Via a new accelerator programme our partner SEED has provided advanced financial support to two winners of their annual awards for social entrepreneurs. At the South Africa Symposium, hosted in Pretoria on March 15-16, we spoke to the entrepreneurs behind the two successful ventures, Andrew Kingman of Baobab Products Mozambique and Arjan Visser of Electricity4All. They give you a glimpse of what award-winning social entrepreneurs think and do.
By providing one-to-one support on financial management and access to finance over the period of one year, combined with a financial contribution of up to USD 40,000, the objective of the SEED Accelerator is to provide the Accelerator recipients with a stable and sound business foundation from which they will then be able to progress without a strong dependence on continued outside assistance. The SEED Accelerator is supported by the Government of Flanders
Baobab Products Mozambique BPM creates a local value chain around Baobab fruits, buying pulp and seeds from women harvesters, before processing it into nutrient-rich powder and oils. The products are sold nationally and internationally.
Electricity4All Malawi Electricity4All provides solar battery kits that can power households and small-to-medium businesses, independently from the grid, by using renewable solar energy. By activating a network of solar energy kiosks, Eletricity4All improves access to affordable and sustainable electricity in rural communities.
How did you start your inclusive business?
Andrew Kingman: “We started work on Baobab in 2013 but the business as Baobab Products Mozambique actually only launched in 2015 – though we registered in 2014. We delayed because we did not want to start incurring overheads and fiscal liabilities unnecessarily.”
Arjan Visser: “In 2011, after having worked for several years in the power sector of Malawi, I noted that there were not many private initiatives focused on increasing access to electricity. I develop a strategy and introduced and piloted the concept of an electricity kiosk in Malawi in 2012. Using this experience, I set up Electricity4all to offer affordable and sustainable power to everyone. The energy landscape is changing quickly now as there are more and more initiatives and innovative ideas to offer affordable, sustainable and clean power in developing countries.”
What does a typical day look like for you?
Andrew Kingman: “My days are immensely varied because I divide my time between providing management services to BPM and to our other natural product business, the Mozambique Honey Company, along with varied inputs to the economic livelihood projects of our partner, MICAIA Foundation. In terms of my time with BPM, a typical day will include an update on orders and marketing with our Business Administrator, a walk around the stores and processing rooms with the Production Controller, an email or two following up on leads from a trade fair or similar, and then it could be preparatory work for a promotional event or work on a funding/investment pitch.
It really is very varied. If it is the harvesting time as now, then a lot of my time is focused on work with our Supply Chain Manager and Field Officer in planning and managing the harvest preparation and then the harvest and buying campaign.”
Arjan Visser: “During the day I have meetings with our Head of Engineering and Head of Marketing to discuss customer issues and our sales plan. Furthermore, I meet with existing partners, such as banks, and connect with potential new partners and customers. When I am not meeting people I work on the development and refining of our strategy, and administrative issues when needed.”
What is the single most challenging aspect of your work?
Andrew Kingman: “The biggest challenge is undoubtedly getting the balance right between thinking and acting like a fully commercial business and maintaining the commitment to deliver on our aspirations as a truly inclusive business.”
Arjan Visser: “The most difficult part is to reach out to customers and raise awareness about the possibilities and advantages of using alternative sources of energy. The usage of paraffin, candles and car batteries is widespread and firmly embedded in the culture, so it takes time before the majority of the population is fully aware of the alternatives and ready to change.”
What are you most proud of?
Andrew Kingman: “Well, I’d probably say that I’m most proud of winning our first bulk order and subsequently securing organic certification for most of our harvesting area and 250 women harvesters.”
Arjan Visser: “Having pioneered an innovative concept for off-grid electrification that is being implemented more and more.”
What do you think is needed to achieve scale or a demonstrable impact?
Andrew Kingman: “Our main need is for access to working capital to ensure that we can buy raw material when it is available and manage the time it takes to do the processing. Ideally, we will raise capital to build our own factory as there is considerable pressure on space in our area and extensive profiteering. Moreover, most of the available facilities are not suitable.”
Arjan Visser: “The costs of reaching out to people in remote off-grid areas need to be reduced significantly in order to make the supply of power systems on a large-scale financially viable. Donors and governments play an important role in increasing awareness and providing support to make the distribution of power in rural areas economically more attractive.”
Where do you see your business in 10 years?
Andrew Kingman: “One of the top 5 Baobab companies in Africa. A big export portfolio (50 tons+) plus own brand raw powder products selling in southern Africa and at least one brand selling in the EU, plus involvement in several joint ventures in relation to high profile finished products in which Baobab is a key ingredient. Of this together will mean that we will have 1,000+ women engaged in our supply chain and earning enough to transform their lives.”
Arjan Visser: “In 10 years we hope to have reached 10% of the population in areas with high economic activity having impacted more than a million people.”
There is increasing attention on inclusive business, to the point that it seems like it could be a solution for all development issues. Is it?
Andrew Kingman: “No, but it could be much more of a ‘solution’ if it were taken seriously as a means of restructuring local trade and investment patterns. The definition of ‘inclusive business’ is very broad and across the broad spectrum of businesses referring to themselves as inclusive there are many that don’t look very different from a ‘conventional’ business. My interest is definitely at the end of the spectrum where social and business entrepreneurs are developing businesses in which producers, suppliers and in some cases whole communities are much more integrated into the business not only as suppliers but as powerful and knowledgeable participants and even co-owners. I know that not all businesses can easily transform the nature or their operations.
However, I fear that many so-called ‘inclusive’ businesses turn out to be one of three main types: a) contract production by another name (very old fashioned mode of production…provide eg a farmer with seeds and other inputs and a contract to supply); b) innovations in marketing and distribution eg package consumer goods up in smaller units so that very poor people can buy them i.e ‘including’ more people as consumers; c) standard businesses with a decent CSR programme re-cast so that it fits the ‘inclusive’ agenda. If we were to really get behind a restructuring of trade and investment such that workers, suppliers, communities were included much more powerfully in value chains and specific businesses, it would mean a significant redistribution of resources.
Being inclusive hits the bottom line. Communications and engagement take time and costs money. Building capacity of suppliers even more so. Sharing profits is a leap of faith that few will take. Perhaps there could be greater encouragement through fiscal incentives, but in the end the very nature of capitalism mitigates against the widespread adoption of truly inclusive business.”
Arjan Visser: “As I mentioned, when the costs of distribution and supply in remote areas can be reduced significantly, inclusive business can play an important role in increasing income and saving money for people with a low-income in remote areas.”
What does it take to be investor-ready?
Andrew Kingman: “Evidence of a valuable market with growth potential, proof of concept (demonstrating capacity to produce a product with the quality that the market demands), a good management team (experience, seriousness of intent etc) who recognize that however valuable the social aims of the business, it lives or dies by its ability to make a profit, and a coherent and realistic business plan and financial model.”
Arjan Visser: “Make sure you can show one or more sales cycles that you have completed successfully. When you can show this in combination with a solid business plan and pitch, you are ready to approach investors.”
The SEED Award for Entrepreneurship in Sustainable Development is an annual awards scheme designed to find the most promising, innovative and locally-led start-up social and environmental enterprises in countries with developing and emerging economies. Find out more information here and apply by March 31, 2016.