What ADVICE would participants give to potential INVESTORS in the field who seek to maximize the impact and effectiveness of their investment? What sectors critically need financing? What type of financing is needed? What are the right expectations for social and financial returns? What changes are needed with regards to legal frameworks and national policies to enable the right kind of investment?
So often we are reminded of the need for solutions to global poverty, and numbers are overwhelming: rate of infant and maternal mortality, malnutrition, illiteracy, clean water and decent housing, plummeting life expectancy…. but the question of what to do for the greatest impact remains.
One of the main virtues of “market-based” approaches is their capacity to self-sustain, independently of government policies or donors’ agendas. Not to say that this is a panacea as some situations are just too dire to effectively leverage market-forces, but the model can apply across sectors and countries. Some initiatives focusing on critical goods such as education, healthcare, water, etc. may also be able to adopt a hybrid model based on subsidies from government/donor grants on one hand, and revenues generated by the venture on the other. One of the most eloquent examples of a market-based model that benefits low-income communities is the micro finance industry that is now serving more than 50 million micro entrepreneurs around the world. However, it has also faced skeptical and critical voices ranging from “it is unethical to charge positive interest rates to the poor” to “it will never be a profitable venture” since its beginning. Creativity and persistence to remove the inevitable challenges along the road are needed to develop these new ventures.
We would like to take advantage of having a critical mass of already 60 entrants in the competition to engage in a discussion about the financing needs to spread “Innovative market-based strategies that benefit low- income communities”. Even if these initiatives have the potential to be financially self-sustaining, there is a critical need for funding at different stages including seed financing for initial development and infrastructure investment, expansion financing to enable scaling up and replication, and often some kind of micro financing at the client level to facilitate the acquisition of products and services by low-income families (such as rural micro finance, housing micro finance, micro insurance schemes, etc.).
This is of course a huge topic but we would love your thoughts and experiences, even one or two sentences. And if we could together influence funding patterns for the field…
Stephanie
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