Bridging the Worlds of Impact Investing and Inclusive Business

By Zahid Torres-Rahman, Founder, Business Fights Poverty

Bridging the Worlds of Impact Investing and Inclusive Business

Attending this month’s SOCAP/Europe conference (see my blog about the event), I have been struck by the huge potential for connecting the world’s of impact investing and inclusive business.

Both are effectively about using private capital to bring about positive social and environmental change. Very often both are focused on supporting small and medium enterprises in the “missing middle”. Impact investors direct their investment capital and know-how to entrepreneurs that generate a social as well as a financial return, while the latter look for commercially-viable business models that include poor people as suppliers, distributors, consumers and employees (tomorrow, the Business Call to Action, in partnership with the Business Innovation Facility and Business Fights Poverty, is hosting a webinar that looks at inclusive business models that target climate change).

Both impact investors and inclusive businesses reject the notion of a simple trade-off between profit and social good, and in fact believe that finding ways to tackle social issues in financially viable ways results in longer-term and more sustainable impacts.

At the same time, both worlds face similar challenges: scaling results; measuring impact; finding ways to move into / influence the mainstream; convincing traditional development actors that the for-profit private sector has an important role to play – to name just a few.

So here’s the opportunity: by finding ways to collaborate, impact investors and inclusive businesses can massively increase the scale of their impact, and share ways to overcome the challenges. An obvious example is an impact investor investing in the value chain of a large corporate. I have been directly involved in helping a beverage company wanting to source more inputs locally in a number of African markets, which requires a significant degree of smallholder farmer development and aggregation. Bringing impact investors into the picture (instead of or in addition to the aid agencies we typically speak to) can help strengthen farmer productivity and/or develop commercial hubs to aggregate, process and deliver the supply of raw materials.

It is surprising then that in general the worlds of impact investing and inclusive business seem to be running forward in the same direction but in isolation. The impact investors – from financial institutions to family offices and philanthropic foundations – don’t appear to be connecting enough with the corporate employees driving the inclusive business agenda. SOCAP has energised me to start building these bridges and finding tangible opportunities, and about how to build a new cross-over space of “Impact Business”. If you are an impact investor or sit within an inclusive business, and would like to build the connections, please get in touch and we can work this out together.

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2 Responses

  1. As someone that spends a lot of time on the ground I agree with the need to bring both worlds together.

     

    Most of the folk that I come across in my work are small holders but provide vital services and goods to their community. You will recall James from my post following the last VILLAGES IN ACTION conference. James provides a milling service that enables folk in the village to preserve food for leaner times but lacks capacity to grow this service because the cost of borrowing is too great.

     

    He also provides a bicycle repairing service, bicycles are the most means of transport in this village and are vital for getting produce to market, people to health centers etc. Imagine the impact of investing and scaling up these services in that remote Ugandan Village!

     

    Then they are the small holders who grow too much food for their personal consumption but are too small to supply large chains- enabling such folk to become suppliers of the large chains can be life changing for the small holder.

     

    I am certainly interested in building such connections so count me in!

  2. Hi,

    I just want say ‘bravo’..this is just what i was waiting for..I must say that this a quite good initiative and the best way to live and work. Doing business with the poor and for the poor. It is moreover a win win situation..where the business flourish and make profit, the governments gain on VAT and the poor also benefit from success of the business. I came across some scam artists pretending to be investors or some genuine investors, but not so keen with the idea of implementing the poor benefit idea in their plan..

    I welcome these connections and have already a good project waiting for investment to be put on track…so i’m in.

    I will be very pleased to expose my project to potential investors or interested parties!

     

    Best regards 

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