engagement cycle. Through partnerships with leading telcos, we’ve established the platform as Africa’s first telco-data monetisation solution, empowering advertisers to access valuable marketing insights directly from telcos, rather than from the individual phones of customers themselves. By enabling targeted mobile advertising on both web and non-web channels, Adrenaline makes it possible for brands to programmatically reach and engage with 130 million+ customers in the mobile-first African market. This reach goes beyond online channels, which are hindered by the aforementioned challenges, allowing brands that use Adrenaline to engage customers directly through always-on offline channels like SMS, flash messages and USSD. 

Using this approach, the platform is helping businesses market their products and services to consumers via personalised messaging at scale, delivering promotions, order notifications, and information about new products and loyalty programs directly through these channels. Importantly in Africa, this outreach can happen even if customers’ phone data is disabled. Marketers can also use Adrenaline to gain real-time customer feedback through smart surveys, and make use of the platform’s reward engine, which delivers virtual rewards to loyal customers, increasing customer engagement.

Reaching African consumers in a shifting online landscape

The future of advertising in Africa, particularly in a cookie-less world, is expected to shift towards more privacy-focused and contextual advertising approaches. Without third-party cookies tracking internet users’ identity and behaviour online, advertisers in Africa and around the world will need to find new ways to deliver targeted ads to their audiences. As eMarketer reported, 60% of U.S. marketers believe they’ll need multiple identity solutions to survive in a post-cookie world, and solutions such as Adrenaline, which uses data from telcos and other sources, are likely to be the answer.

Another potential solution is contextual advertising, which targets users based on the content they are currently consuming rather than their browsing history. This approach has already gained popularity in Africa, and it is expected to continue to grow in the absence of third-party cookies. First-party data — i.e., data that is collected directly from users through their interactions with a business or website — can also offer a solution. By collecting and analysing this data, businesses can better understand their audience and deliver more personalised and relevant ads. This approach requires a strong focus on user privacy and data protection, which is becoming increasingly important in Africa and globally.

Whatever the solution, it’s clear that in today’s African market, the traditional marketing strategies of the past will no longer be an effective means to engage customers — and neither will solutions copy-and-pasted from foreign markets. Africa-focused marketers need to contemplate the use of customer engagement strategies that meet the market where it’s at. By recognising how African customers engage with brands, and reaching them through the mobile devices and media platforms they’re most comfortable with, marketers can not only engage customers effectively, they can also create lasting relationships with them. If they don’t, they may find themselves gradually losing relevance to the core customers that drive their businesses.

Ayodeji Balogun is Chief Technology Officer at Terragon.

Photo courtesy of Francisco Venâncio.

What really is the future of work in Africa? Though it’s difficult to make confident predictions about such a dynamic and rapidly changing region, Africa is beginning to feel the impact of the same trends that are reshaping labour markets in more developed countries. For instance, if we look at the evolution of labour markets in Western countries over the last decade, the biggest shift has been in the way people find and mediate their work: They increasingly find jobs through job matching platforms, manage their businesses through e-commerce platforms, and earn money on the side through gig matching platforms. These digital platforms are part of a broader effort to use technology to enable, facilitate or improve people’s work opportunities, productivity and livelihoods — an emerging sector that’s collectively known as “jobtech.”

While not yet as ubiquitous in Africa as it is in Western markets, the shift toward jobtech is coming to the continent. Simply put, jobtech is the future of work in Africa: Up to 540 million people worldwide will benefit from online talent platforms by 2025, and significant growth of the e-commerce sector is expected in Africa, with 30-88 million Africans expected to earn income from digital marketplaces by 2030. The Briter Intelligence database counts 1,007 jobtech platforms in Africa today.

As we’ve seen in other markets around the world, jobtech has the potential to create new work opportunities that were not previously possible, improve the regularity and quality of work, increase the size of income, and overcome traditional barriers to access for marginalised groups. But these countries have also shown that it can generate bad work as well as good, and create new barriers to access for these same marginalised groups.

As the shift toward jobtech accelerates in Africa, it will be important to keep these potential downsides in mind, since the continent has uniquely challenging market fundamentals, and there is a lack of innovation in the broader employment space. For instance, jobtech workers’ participation in formal employment platforms subjects them to regulations around minimum wage, taxation, work conditions, etc. — yet they must often compete with workers in the informal sector, who earn (often illegally) low wages, and who are faced with non-existent or ambiguous requirements around taxation and other labour norms. Moreover, weak domestic demand for labour isn’t fundamentally fixed by layering tech-enabled matching — much more is needed to create work, or (in the language of Efosa Ojomo and Clayton Christensen), to move non-consumption of labour into consumption of it. These market fundamentals make it difficult for platforms to achieve viable business models, and for those platforms to offer quality work to their users.

However, compared to thriving ecosystems like those of fintech and edtech, where entrepreneurs learn and collaborate through meetups, WhatsApp groups, blogs and events, the jobtech ecosystem is extremely nascent. None of these resources have historically existed, and even the term “jobtech” has only come into common usage in the last couple of years, as a shared language around the sector has gradually started to emerge. This lack of visibility, shared knowledge, community and collaboration limits the scope of the innovation that is desperately needed to drive the sector forward. Yet even with these issues, jobtech has emerged as a diverse and evolving sector in Africa, with huge potential to alleviate its youth unemployment challenge by meeting the current and future need for millions of jobs across the region.

Segmenting the Jobtech Landscape in Africa

Given this potential, and the fact that the sector is so nascent, it is important to define the continent’s jobtech landscape. To that end, the Jobtech Alliance — an ecosystem-building initiative steered by Mercy Corps and BFA Global — aims to advance inclusive jobtech in Africa by developing a taxonomy that segments the sector into five categories. These categories include:

1. Platforms for offline work — i.e., platforms where the work is mediated online but delivered offline. Most people first think of ride-hailing apps like Uber or Bolt when considering this category, but it also includes other types of platforms, from job boards and other recruitment platforms to distributed manufacturing.
2. Platforms for digitally-delivered work — i.e., platforms where the work is both mediated and delivered online. This category ranges from the more traditional types of digital work, like skilled online freelancing, managed services/business process outsourcing and microwork, to platforms like YouTube that enable creators to monetise their work. There’s even an emerging field of (often blockchain-based) platforms enabling people to earn money or tokens through learning, playing, trading and more (these platforms are often called “X-to-earn”).
3. Digital services for microenterprises — i.e., platforms that improve the market access, business performance or productivity of self-employed individuals or microenterprises. These include e-commerce marketplaces like Jumia, social commerce/digitally-enabled agent networks such as Moniepoint, and business management tools.
4. Tech-enabled skilling — i.e., edtech platforms that equip people for the future of work. This skill development can be guided or self-paced, and these platforms may also facilitate access to networking/information and other tech-enabled opportunities (e.g., internships).
5. Tools for worker enablement — i.e., nascent digital platforms that provide workers with tools that enhance their rights, benefits and protections. These typically build on top of the above categories of jobtech, or use the data from platform work — and they could include things like portable benefits or digitised collective action.

Critical to the success of an ecosystem is a shared language and understanding of the sector itself. But the sector we now call “jobtech” has historically used fragmented and overlapping language to talk about different elements of the space — e.g., “digital jobs,” “gigmatching,” “platform livelihoods,” “future of work,” “e-commerce,” and much more. This patchwork of terminology lacks the relevance, intuitiveness — and quite frankly, the sexiness — of the more cohesive language used in sectors like fintech. The above taxonomy aims to start to provide a shared language for the various stakeholders — startup entrepreneurs, investors, philanthropic donors, accelerators and researchers — operating in this wide-reaching and critical sector.

Current Trends in Africa’s Jobtech Sector

Building on BFA Global’s experience working with hundreds of jobtech startups in Africa over the last few years, and the acceleration work we’re doing with over a dozen African jobtech startups through the Jobtech Alliance, we recently launched the sector’s first ever Landscape Scans. These reports are focused on identifying common business models, key players, trends and business opportunities across the jobtech industry.

Looking across the Landscape Scans, a few common trends are visible: First, while the initial wave of jobtech in Africa replicated Western models, these have typically struggled to achieve viability and scale on the continent (see Landscape Scan I – Platforms for Offline Work). While white collar job-matching platforms in Africa have helped to improve transparency and address labour market efficiencies, they haven’t been able to make up for the fundamental lack of formal sector jobs on the continent. On the other hand, blue collar gig-matching platforms, which on paper have significant potential to formalise the huge informal sector, have often struggled to deal with operational hurdles and low consumer capacity to pay for quality, and thus have struggled to reach scale. Jobtech platforms in Africa need to do much more than simply “facilitate a match” between workers and available jobs — they need to fix more of the fundamental problems of a broken labour market, from a lack of demand, to skills deficits with the workers, to supply chain issues and more.

We have, however, seen success among platforms that meet informal workers where they are and support the digitalisation of African microenterprises (see Landscape Scan III – Digital Services for Microenterprises). A recent study from DFS Lab found that 70.8% of Kenyan and Nigerian micro and small retailers have digitised at least one aspect of their business operations — mostly payments — and the uptake of other digital functionality is rapidly increasing.

The digitalisation of microenterprise has made small businesses more efficient, increased sales and improved access to finance. The proliferation of platforms providing supply chain and financing for retail microenterprise has been partly driven by significant VC funding — Briter Intelligence reports that over $470 million was raised by 28 African business-to-business commerce startups between 2009 and 2022. But in recent months we’ve seen the expansion of such models beyond retail, as platforms are building the infrastructure for microentrepreneurs to thrive in a range of verticals. To take just one example, one of the Jobtech Alliance’s accelerator startups, Fitted, is an AI-enabled platform that allows fashion customers, tailors and fabric sellers to collaborate to produce exceptional quality outfits on time. It is currently building a digital platform which enables tailors in Nigeria — who typically operate entirely via pen and paper (and sewing machine) — to operate online, doing customer management and even measurements (through augmented reality), while obtaining supply chain support and access to finance.

While many of the platforms mentioned above are constrained by the limited local purchasing power in Africa, another exciting trend we’ve noted is the opening of the world’s jobs to African workers. Accelerated in part by the COVID-19 pandemic, platforms for digitally-delivered work have grown massively over the past few years (see Landscape Scan II – Platforms for Digitally-Delivered Work). These platforms can connect workers to service buyers across African borders and beyond — including in lucrative markets in Europe, North America and other developed countries. Global platforms tend to dominate the freelancing space, and quality control and skills gaps continue to be challenging, but we’re particularly excited by the gradual emergence of Africa’s global business services sector (traditionally called business process outsourcing). These businesses manage projects or contracts (largely for other businesses) delivered by multiple skilled or semi-skilled workers, working in areas such as call centre sales or customer care. Because they are more hands-on and work with larger contracts, these businesses can afford to build skills among their workers. While the sector traditionally has been dominated by large players, we also see an emerging trend in which smaller providers satisfy specific niches ranging from sales lead generation to customer success.

Tana is one such platform: a participant in our accelerator, it is a tech-enabled marketplace that connects global companies to vetted and trained remote team members on the African continent. To address the key questions about supply and demand within the global businesses sector, we’re helping them to explore which segments of employment are best suited to take on African talent, and to determine which types of lower-skilled tech roles are best suited for remote hiring. Answering these questions for Tana (and other such companies) will help connect Africa’s ample supply of educated youth with the growing global demand for the services they can provide. The big question that we will be following keenly over the next year is whether the emergence of generative artificial intelligence will limit that anticipated flow of lower-level digital work to Africa. Evidence suggests that this may already be happening, but new opportunities are likely to emerge.

One last trend we’ve seen, when looking across jobtech platforms in Africa, involves the consistent challenge (and opportunity) in the infrastructure required for these platforms to provide decent work for users across the continent (see Landscape Scan V – Digital Tools for Worker Enablement). This involves not only physical infrastructure, but also interoperability between the offline and digital world, and between the multiple platforms where workers might be “multi-homing” — i.e., utilising several platforms simultaneously. Few Uber drivers in Africa are just Uber drivers: Instead, they obtain gigs through Bolt, Glovo and/or half a dozen other ride-sharing and delivery apps. This increases their access to more available gigs, but also presents some key challenges. For instance, if a plumber’s entire experience is from gigs on different platforms, how does she aggregate her ratings across platforms to convince her next employer that she is a good plumber? How does she get insurance or loans, as financial services have traditionally been built for those with formal job contracts rather than platform-based gig work? Resolving these issues presents opportunities to build new businesses. Because these business models tend to build on top of other jobtech platforms (or indeed, function as foundational infrastructure which others can build on), they require jobtech to be more ubiquitous before they can achieve viability. However, there is an emerging cohort of platforms that are seeking to fill this gap globally, and we’re interested to see the role that different actors could play in building this essential infrastructure.

One of our accelerator portfolio startups, Power, is playing this sort of role. A Kenyan financial service provider, it is offering a suite of digital financial services (including earned wage access, savings, loans and insurance) to workers in Africa. As part of the accelerator, the Jobtech Alliance is developing a collaboration between Power and the Swedish-based data scraping platform Unveel, enabling it to offer its suite of financial services to gig workers on Bolt, Uber and Glovo in Kenya.

Africa’s jobtech sector is incredibly new, which is part of both the challenge and opportunity it presents. But as more people earn their incomes digitally and the industry grows, this category of platforms will become increasingly viable (and important) on the continent. First movers in developing key jobtech infrastructure will be well-placed to benefit if and when the sector scales, as the future of work continues to evolve in the region. And these companies will undoubtedly struggle with the dilemmas that are inherent to the broader sector’s growth. Yet despite these inevitable challenges, this nascent, still overlooked part of Africa’s digital economy will play a large role in providing employment for the continent’s growing population.

Michelle Hassan is the Kenya Country Manager and a Principal Consultant at BFA Global, as well as a Program Director at the Jobtech Alliance; Chris Maclay is Mercy Corps’ Program Director at the Jobtech Alliance; Bethany Hou is a Venture Building Associate at the Jobtech Alliance. 

Photo courtesy of Muhammad-taha Ibrahim.

It was 1996, only weeks after the end of the Siege of Sarajevo during the Bosnian War. Amid the rubble of the war, Catholic Relief Services sent me to Bosnia as a consultant, to help launch a microfinance project there. In those days, microfinance was viewed by many development sector professionals as the silver bullet that would end poverty. I had my doubts about that, but I wasn’t aware of any viable alternatives. As the local Catholic Relief Services staff and I revised manuals and worked on the budget for yet another iteration of the standard microfinance model, I asked “How do Bosnians save and finance their businesses?” Their response: “Businesses have used zadrugas for generations to save and lend to each other.”

While most Bosnians know about zadrugas — a type of informal saving and lending group — I had never heard of them. And why should I? The microlending model I was promoting had worked (more or less) in scores of countries, yet I couldn’t help but ask myself: If zadrugas are so common in this community, and if our objective is to get capital to local businesses, why are we asking Bosnians to adopt microfinance models developed for market vendors and microenterprises in Africa, Asia and Latin America? Why not leverage the saving and lending model this community is already using successfully, and has been using for generations?

If I knew then what I know now, after more than 20 years evaluating and launching informal savings group initiatives and studying rotating savings and credit associations (ROSCAs) around the world, my consultancy in Bosnia would have taken a different turn. Rather than working to create a new microfinance institution (MFI) that would take on many of the roles zadrugas had traditionally played in the community, we would have asked the Catholic Relief Services staff to reach out to local zadrugas and enlisted the leaders of the best-managed and most-interested zadrugas to organize and support new groups.

I call this commonsense approach — starting with what is already working — the “low-friction” alternative. It’s based on understanding, and then supporting the growth of, local initiatives, by providing a small amount of outside funding and then fine-tuning and replicating those that have been most successful. Had we taken such an approach in Bosnia, the zadruga leaders — backed up by technical staff serving as catalysts rather than trainers, promoters and loan collectors — would have led the creation of more and higher-quality zadrugas to serve far more businesses, more sustainably and at a fraction of the cost.

Taking Savings Circles From Theory to Practice

Years later, in 2022, I was working in Lynn, Massachusetts — a city where roughly 40,000 of the 100,000 residents are Hispanic, largely immigrants from Guatemala and other Central American countries. Grassroots Finance Action, the not-for-profit that I direct, had launched a pilot project there, to see if encouraging ROSCA group leaders to train more groups could offer a simple way to boost financial inclusion. The goal of the project was to increase the number of Guatemalan immigrants investing in their informal savings circles (called “cuchubales” in the Guatemalan community). A few immigrants from other countries also joined.

Invited to Lynn by a local NGO, the Latino Support Network, we spoke to Guatemalan immigrants about their cuchubales. We found that while many attending the meeting were members of cuchubales, many were not. Of those who were not members, many said they were interested in joining.

Seeing the scale of the unmet demand, the Latino Support Network selected three Guatemalan women who had organized or been part of these savings circles in Lynn. Their task was to organize more cuchubales. They received a small, year-long stipend for their time. Within weeks, the three women had organized three new groups, using the same strategies they had long used in their home country and in Lynn.

As with the previously existing cuchubales in Lynn, each member of these newly formed savings circles agreed to invest $200 every week in their groups. In exchange for this disciplined saving, they received a lump sum payout that amounted to $4,800 after 24 weeks of saving in cuchubales with 24 members, and $8,000 after 40 weeks of saving in groups with 40 members — a transformational sum of money. As is typical for ROSCAs, a different member received the total collected by the entire group each week, progressing in turn until all had received their payouts. A $50 fee per member (about 1% of the payout) paid the organizers for the time they spent collecting and distributing the funds.

Asked what they liked about their cuchubales in a survey carried out by the Latino Support Network, many said, “It taught me to save. We can’t save in a bank — it is too easy to take our money out, and then there are all the fees and documentation.” Through the survey, we also learned that group members used their payouts to pay off debts to money lenders, payday loans and high-interest credit cards. They used the rest as a reserve for future expenses. Better-off members invested these funds in their businesses and homes.

The survey further revealed that:

• Only a fifth of group members had been members of cuchubales before: This shows the depth of the potential demand.
• 42% were low-income.
• 80% were women.
• All but two signed on for the second savings cycle — and for a third cycle that is currently underway.
• There was not a single delinquent payment: In these tight-knit communities, trust in each other is paramount.

The results of this approach clearly demonstrate its value: By the end of the third savings cycle, the cuchubal organizers in Lynn will have mobilized and distributed $1.5 million dollars, on average $20,000 per member over the three savings cycles. The size of these totals was surprising, as many group members lived on an income of roughly $30,000 per year. But as we learned, participating in the groups inspired members to take steps to maximize their savings: The lowest-income members earned extra income to make their payments, by taking on gig-economy jobs like driving for Grubhub, or requesting support from family members. Those who were saving more, $400 per week instead of $200, had higher-paying jobs. But regardless of their income, saving this much requires the members to watch every dollar: They cannot let the others down.

Impressive as these results are, they could be even greater with additional support. The current cuchubal organizers have already identified potential new organizers who have access to different networks than they do. They could train and support them, with some guidance and funding from an external organization.

But even without this additional support, the word is beginning to spread to other area communities: A delegation of Mayan women organizers working in fish processing plants in New Bedford, Massachusetts exchanged cuchubal strategies with the Lynn organizers, and within days had organized their own group, where 20 members are investing $100 each week — generating weekly payouts of $2,000. This simple model could be replicated nationwide and around the world: Indeed, Grassroots Finance Action has already received inquiries from Minneapolis, Nepal and Ghana, where community members are interested in creating their own savings groups.

Throughout history, transformational ideas often spread through word of mouth. Our strategy at Grassroots Finance Action aims to accelerate this peer-to-peer spread of ideas. The requirements? A little financial lubrication, recognition and support.

The Trillion Dollar Informal Financial System

The zadrugas of Bosnia and the cuchubales of Lynn are examples of a vast informal economic system that mobilizes and distributes a jaw-dropping trillion dollars every year. This estimate is based on the field research my graduate students from Brandeis and Columbia Universities and I have conducted, combined with data sets like the World Bank’s Findex21 report. This trillion dollars represents the sum of:

• The 419 million members of savings circles in developing countries — an estimate we extrapolated from the Findex21 study. We conservatively estimate that each member saves an average of $2 per week, or $100 per year. Collectively they mobilize and distribute at least US $42 billion each year.
• Our best guess is that one third — 83 million — of the quarter of a billion immigrants living in rich countries set aside money in savings circles. In New York City, research suggests that 74% of Mexican and 69% of Ecuadorian immigrants save informally, often via savings circles, so this could be an underestimate. Our own research shows that immigrants typically contribute at least $100 per week ($5,000 per year) to their savings circles — and often twice that amount. So we conservatively estimate that these immigrant savings circles contribute over $400 billion toward the trillion-dollar total.
• In addition, immigrants living in rich countries send home $529 billion in remittances to developing countries (more if remittances to other developed countries are counted). This is three times the total of official development assistance and foreign direct investment combined, but without the service delivery overhead. Furthermore, half of global remittances reach the rural areas where poverty is greatest and financial institutions are scarcest. While three quarters of remittances directly benefit families, the rest — over $100 billion per year — is saved or invested in productive activities that generate income or jobs, multiplying the economic development impact.

This informal financial system is based on trust instead of institutions, and it leverages the accumulated money management wisdom of millions of villagers and townsfolk, who lead rotating savings circles with similar models in countries around the world. Some of these savings groups (with 15 to 20 million members) are promoted by NGOs, principally in African villages, while others, most notably the Self-Help Groups in India, are facilitated by governments. But the vast majority, tens of millions of groups with easily 300 million members, are organized and run by local leaders acting independently without outside support. These groups are uniquely positioned to boost savings and extend financial inclusion among the more than 2 billion adults in the developing world who, according to the Findex21 report, do not save at all. With a little support they could reach many more.

Yet despite their importance — and the fact that they already do much of what we in the financial inclusion sector say we want to do — there is scarce recognition among financial inclusion practitioners that this informal system is worth consideration. This is puzzling, since those saving in informal groups and receiving remittances include many of the customers, and even many of the employees, of these institutional financial inclusion providers.

Nevertheless, it’s clear that villagers and townsfolk in developing countries, along with their loved ones who are living as immigrants in rich countries, are financing their own development. Some — often the comparatively better off, and those who live in cities and towns — use loans from MFIs and banks as part of their money management strategy. They are likely to use apps to send money, pay bills and take out loans. But the poorer the population, the less relevant (and more perilous) these formal financial inclusion tools are — especially when it comes to taking on debt. Contrary to the often-cited quote from Muhammad Yunus, it is savings, not credit, that is a “human right.”

Reversing the Financial Inclusion Paradigm

If the goal of financial inclusion is to provide people with easy access to useful amounts of capital and a safe, convenient place to save — whether this is from a financial institution or an informal savings circle — savings should be a higher priority than facilitating their access to more loans. This shift from credit to savings (including informal savings) would represent a reversal of the financial inclusion paradigm, as the sector has typically focused on credit-based approaches for increasing financial access through formal institutions.

Fortunately, the foundation for this paradigm shift already exists, in the form of the countless savings circles currently in operation around the world. The easiest way to reach non-savers is for the leaders of these existing savings circles to train new ones. Our experiences in Latin America, Africa and elsewhere show that with modest outside support, leaders can organize and support 10 to 15 new groups over three years.

This process could start with a network of pilot projects, focused on determining whether local leaders can successfully train more and higher-quality groups. Across the developing world there are hundreds of thousands (if not millions) of savings circle organizers who already lead quality groups and may be interested in expanding their reach. Local NGOs and other development organizations could identify and support them through a simple approach: Starting with this question, “How would you organize more savings circles in your community?” these organizations could select the group leaders who offer the best answers, providing them with modest funding and assistance to help organize them into teams, so they could learn from each other, monitor their progress and evaluate their outcomes.

According to Grassroots Finance Action’s estimates, involving 1 billion new members in these new savings groups would cost between $10 and $20 billion over the course of 10 years. This represents a very modest investment, considering that $580 billion will be spent on institutional financial inclusion over the next decade, if current yearly funding levels remain consistent. Yet except for some small investments in savings groups and Self-Help Groups, almost none of the sector’s roughly $58 billion in annual funding is currently being invested in this promising alternative.

Our estimates suggest that the newly organized savings groups would mobilize $50 – $100 billion in savings every year for the use of group members. With predictable pools of capital in hand, families would likely have more to eat, and more cash to navigate income volatility, launch enterprises, send their children to school and access health care. They would also build solidarity and mutual support within their groups — and over time, their financial activities within these groups would enable some members to gain access to institutional finance from formal providers.

A more modest objective — doubling the membership in informal savings circles to 840 million rather than adding 1 billion new members — would be even more feasible: At a cost of around $8 billion over five to 10 years, this could be accomplished for about 14% of the amount invested in institutional financial inclusion in a single year.

Despite the relatively minimal cost of scaling savings groups, this effort could lead to the development of a new approach to financial inclusion — one that includes the poor and poorest on a scale that is hard to imagine using our current models. All it takes is the humility to shift from talking to listening, learning from the existing financial systems created by the poor rather than trying to teach them to adopt our preferred approaches. As our motto at Grassroots Finance Action puts it, “They already have the answers, just ask.”

Jeffrey Ashe is an Adjunct Associate Professor for the School for International and Public Affairs at Columbia University and the Director of Grassroots Finance Action.

Photo credit: Jeffrey Ashe

The COVID-19 pandemic facilitated short-term digital transformation across all critical sectors, including health. In many countries, especially in low- and middle-income countries (LMICs), COVID-19 catalyzed the scaling of a variety of digital health interventions, including telemedicine, disease surveillance and reporting systems, health hotlines, mass communication through mobile phones, optimized digital supply chain systems, and cross-border data sharing for global vaccination certificates and passports.

However, many of these catalytic investments have not translated into the sustained digital transformation of health globally.

Today, less than 50% of countries systematically include health in their national digital transformation policies. After 25 years working on various aspects of mobile health and digital health in low and middle-income countries, I am convinced that without larger digital transformation it will be impossible for the health systems in most LMICs to digitally transform, as they lack IT capacity and relevant foundational enablers. Many of the developing countries that have digitally transformed their health systems have done so by leveraging a thriving broader digital ecosystem. A good example of this transformation approach is Estonia, which invested heavily in digital infrastructure, IT workforce development, relevant policies and regulation, and cross-cutting architecture for financial and social services, then leveraged this development to support the digital transformation of health.

With the broader technological advancements happening around the world — including higher bandwidth connectivity, eGovernment services, growth in digital literacy and the adoption of emerging technologies like artificial intelligence (AI) — the enabling environment for digital health transformation is stronger than ever before. But greater strategic alignment, smarter investments and more forward-looking policies are needed to unlock this potential and enable LMICs to leverage digital tools to move us toward universal health coverage globally.

A New Resource to Advance the Development of Digital Health

To support these efforts, HealthEnabled worked with our partners to launch the Global Digital Health Monitor (GDHM) at the World Health Assembly in May 2023. Hosted by the Global Development Incubator, the GDHM is an interactive digital resource designed to help countries strategically advance their digital health transformation. To that end, it aims to:

• Monitor and improve the quality of digital health at the country level;
• Track countries’ progress towards comprehensive, integrated digital health systems;
• Identify funding and technical assistance needs within and across countries;
• Foster better alignment among policymakers, donors and implementers in digital health; and
• Highlight potential areas of risk for country-level investment

Facilitated through a multi-stakeholder initiative that includes representatives from ministries of health across regions, regional digital health networks, UN agencies and policymaking representatives, the GDHM uses the World Health Organization (WHO)/International Telecommunication Union (ITU) National eHealth Strategy Toolkit as its underlying framework — a toolkit that’s used by many countries to develop their national digital health strategies. The GDHM also provides a set of core indicators that align with the WHO’s Global Strategy on Digital Health 2020-2025. This accounts for its alignment with UN goals like universal health coverage, broader digital transformation, private sector engagement and the use of emerging technologies such as AI, as well as diversity, equity and inclusion — including an indicator to help countries address the widening gender digital divide.

The GDHM is designed to be used by ministries of health, private health and technology sector stakeholders, and international agencies. Its breadth of services enables countries and regions to benchmark and track their progress over time, advocate for resources, identify countries that are performing well to facilitate cross-country learning, and support the private sector’s efforts to strategically prioritize new market entry and strategies. In the lead-up to its launch, it was adopted by 62 countries representing more than 2.5 billion people globally. Over half of these early adopters are in Africa (33 countries), due to a push by Global Fund to use the GDHM to set a baseline and monitor its digital health investments in its 55 high-impact and core countries. Gavi, the Vaccine Alliance is also using the platform in a similar fashion. The tool has also been adopted by countries in the Americas, and the Eastern Mediterranean, European, Southeast Asian and Western Pacific regions.

Initial Insights from the Global Digital Health Monitor

The Global Digital Health Monitor analyzed early adopter countries on a five-phase scale, with Phase 5 being the highest state of maturity. This analysis involved 23 indicators, mapped to the seven digital health enabler components highlighted by the WHO/ITU National eHealth Strategy Toolkit — namely Leadership and Governance; Strategy and Investment; Legislation, Policy and Compliance; Workforce; Architecture, Standards and Interoperability; Infrastructure; and Services and Application. Through our initial analysis of 62 countries, we found that just 5% are in Phase 5 maturity (Portugal, Saudi Arabia and the United Arab Emirates), while 95% are in Phase 4 digital health maturity or lower. There is no country in Phase 1. Globally, the area with the highest maturity is Leadership and Governance and the lowest is Workforce. This is not surprising, as many countries struggle to translate their strategic digital health ambitions into scaled digital health interventions — and then ultimately into strengthened health systems and improved health outcomes.

A closer look at the Workforce area highlights one way the GDHM can encourage progress toward better digital health systems: We found that 48% of countries have no digital health curriculum for health professionals as part of their pre-service training requirements, with only 13% teaching digital health in relevant institutions. In addition, 38% of countries reported having no training for their digital health workforce available in the country, with 74% having no workforce strategy, policy or guide that recognizes digital health. These findings can help guide the efforts of government and other stakeholders: According to Innocent Chiboma, Principal ICT Officer, Ministry of Health in Zambia — a country that has used the GDHM to inform the development of its National Digital Health Strategy — “We knew that we had issues with our workforce, but we didn’t know to what extent. The insights from the Monitor show us that we really need to concentrate on our workforce and do something about it.”

GDHM data has also revealed a need for greater strategic clarity, with clearer roles for public and private sector players. For instance, we found that while less than half of participating countries include health in their national digital transformation strategies, digital health is included in the national health strategies of 84% of these countries. However, only a small percentage periodically evaluate and optimize digital health as part of these strategies. And though 61% of the GDHM’s participating countries have formal governance structures in place for digital health, only 42% are fully functional and government-led. Additionally, only 10% of countries reported having a structured and systematic budget line for digital health that is sufficient to meet the country’s digital health needs. And for 75% of participating countries, private sector participation is either non-existent or ad-hoc and limited. According to Dr. Gloria Nenita V. Velasco, OIC-Director IV of the Department of Health – Knowledge Management and Information Technology Service in the Philippines, “When we started, government was leading the development of information systems, but now we’ve seen that the private sector has actually overtaken the government in terms of capacity. We need to pivot.” In response to these insights, several countries are now shifting to clearer roles for the public sector, while working to create a supportive environment to de-risk investment and activity by the private sector, in order to increase the reach and impact of digital health interventions.

Our team’s early analyses highlight progress worth celebrating, while also offering more targeted visibility into areas that require further growth and improvement. And our ability to measure and monitor digital transformation will only increase as more countries participate.

As our reach continues to grow, the GDHM is raising the bar on the digital transformation of health by supporting countries’ efforts to prioritize and monitor their investments, and facilitating cross-country learning between higher-maturity and lower-maturity countries. Together we can improve health and well-being for all and achieve universal health coverage by creating a more effective, equitable and efficient global and national health system through digital transformation.

To explore the platform visit: www.digitalhealthmonitor.org.

If you’re a government health official interested in joining the GDHM by completing a country profile, please contact info@digitalhealthmonitor.org.

Patricia Mechael, Ph.D. is co-founder and policy lead at HealthEnabled. She leads the Global Digital Health Monitor and is a Senior Associate Professor in the Department of International Health at the Johns Hopkins Bloomberg School of Public Health.

Photo courtesy of Jernej Furman.

The latest Intergovernmental Panel on Climate Change global synthesis report has sounded a sobering alarm. The stakes could not be higher in the global struggle to mitigate and adapt to climate change, and time is running out. UN Secretary-General Guterres has urged the world to embrace an “everything, everywhere, all at once” approach to confront this challenge head-on. The enormity of the task is daunting, but we are not without hope.

Given the scope of the crisis, and the extent to which the private sector is driving both its causes and potential solutions, there’s widespread recognition that businesses must be a central part of the global response. And companies of all sizes and sectors can play a critical role, while also generating economic value. For instance, green enterprises can have a positive environmental and/or climate impact either through the process of delivering products/services (e.g., by utilizing clean technologies) or by providing products or services in a green sector (e.g., waste management). And they can also create sustainable employment and livelihood opportunities in the process, particularly for marginalized groups such as women and youth.

More traditional, larger companies also have a significant role to play — not only in mitigating their own emissions, but also in working with the small businesses in their value chains to accelerate their efforts to adopt green approaches and reduce their carbon emissions. The primary components of these value chains are small and medium-sized enterprises (SMEs) and small and growing businesses (SGBs) — companies that need capital and support to thrive. These businesses play a crucial role in job creation and economic growth in both emerging and developed countries worldwide. And they are critical yet underutilized drivers of innovative solutions to address the world’s growing climate-related challenges.

That’s why groundbreaking recent research by the Aspen Network of Development Entrepreneurs (ANDE), undertaken with support from the IKEA Foundation, explores SGBs’ role in advancing the green economy. Focusing on two dynamic emerging markets, India and Kenya, this research aims to help illuminate a path forward — one that allows leaders to act with the urgency and purpose that this crisis demands. By seizing the business opportunities unveiled by these findings, we can take some of the necessary steps to reduce greenhouse gas emissions and ensure we leave behind a habitable planet for future generations. We’ll share some key insights from these reports below.

The Economic — And Environmental —  Impact of Small Businesses

At first glance, and just based on their size, the economies of both India and Kenya could not be more different. In 2022, India had a GDP of almost US $3.4 trillion, while Kenya’s stood at around $113 billion. However, ANDE’s research showed that India and its smaller East African counterpart shared more similarities than differences in their small business sectors. India has the second largest number of SMEs in the world, after China, and these businesses employ over 110 million workers. Similarly, in Kenya, SMEs constitute 98% of all businesses.

ANDE’s research shows that if those countries could guide their small business sectors toward the green economy, either by supporting existing green SGBs or by encouraging green practices in traditional SGBs, they would awaken a giant and largely untapped economic potential totaling over US $120 billion in Kenya and up to US $3.46 trillion in India between now and 2030. If these businesses — which are operating in sectors from renewable energy and water management to sustainable agriculture and ecotourism — can become a focal point in the global response to climate change, they will create countless jobs in the process. The World Economic Forum estimates that India has the potential to create over 50 million jobs by 2070 on its path toward net zero, with many of these certain to be generated by small businesses. And green jobs are a core component of the Kenyan government’s Vision 2030 economic development plan, which aims to establish Kenya as an ”industrializing, middle-income country providing a high quality of life to all its citizens by 2030 in a clean and secure environment.”

Alongside their impact on employment, these growth-oriented enterprises can bring new ideas into practice, introduce technical innovations, and create demand for new environmentally friendly goods and services. In the process, they can contribute significantly to emissions reductions and national climate adaptation goals — but only if they are supported effectively. 

How India and Kenya Can Develop Their Green Ecosystems

ANDE‘s research in these countries has also shed light on which sectors have the most growth potential — and these industries urgently need more tangible stakeholder support. For example, waste management and the circular economy present two of Kenya and India’s most significant market opportunities. Yet more funding, policy and technical support is needed to help ventures in these sectors scale. 

Moreover, efforts to reduce informality and improve pathways for small businesses to partner with government-run systems need to follow suit to unlock the waste management and circular economy sectors’ full potential. And investors and entrepreneurs need to embrace opportunities to provide services that have traditionally fallen within the purview of government. For instance, businesses and funders often overlook water management, as they perceive it as a public sector domain. However, our research reveals that ventures do operate in business segments like water treatment and usage monitoring, and they require more support from the ecosystem across the board.

While some key differences exist between India and Kenya’s green ecosystems, they both have the same pressing need for financial investment. About 75% and 90% of support organizations in India and Kenya respectively reported that access to finance and growth capital is the most significant challenge entrepreneurs in their country’s ecosystem face. And though intermediaries like accelerators and investors in both countries focus primarily on supporting early-stage ventures, there needs to be more investment or grant support directed to ideation and initial launch stages. 

As the world confronts the challenge of climate change, we must adopt a comprehensive approach that considers every facet of the issue. We cannot afford to address this crisis piecemeal. Instead, we must take a holistic view that encompasses both local and global perspectives. ANDE’s research in India and Kenya has revealed a plethora of opportunities for small businesses to participate in the green economy, which can serve as a driving force for economic growth in those countries. And similar opportunities surely exist in developing economies around the world. The onus is on entrepreneurs, investors and other business sector stakeholders to seize these opportunities and take action on a massive scale, everywhere and all at once. We must not let this moment pass us by. It is time for us to step up and embrace our responsibility to drive sustainable development for ourselves and future generations.

To learn more, access the full research reports on ANDE’s website:

https://andeglobal.org/publication/green-entrepreneurship-in-kenya

https://andeglobal.org/publication/green-entrepreneurship-in-india

Abigayle Davidson is Director of Research and Impact at ANDE, and Patrick Obonyo is a Program Manager at Ikea Foundation.

Photo credit: Corrie Wingate Photography/SolarAid

Transporting produce in Rwanda is difficult — it isn’t called the land of a thousand hills for nothing, and the roads in rural areas are largely unpaved and often in poor condition. In addition, the country’s storage infrastructure is limited. And while there has been progress in expanding the road network and storage facilities, challenges in the transportation of produce remain.

This is particularly true as cold storage traditionally requires electricity — something that 39% of Rwandan households lack. These logistical issues result in farmers either selling their produce cheaply or losing it to spoilage. In addition to less income, the short shelf-life of some produce also means that farmers have infrequent income, making financial planning and saving difficult.

To better understand these challenges and their potential solutions, Cenfri has been analysing the country’s agriculture sector as part of the Rwanda Economy Digitalisation Programme. This is a three-year initiative we’re conducting, in partnership with the Government of Rwanda’s Ministry of Information Technology and Communication and funded by the Mastercard Foundation, to support data-led decision-making in government. (While the three years end in March 2024, discussions for an extension are ongoing.)

To understand how the agriculture sector is performing, we analysed the performance of the Ministry of Agriculture and Animal Resources (MINAGRI)’s priority crops using data from eSoko. MINAGRI established the eSoko platform to help inform farmers of the prevailing market prices of their produce, as part of Rwanda’s efforts to advance the digitalisation of its economy. The platform does this by equipping field staff with smart phones to collect pricing information for a range of agricultural commodities from over 60 markets across Rwanda. Prices from this database are then regularly shared with farmers via digital channels.

We used this data, along with additional underlying data that showed the prices of these crops at a greater level of granularity, to explore the impacts of inflation, seasonality, price stability and regional differences on the prices of priority crops. In the process, we found an interesting anomaly in carrot prices that we were able to explain with further analysis. This analysis revealed how digitalisation can enable a clearer understanding of the impact policy and support initiatives have on markets. With a sound understanding of a market’s performance, support initiatives can ensure that relevant interventions are undertaken and their impacts tracked, to create well-functioning markets with predictable prices that allow farmers to plan ahead and receive fair value for the goods they produce.

Effective post-harvest management empowers farmers to make supply decisions

In the graph below, we show the prices of carrots — one of MINAGRI’s priority crops — in five markets from each of the Rwandan provinces from April 2019 to June 2022.

Figure 1: Farmer prices for carrots across regions 2019-2022

Source: eSoko MINAGRI

Between April 2019 and June 2020, we see large price differences across markets: For instance, prices are often double, or even more, in Kigali compared to other regions. This suggests there are shortages in some markets, while others need to drop the price on excess produce to get rid of stock before it spoils. But after June 2020, we see the differences in prices decreasing and becoming more similar across regions, indicating more stable and predictable markets. This change can also be measured using the standard deviation of price, a statistical measure of how much prices vary from the mean. Before June 2020, the standard deviation was 145 Rwandan francs. After June 2020 it declined to 81 francs, demonstrating considerably less variation in prices.

As indicated in the graph, this price stabilisation coincided with the implementation of a new storage solution — the Zero Energy Cooling Chamber — in June 2020. Thanks to this facility, farmers are now better able to store carrots when they are in oversupply and send them to regions where there are shortages. Storage is, of course, only part of the logistics of getting perishable foods to market on time and in good condition. But this facility has nonetheless played a valuable role in stabilising prices for Rwandan produce.

This innovation was implemented under the USAID-funded Hinga Weze project in the Western Province, and it provided KOGIMUIN — a 55-member farmer cooperative — with a facility that houses 300 crates of carrots of 15 kg each. The Zero Energy Cooling Chamber utilises no electricity, relying only on the simple thermodynamics of bricks, water and sand to maintain carrots at cool temperatures. When harvests are greater than the Zero Energy Cooling Chamber’s capacity, cold rooms are utilised.

The facility was provided alongside broader training on post-harvest handling techniques, which has enabled farmers to store their carrots for up to five months, helping them to stabilise the supply available on the market. These improved post-harvest management techniques were also linked with support on market access, a combination of interventions that have allowed farmers to negotiate better prices — amounting to 50% increases in some instances.

It is important to note that shortly prior to the interventions by Hinga Weze, Rwanda experienced a national COVID-19 lockdown starting in mid-March of 2020. If this had been a key driver of the change in price, we would observe a similar change in the prices of other crops. However, other crops did not show a similar variation during this period. This suggests that the national lockdown was not a driver of the trend we see here.

Making price data useful to farmers and policymakers

The aim of eSoko is to make prices easily accessible, and thereby help make markets more efficient by ensuring that farmers are well-informed of where their produce will receive the best price. However, this information is only useful if farmers can access the different markets. Otherwise, they may still have to sell crops cheaply or lose them to spoilage, regardless of whether better prices are available at other markets. But if farmers don’t need to deliver to the local market right away, the differences in prices across markets can more directly reveal the true costs of transport and logistics. These price differences should narrow as logistics improve and lower the costs of shifting production to different markets in Rwanda.

The impact of improved storage and logistics on Rwandan farmers can only be seen and understood because the price data can be linked to events or interventions occurring during the data review period. Thanks to data scientists Cenfri trained and placed within MINAGRI, we were able to access the data from eSoko for the above analysis. Going forward, these scientists are also working to ensure that the eSoko data is accessible to the relevant government departments, to allow them to better understand the impact of their policies on agriculture markets in near real-time.

Rwanda has invested significantly in the digitalisation of its economy through various programmes, such as the eSoko system that provided the data analysed in this article. These investments have made it possible to obtain data that highlights the impacts of policy and initiatives on markets. The challenge is getting this data to policymakers promptly, in a format they understand. It is only by doing so that we can unlock data-driven policymaking in Rwanda and other emerging economies — a challenge we are working on through the Rwanda Economy Digitalisation Programme.

Olivia Rutayisire is a Data Scientist, and Pieter Janse van Vuuren is an Associate at Cenfri.

Photo courtesy of IFPRI/Ian Masias.

Jamaica’s agricultural sector shows great dynamism, as the country seeks to diversify production to promote exports and build self-sufficiency. But like much of the region, Jamaica still imports more food and livestock than it exports, so the country is seeking to diversify production further — while exploring new farming practices and technologies that can boost its agricultural output and sustainability.

These efforts have the potential to put Jamaica’s agricultural sector on a more sustainable footing, and they can also provide a model to other countries, notably Small Island Developing States, which wish to diversify and develop their farming practices. (Small Island Developing States, or SIDS, are defined by the UN as countries with a unique developmental profile due to their geographical and other characteristics, notably their distance from major trading centres and their vulnerability to economic shocks). 

Below, I’ll discuss five major trends that are set to shape the agricultural sector of this ecologically diverse Caribbean country — and that could be applied in other emerging economies. 

Trend #1: Diversification of crops

There has been a significant move in recent years towards the diversification of crops in Jamaica, something that has long been identified as an important way for SIDS in the tropics to improve food security and sustainability. Diversifying agricultural output can include crop rotations to maintain soil health and fertility, and intercropping, whereby farmers plant different crops in the same field at the same time. It can also lead to the development of value-added products in Jamaica itself, as produce can be processed into products such as jams, jellies, sauces and spices. And it can enable seed-saving and exchange, which is increasingly employed to allow farmers to access a wider variety of crops and increase genetic diversity, and which has implications for climate change and pest resilience. Seed saving schemes allow farms to increase crop biodiversity, as farmers have more options that allow them to adapt as weather patterns change, thus avoiding future crop failure. As part of these efforts, Jamaican farmers are shifting away from traditional crops such as sugarcane and focusing on higher-value crops for export, such as yellow yam and other roots and tubers, scotch bonnet peppers, and value-added exports such as hot pepper sauces.

Numerous government-supported initiatives are now in place to advance this sort of diversification. For instance, in April of this year Jamaica’s Ministry of Industry, Investment and Commerce sponsored an event promoting the country’s coconut sector, part of an International Trade Centre programme promoting the development of value-added products in the coconut trade in the region, which is itself sponsored by the EU and CARICOM. The World Bank is likewise heavily involved in agricultural projects throughout the country, and the government makes supporting agricultural diversification a key priority for the sector. 

Most Small Island Developing States have seen their exports decline and their food and agricultural imports increase during periods of growth in recent years. And the vulnerability of these SIDS economies was unmistakably revealed amidst the COVID-19 pandemic. To address the fluctuating prices of food and ensure both food security and proper nutrition, it is imperative for farmers to embrace diversification and actively promote the enhanced utilisation of local products.

Trend #2: Use of technology 

Jamaica’s agricultural sector is increasingly adopting technology to improve efficiency and productivity. This includes the use of drones for mapping and monitoring crops, precision agriculture techniques employing high-tech sensor and analysis tools (as described here), and mobile apps to manage farming activities.

For example, in February of this year Jamaica’s Rural Agricultural Development Authority procured two “agri-spray drones,” making the announcement via a demonstration of the new equipment at an onion farm in St. Thomas. In addition to completing the job of spraying pesticides over an area in minutes rather than hours, this innovation will also obviate the tough physical labour of manually spraying crops. Drones can also be used for the aerial surveillance of crops, so that farmers can more quickly identify crops that are withering, for instance. The drones can be rented from the government via a mobile app, which is yet another example of the growth of tech in Jamaican agriculture (although for the time being only large farms are likely to be able to access such equipment). 

Numerous apps are also now available to Jamaican farmers, offering all manner of services, including up-to-date market information, updates on weather patterns, and microcredit services that can be accessed via dedicated mobile apps. (An example of the latter can be found here). These sorts of apps can also facilitate access to markets and enhance value chains for farmers in SIDS. For instance, e-commerce platforms and digital marketplaces enable farmers to connect directly with consumers and bypass intermediaries, thereby increasing their profitability and market reach. 

Trend #3: Climate change adaptation

Climate change is having a significant impact on Jamaica’s agricultural sector, with increased occurrences of extreme weather events such as droughts and floods. As a result, there is a growing emphasis on developing climate-resilient crops and farming practices.

Examples of climate-resilient technologies and practices now being implemented in the country include solar-powered pumping systems, open-field irrigation (also called “drip irrigation”), and hydroponic production systems (i.e., systems which grow plants by feeding them on nutrients dissolved in water rather than soil), all of which were implemented by the Food and Agriculture Organisation of the United Nations at a training project in St. Catherine, Jamaica last November. Further such training projects, supported by Jamaica’s Rural Agricultural Development Authority, are currently underway. 

Environmental concerns, the availability of natural resources and the challenges posed by climate change are closely intertwined with food security and better nutrition. In response, it’s of paramount importance that SIDS recognise the value of moving from imported to local food, since these countries are particularly affected by the far-reaching impacts of climate change on the globalised food system.

Trend #4: Organic farming

There is a growing interest in organic farming in Jamaica, driven by the desire for healthier, more sustainable food production. Several local organisations, such as The Jamaica Organic Agriculture Movement, are working to support and promote organic farming practices, and there is increasing demand for organic produce both locally and internationally.

The government is also supporting the growth of organic farming, with the country’s then-Minister of Industry, Commerce Agriculture and Fisheries declaring in 2021 that “With the global farming market size valued at US $95.38 billion in 2020 and projected to reach US $213.67 billion by 2030, Jamaica must strive towards using more organic inputs on our farms. It is also imperative that we vigorously pursue the development of our organic agricultural industry.”

Organic farming offers three key benefits to SIDS. First, it reduces their reliance on chemical inputs, promoting healthier and more sustainable agricultural systems. Second, it helps preserve soil fertility and protects water resources by avoiding the use of synthetic pesticides and fertilisers. Third, it supports biodiversity conservation, as it encourages the use of ecological approaches and minimises the negative impacts of farming on local ecosystems, ultimately contributing to the long-term resilience and sustainability of SIDS’ agricultural sectors.

Trend #5: Agri-tourism

Jamaica’s agricultural sector is increasingly being integrated with its tourism industry. This is enabling the island to cash in on the burgeoning agri-tourism sector, which provides visitors to farms with the opportunity to appreciate Jamaica’s agricultural traditions, while creating new ways for farmers to generate income.

A good example of this is Stush in the Bush, a producer of high-end organic foods and related products, which offers visitors what it bills as “intimate farm to table dining experiences” geared toward discerning foodies. Such bespoke services are an increasingly attractive option for farmers willing to invest in new facilities and act as tour guides for foreign visitors, in addition to their usual farming duties. 

Once again the Jamaican government is aware and supportive of these trends: In 2020 Tourism Minister Edmund Bartlett cited farm tourism as an important value-added component of the island’s tourism sector, which he described as “an opportunity for many of our farm hands to earn some much-needed foreign exchange.” A government-backed “Agro-Tourism Farmers Market” is also in operation to facilitate connections between farmers and hotel resorts.

Agrotourism provides opportunities for economic diversification by showcasing the unique agricultural practices, local cuisine and cultural heritage of SIDS, attracting tourists and generating revenue. Additionally, it enhances community engagement and empowerment, fosters sustainable agricultural practices and promotes cultural exchange, contributing to the overall development and resilience of SIDS’ tourism and agricultural sectors.

In conclusion, Jamaica’s agricultural sector is currently undergoing dramatic and exciting changes, as it focuses on building greater self-sufficiency and sustainability. Other emerging countries, particularly Small Island Developing States, can learn from its example as they work to develop their own farming practices.

Varun Baker is the Founder and CEO at Farm Credibly.

Photo courtesy of Marchmont Communications.

Are carbon credits a legitimate tool to fight climate change? Despite their growing popularity as a way for businesses and other carbon emitters to offset their own emissions by buying credits from other entities that reduce or remove carbon from the atmosphere, recent research has called their effectiveness into question.

Earlier this year, an investigation conducted by The Guardian, the German weekly Die Zeit and the nonprofit SourceMaterial claimed that more than 90% of rainforest carbon offsets under Verra, the world’s leading carbon certifier, are likely to be “phantom credits” that don’t represent genuine carbon reductions. And another recent report from the University of California, Berkeley found that the cookstove sector — which sells carbon credits as a way to monetise its own emissions impact — could be over-reporting its carbon reduction by 6.3 times on average: In other words, a typical cookstove project could be claiming to produce roughly six times more carbon credits than the actual climate benefits it generated.

Based on these reports, it’s understandable for people to conclude that carbon credits are nothing but greenwashing — a charade designed to allow big corporations to pretend to take climate action while making no real effort to reduce their actual emissions.  

Working in and around carbon markets for eight years, I’ve gone through these doubts myself. But as is typical in highly technical fields, a deeper understanding of the mechanics, structures, opportunities and risks of carbon credits produces a more nuanced view. I’ve come to see that putting a price on carbon is actually one of our most effective ways to accelerate decarbonisation and give ourselves the best possible chance of meeting science-based targets in climate change.

From my perspective, there are three questions that help clarify the role carbon credits must play in global decarbonisation:

• Should the entities that are creating carbon emissions be charged if they continue to release them?
• Should we take that money and direct it towards high-impact projects that stop or remove emissions, such as saving the world’s forests, removing smoke from kitchens in the developing world and building tech that draws carbon out of the atmosphere?
• Should we make this happen as fast as possible?

If you answer yes to all three of the above questions, then pricing and trading carbon is the best-placed tool to achieve these goals. It taxes emitters to drive their behaviour change, directly funds projects that reduce carbon, and does it through a market-based mechanism that enables efficiency, investment and scale. 

But this doesn’t mean the problems cited by The Guardian and the University of California, Berkeley aren’t real — they very much are. And while there are multiple factors driving these challenges, the biggest one is that, until very recently, we’ve just not had particularly effective tools for handling one essential element of carbon markets: verification. 

The Verification problem for carbon credits

Verification of carbon requires a trustworthy process for confirming that a ton of carbon (the unit of measurement represented by a single carbon credit) equates to a ton of actual carbon or other greenhouse gas removed from, or not emitted to, the atmosphere. It is done through standards bodies, with Gold Standard and Verra being the most well-known at a global voluntary level. These bodies are the ones responsible for the creation of tools, methodologies and outcomes that both project developers and credit buyers can utilise to verify the climate impact of the credits they’re exchanging. With this verification, both parties can trade carbon credits, which are otherwise known as Verified Emission Reductions (VERs).

A simple example: A Nepali woman cooks with wood, which releases one ton of CO2 per year. With the support of a cookstove company, she then switches to electric cooking, 100% powered by hydro and solar which have no CO2 emissions — which means that over a year, one ton of CO2 is prevented from going into the atmosphere. If you can measure, report and verify (MRV) under a certified standard that this change has indeed occurred due to a dedicated project intervention that otherwise wouldn’t have happened, this generates one ton of VERs — which equates to one carbon credit that can be traded for a limited period of time.

It’s in this MRV process, ensuring that one ton is actually one ton, where the market is falling short. Why? Because as The Guardian and UC Berkeley pointed out, the traditional field-based tools used to date by the sector can too easily generate overestimates that then compound together. According to these sources, this compounding effect is leading to significant overestimates of credits generated compared to their independent reviews.

However, these inaccuracies, in my view, were highly unlikely to have been triggered intentionally. The majority of stakeholders in carbon markets — standards bodies, project developers, verifiers, buyers — are staffed and managed by people of integrity dedicated to the planet, myself included. We have done and continue to do our best to measure carbon in highly challenging conditions across the developing world. 

But we can’t avoid the mounting evidence that the traditional tools utilised with field-based processes are coming up short. The reason this is becoming evident now is because of the rapid advance of technologies that can more accurately measure emission reductions. This new wave of technology, often referred to as digital Measurement, Results and Verification (dMRV), is both helping us to better understand what is working now, and laying the foundation for the future success of measuring and pricing carbon.

IoT and Satellite – The technology-driven future of carbon credit verification

In The Guardian’s investigation, the conclusions were made possible because of recent advances in access to cost-effective satellite imagery. This imagery provided researchers with data that allowed them to review Verra’s claims of avoided deforestation, resulting in their finding that these claims had been substantially overstated compared to what was actually occurring in the rainforests impacted by the projects Verra certified.

Likewise, though the UC Berkeley report concluded that traditional field-based MRV methodologies are potentially over-reporting cookstove VERs by 6.3 times, it also found that one methodology actually was generating more accurate credits aligned with the study’s estimates: namely, Gold Standard’s new metered methodology, which requires stoves to be integrated with technology like Internet of Things (IoT) SIM cards to verify exact usage data. 

The dMRV technologies being used to uncover these areas for improvement in the current system are the same technologies that are already being used to build the future of digital verification. For instance, Pachama is a U.S. startup utilising satellite verification to calculate carbon credits for deforestation projects. And at ATEC, we recently signed a landmark multi-country agreement with Engie that will use dMRV to verify the purchase of up to 11.5 million tons of carbon credits generated by ATEC cookstoves in Bangladesh and Cambodia. This verification will be conducted using the Gold Standard metered methodology that the Berkeley report rated as the most accurate available. You can view the power of this IoT technology in tracing decentralised carbon credits in the walkthrough of ATEC’s dMRV Carbon Credit Dashboard shown in the video below.

With dMRV technologies we can build higher levels of trust in carbon projects and direct billions of dollars in carbon financing to the developing world, helping these communities to play a significant role in addressing climate change: a problem they didn’t create, but one that is impacting them disproportionately nonetheless.

A call to action for people and planet

We are just beginning to understand what putting a price on carbon can do to solve one of the great existential challenges of our time. But it’s already becoming clear that dMRV, through IoT and satellite data, is a big step forward in building trust in carbon credits — as well as enabling the infrastructure for their massive scale. By ATEC’s estimates, transitioning the 4 billion people who still cook with wood to modern, decarbonised cooking will reduce global emissions by one gigaton — an amount greater than the emissions produced by the global airline industry. But further steps are needed to continue to build trust in carbon markets, and to scale them to reach their technical potential.  

Beyond the widespread implementation of dMRV, as a project developer we recommend five other steps forward to help build scale and integrity into the market. There may well be others — and there are likely differing views on these points — so we welcome debate on the topic. 

Our recommendations for building robust voluntary carbon markets for people and the planet include:

• The creation of a truly global system for carbon trading, to remove barriers between buyers and generators. Uncertainty around issues of inter-country trading under Article 6 of the Paris Agreement is a common challenge expressed by carbon credit buyers. A frequent criticism is that credits are too inexpensive and companies can offset emissions too cheaply — and this is true. Creating a truly globalised market where every emission is counted and can be traded will liberate projects to achieve their true value. Bilateral agreements to allow trading between countries, under Article 6.2 of the Paris Agreement, are one potential way forward, and these are being pursued by Singapore, Switzerland and others.
• Required tracking of the ultimate beneficiaries of carbon finance, ensuring that those who are actually generating emission reductions are the ones receiving the majority of that financial benefit. There have unfortunately been reported cases of projects with little financial benefit flowing to the households and communities that do the actual hard work. New advances in automated data generation and mobile/digital payments mean we now have the technology to provide that direct flow of finance in a transparent and scalable way — something that will also lead to traceable improvements in additionality.
• The creation of separate price indexes for digitally-verified and field-verified credits. Digitally-verified credits are clear leaders in ensuring that a carbon credit represents a ton of actual carbon. But digital tech costs time and money — expenses that are typically incurred initially by project developers and their funders, then built into the ongoing carbon pricing. These costs must be compensated appropriately and not lumped together under the same index reference price with field-verified credits from lower-quality projects. This is similar to other commodity and asset classes that have different quality tiers which attract different pricing, and companies like BeZero Carbon, Sylvera and others are helping to move this sort of recognition forward.
• Standards to tighten independently-verified baseline figure ranges for project design. Though dMRV addresses over-crediting concerns in usage verification, if there is a lack of reliable data on what was happening beforehand (i.e., baseline figures) then there’s still the risk of verified credits not being accurate within a project. To reduce this risk, standards bodies could further tighten allowable baseline figures into an independently verified range per country.
• Tracking of credit purchases against emission type, to increase visibility and make it harder for companies to effectively “pay to pollute.” Many companies participating in carbon markets are understandably buying credits to align themselves with their customers, who want to ensure that their personal spending is achieving the best outcome for the environment. By tracking what types of emissions they are offsetting through carbon credits and communicating this publicly, companies can give customers confidence that they’re reducing the emissions they should, then responsibly using carbon credits only where necessary.

Combined with dMRV, these recommendations can increase confidence in carbon credits, building a market that’s credible, transparent and based on trustworthy, internationally respected norms. We believe they can help carbon credits play a vital role in the global decarbonisation efforts that will be key to the ongoing fight against climate change.

Ben Jeffreys is the CEO of ATEC Global, an international leader in PAYGO clean cooking. 

Photo courtesy of Forest Service, USDA.

Efforts to decarbonize the world’s energy systems are accelerating, pushing many industries and companies to innovate to survive. But while this global energy transition brings profound change — and with it new challenges — it also heralds tremendous opportunity in new areas.

The automotive industry is a highly visible proving ground for this shift, as the transition to electric vehicles (EVs) gains momentum around the world. We at the William Davidson Institute at the University of Michigan (WDI) are examining the drivers and implications of this shift: For instance, increasingly stringent emissions standards — along with government and company targets and commitments to phase out the production of internal combustion engine (ICE) vehicles —  often mean that established companies along the ICE value chain have to reimagine their role in this changing landscape to stay competitive.

As part of our efforts to support business development in low- and middle-income countries (LMICs), WDI is studying how companies in these markets (and others) are navigating the energy transition. In Mexico, for example, we have examined the potential impact of electrification on automotive suppliers in the state of Chihuahua, highlighting new opportunities in the EV space that companies could consider. More broadly, we’re contributing to analysis and conducting research on the business pivots that companies are making as a result of this transition, and we’re seeking to disseminate knowledge around these examples for the benefit of the broader sector. 

One such company is Bosal, a global Tier 1 automotive supplier — i.e., one that provides products directly to automotive original equipment manufacturers (OEMs). The company is in the process of leveraging its expertise with ICE-related products to expand into the renewable energy market, before the predicted dwindling of its ICE portfolio. In this article we describe some strategies and lessons from Bosal’s evolution that can be valuable to other companies affected by the energy transition. The insights we include here are based on interviews with Bosal’s Executive Vice President for Energy, Cedric Ballarin. 

Bosal: from emissions control systems to hydrogen

Bosal is primarily known as a manufacturer of emissions control systems (including exhaust systems, catalytic converters, heat exchangers, particle filters, etc.) focused on the business-to-business market. Founded in 1923 and headquartered in the Netherlands, it’s a family-owned company with a global footprint that includes 16 manufacturing and distribution centers and six R&D centers in countries around the world. Its customers have historically been automotive OEMs, and its presence in LMICs extends from Mexico and Brazil, to South Africa and Turkey. 

In response to the energy transition and changing market needs, Bosal has been working on refocusing its product portfolio to serve the needs of customers outside the traditional automotive industry. As is the case for many automotive suppliers, the company has found that the pie is getting smaller when it comes to future potential revenue from ICE-specific products such as catalytic converters and exhaust systems. This has created an increasingly urgent need to diversify away from these products, as the OEMs that comprise the customer base for Tier 1 suppliers double down on electrification investments that reduce their need for ICE-related products like Bosal’s. With global investments in renewable energy and energy efficiency technologies reaching an all-time high of US $1.3 trillion in 2022, up 19% from 2021 investment levels, the trendline suggests that demand for products related to renewable energy applications will continue to grow.

One high-potential area Bosal has identified is hydrogen production, with global investments signaling growing interest in hydrogen-related applications. Indeed, despite the ongoing debate about the feasibility and efficiency of a hydrogen value chain, many believe that clean hydrogen has a critical role to play in a net-zero emissions world, especially in hard-to-decarbonize sectors such as steel making, chemicals manufacturing and heavy-duty transport.

Satisfying greater demand for clean hydrogen will require scaling up production and reducing the cost of electrolyzers (which produce hydrogen by using electricity to split water into hydrogen and oxygen) and fuel cells (which convert hydrogen into electricity) — as well as the components needed to make these technologies operate as efficiently as possible. To that end, heat exchangers are critical components of certain types of electrolyzers and fuel cells, such as those that use solid oxide technology, which generate heat as a by-product. Heat exchangers manage the temperature changes involved in these complex processes and can improve the performance, efficiency and lifespan of these technologies. 

Bosal already specializes in designing and manufacturing high-performing heat exchangers, which are used in its emissions control systems. It has now enhanced these devices to enable their use in solid oxide fuel cells and solid oxide electrolyzers, two of the several types of fuel cell and electrolyzer technologies currently available. Recognizing an opportunity here, the company is ramping up the development of these heat exchangers, which can also be used in a variety of stationary applications beyond the mobility market. 

Bosal’s recently created energy division is key to these efforts, as part of its broader goals of implementing innovations to suit the needs of a wide range of new customers, finding new markets, and helping the company capitalize on its automotive roots to manage its transformation in the emerging renewable energy space. 

So what does it take for an automotive supplier to transform into an energy solutions company?  

Enabling the pivot: practical lessons

Here are three lessons that we can distill from Bosal’s ongoing efforts to execute this pivot into a new market and tap into new opportunities — while also addressing the inevitable growing pains:

• Combine realism with ambition

For Bosal, being realistic about its business model has meant closely monitoring the momentum building around decarbonization, recognizing this trend as an existential threat to its traditional business — then taking action. However, the company also recognized that this action does not entail eliminating current products, but rather leveraging its expertise in heat exchangers and related manufacturing processes (e.g., steel, pipes, cooling, bending, cutting, welding, etc.) to develop more advanced products that can be used in new applications. In other words, Bosal realized that to conduct a successful pivot into a different market, it would need to build on its existing technical expertise, established footprint and assets to manufacture high-volume and high-quality products at a competitive cost. 

At the same time, the company saw that even with its established assets and expertise, it needed to embrace the changes inherent to diversifying its customers and refining its business model. By staying attuned to the needs of this new market — defined more broadly than automotive — Bosal was able to identify new opportunities and refocus its efforts to take advantage of them. In this case, the need for new energy storage solutions and the potential of hydrogen has allowed it to enter a market that was not on most companies’ radar 10 or 15 years ago.

The global fuel cell market is projected to reach US $ 36.41 billion in 2029, up from US $ 4.58 billion in 2021, and global capacity to manufacture electrolyzers could exceed 60 gigawatts per year by 2030, up from 8 gigawatts per year in 2022. With its new strategy, and given this anticipated market growth, Bosal envisions that in the next five to seven years, its two product lines will intersect: Sales related to heat exchangers for electrolyzers and fuel cells will be on par with (and then overtake) sales of emissions control systems, as revenue from new energy technologies eventually offsets anticipated revenue losses in its ICE-focused line. 

• Take risks on products that stand out from the competition

Other auto suppliers are also leveraging their expertise in automotive engineering and manufacturing to develop hydrogen production technologies, as well as fuel cell vehicles and other applications. Product differentiation is therefore key, if a company hopes to stand out amid the competition. 

Sometimes this means taking risks. In Bosal’s case, that means betting on solid oxide technology for electrolyzers and fuel cells. Both of these technologies are currently considered niche, and they are earlier in their development than other technologies in terms of their commercial readiness to be incorporated into a global hydrogen market. However, they also have high growth potential for various reasons. For example, solid oxide fuel cells are fuel neutral, and can operate with natural gas, biogas or other fuels — as well as with hydrogen. This enables rapid adoption, since customers can begin by using fuel with existing infrastructure, such as methane gas, and migrate to hydrogen when the necessary infrastructure is in place. Solid oxide also offers higher efficiency rates than some other fuel cell and electrolyzer technologies, producing greater output for the same operating cost. 

To further differentiate these new products, Bosal has made their impact on efficiency a core part of the value proposition it communicates to its energy sector customers. This highlights an important difference relative to its automotive portfolio: Whereas Bosal’s heat exchangers for exhaust systems don’t directly influence the efficiency of the engines that utilize them, its new heat exchangers can have a significant impact on the efficiency of fuel cells and electrolyzers, making them highly valuable components. When applied at scale, the impact of this efficiency can be massive. Articulating this benefit is a key part of developing a value proposition that appeals to Bosal’s new customers: The upfront cost of the product is offset by the efficiency gains expected in the overall system — a long-term value that needs to be made clear to the customer.

• Embrace a new paradigm

In doubling down on its energy product line, the company is stepping more decisively into a space that is different from the automotive industry in many ways. For starters, its customers are much more diverse: While in the auto industry a supplier like Bosal may have 12 customers worldwide, in the energy sector there are thousands of potential customers of different types. These can range from small startups and midsize companies to multi-billion dollar conglomerates, and can include energy producers, other automotive suppliers looking to pivot beyond ICE vehicles, energy service providers and oil exploration companies, among others. 

This diversity means that customers have vastly different expectations from one another, which requires a completely different approach to customer relationships than the strategies used by companies that serve just one type of customer. In many ways, Bosal has had to forget what it has learned from managing auto customers — an industry with highly standardized processes and specifications, as well as more predictable product cycles — and develop new customer service strategies based on individual expectations and product requirements for a myriad of applications. 

It has also needed to prepare to expand further into LMIC markets, as the potential for renewable energy applications grows there. While Bosal’s main markets today are Europe, Asia and North America, many LMICs have developed plans and roadmaps to become hydrogen hubs or otherwise develop capabilities in this space, which will open new opportunities for the company to serve a wide range of potential customers in those markets.

Looking ahead

As Bosal solidifies its new heat exchanger offerings, it is also exploring further avenues to grow its business, either through concentric or vertical diversification. These include, for example, exploring carbon capture and recycling applications for energy-intensive industrial processes.

With new products or applications for different markets in the works, the company is well on its way to transforming itself into an energy solutions provider. As it continues this journey, it will have to adapt to rapidly changing market dynamics and respond to new opportunities. But by anticipating these challenges and laying the groundwork for this future growth, it has greatly enhanced its ability to not only survive the global energy transition today, but to thrive in the renewable energy markets of tomorrow.

Is your company undergoing a transition in the energy or mobility space — or are you involved in research on this topic? If so, please reach out to share your insights or questions.

Diana Páez is Senior Director, Energy & Mobility at the William Davidson Institute (WDI), and Dana Gorodetsky is Program Manager, Energy at WDI.

WDI is NextBillion’s parent organization.

Photo courtesy of Bosal.

There are over 70 mini-grids in operation in Nigeria today. Most of these isolated power systems are powered by a combination of solar power, battery storage and small diesel generators that provide back-up power when needed, with the goal of delivering reliable clean energy to communities that are accessing electricity for the first time. Many energy businesses want to serve these new communities, and with over 85 million Nigerians lacking access to grid electricity, a market for their services exists.

But serving a new community that has never had power presents some unique challenges — not only in Nigeria but across the developing world. It requires energy companies to find and convince customers — who typically lack the equipment and appliances to use power — to sign up for electricity services they’ve learned to live without. It also requires them to convince local businesses, generally in the agriculture processing sector, to swap out their existing (still serviceable) gas-powered rice and flour mills or cassava graters and invest in new electric versions — which necessitates investments that are hard for these local businesses to fund without access to affordable sources of financing. Energy providers are not equipment and finance experts, they are in the business of generating, distributing and selling power to consumers. But if users lack the means to use the power they sell, the energy providers’ revenue model fails.

The Challenges of Boosting Demand for Productive Uses of Clean Energy

Partnerships can help address some of these challenges. Ideally these involve an energy and equipment provider partnering to enter a new community, then working together to find customers, understand their needs and make investment decisions in tandem. These partnerships can also help inform some of the key decisions energy companies must make at the planning stage of projects, since cross-cutting expertise from equipment providers can help them avoid added costs later on. For instance, equipment providers can help them determine how big a battery bank to invest in and how far to extend their network infrastructure. And energy companies can advise equipment providers on which electrical loads make sense to serve with a mini-grid system, which can help these providers prioritize customers and determine which equipment models to retail locally.

But making these decisions collaboratively requires businesses to find partners that share interest in the same regions and value chains, and that have the operational capacity to deliver. It also requires the partners to line up the money to fund their customer engagement activities, and to make the right staff available at the opportune time — i.e., before a competitor swoops in on a preferred site. Finding the right partner and learning how to work collaboratively is difficult, and these partnerships often fail to materialize unless an external entity steps in to take on the coordination role. This is because energy use companies (such as equipment providers) and energy supply companies do not tend to interact with each other under normal circumstances, and they each have limited staff to lead coordination efforts.

Funding these demand-side efforts presents another key issue. It took decades for policymakers and their development sector partners to relinquish their “if you build it, they will come” approach to designing energy access programs, and to broaden their perspective to consider not only the need for more supply, but also the challenges of creating demand for energy services. To take one example: As recently as the period from 2000 to 2008, investment in supply expansion represented almost half of the nearly $4 billion in total investment the World Bank approved for energy access, whereas investment in productive use represented just 0.7%.

As awareness of the demand-side challenge in energy access has increased, there has been growing recognition among policymakers and development sector players that they must consider demand stimulation by funding productive uses of electricity — i.e., the use of electricity for income-generating activities, which are predominantly agricultural in rural communities — alongside supply-side infrastructure financing. And yet the need for financing for productive use equipment and the solar systems needed to power them remains large, with some estimates as high as $120 billion per year from 2020 to 2030 in sub-Saharan Africa. And even when sufficient financing is made available, it remains difficult to craft policy solutions that address the needs of the entrepreneurs who deliver the electric equipment and services to consumers.

What’s more, even well-intentioned policymakers often develop solutions that miss their mark. For example, the Nigeria Electrification Project allocated a considerable amount of development funding (US $20 million) to support demand stimulation alongside its mini-grid development efforts. However, these funds were provided as results-based financing that was disbursed only after verifying that the appliances had been deployed in communities. Although this type of support is necessary at later stages to scale a market, it is not the right solution for nascent markets in which emerging companies are still fine-tuning their business models and technologies. Since these businesses operate with limited funds and lack access to upfront financing, they are often unable to fund the deployment of productive use products in these markets in the first place, much less take advantage of results-based financing on offer only after successful deployment.

These are some of the challenges that make the implementation and ongoing viability of clean energy access projects difficult. So how can the sector work more effectively to make productive use happen in rural communities?

A blueprint for productive use of mini-grid energy

Nigeria’s Rural Electrification Agency (REA) and RMI are addressing this need by enabling the doers, the people ready to roll up their sleeves to find the right partners and develop productive use solutions that work in challenging markets. We’re doing this by providing them with the short-term coaching and strategic matchmaking they need as they learn to do something new, in lockstep with flexible upfront funding that enables them to test these new and often risky ideas.

In a little over a year, we’ve forged partnerships with nearly 30 organizations to form eight teams that are designing and testing energy-agriculture business models. Each team includes at least one agriculture appliance company and at least one mini-grid provider, which work together to sell both appliances and mini-grid electricity to new customers who currently have neither. The teams are now electrifying productive uses of Nigerian mini-grid electricity in almost 20 pilot sites across the country, testing the viability of 11 business models. These models range from using electric two-wheelers to run farmer extension services, to electrifying existing processing operations like cassava grating and maize and rice milling, which are currently powered by diesel.

If implemented at scale in Nigeria, these productive use efforts are expected to reduce greenhouse gas emissions by 1.4 million tons of CO2 by 2030, and by 7.4 million tons over the full life-cycles of the supported electric machinery. They’re also projected to create or improve over 150,000 jobs and positively impact the livelihoods of nearly 4 million Nigerians. This approach can also provide a blueprint that other companies and projects can use to scale the productive use of mini-grids in other countries and regions.

As this project demonstrates, productive use can’t happen without strategic partnerships. Energy developers, equipment providers, and agriculture and value chain experts each have different pieces of the puzzle. To establish and grow productive uses of mini-grid energy, it’s essential to enable these actors to contribute their unique knowledge to the design of business models that bring electric-powered equipment (and the services enabled by these devices) to customers in remote locations.

In Nigeria, the Energizing Agriculture Programme (EAP) Innovation Accelerator, co-led by RMI and the REA, is providing the ecosystem to make these partnerships happen. After identifying a problem on the agriculture side that electricity can solve (e.g., how to reduce energy cost volatility and improve the efficiency of oil palm milling), the accelerator started by identifying companies with a business interest in solving that problem. It then connected them with energy providers they could partner with, and with market experts who could advise them in developing and fine-tuning their business model to reach this new market. By bringing these actors together and tasking them with solving a specific problem, the accelerator created a space for collaboration and problem-solving, enabling them to work through pressing challenges and technical questions and identify concrete solutions (e.g., co-developing a lease-to-own business model for electric palm oil milling equipment). By hosting match-making sessions and bootcamps, it provided opportunities for peer-to-peer networking focused on sharing cross-sector expertise across agriculture and energy, and helped foster the relationships these teams needed to make joint projects happen. Through close follow-up and problem-solving support by a team of dedicated coaches, the accelerator converted these early conversations into real partnerships with concrete project commitments, and provided flexible funding to implement pilots to test the proposed business models.

The EAP, with partners like VIDA and ESMAP among others, will continue to provide Innovation Accelerator companies with an ecosystem of support, helping to identify and advance a concrete investment pipeline to scale viable agriculture electrification models. But these companies will need follow-on financing to access the growth capital they need to expand into new markets and communities.

To that end, this year the accelerator’s pilots will start to provide us with the data that shows which models are viable and can scale. This information, alongside a concrete pipeline of new projects that these companies will pursue after they have refined their business models through the accelerator, will be crucial to informing investment decisions by funders. These funders’ participation in the ecosystem is vital, as they will provide the financing these companies need to scale.

In the coming months the EAP and its partners will amplify the lessons and insights learned from the current Innovation Accelerator pilots, with a special focus on sharing the information that investors need to make their funding decisions. To keep abreast of these findings and other news surfacing from the EAP, please visit the program’s website here.

Scarlett Santana is a manager at the RMI Global South Program.

Photo courtesy of Maheder Haileselassie / IWMI.