Innovations Against Poverty

Transcription

1 Distribution Sustainability Training Partnership segments Cost Model Innovations Against Poverty Guide for Applicants

2 Terminology Inclusive Business The Innovations Against Poverty programme and other similar programmes use the term inclusive business and our programme will support inclusive business models. This term refers to profitable core business activity that also tangibly expands opportunities for the poor and disadvantaged in developing countries. Such business models can engage the poor as innovators, employees, suppliers, distributors and consumers. Over time, inclusive businesses must deliver commercial returns, whether in the form of profits, market share, strategic security, or better branding. But despite these returns, investment in inclusive businesses may be too low because compared to other options there are higher risks or higher initial transaction costs: new systems or technology to develop, different markets to understand, new risks to appraise, costs and time of training and transition, different economies of scale to capture. This is why Sida is offering financial assistance through Innovations Against Poverty. Bottom of the Pyramid, Base of the Pyramid (BoP) In economic terms, this refers to the poorest socio-economic group from a global perspective. The phrase bottom of the pyramid is used in particular by people developing new models for doing business that deliberately target that demographic, often using new technology. In Sub-Saharan Africa as well as South Asia over seventy percent of people live on less than $2 a day. (World Bank, 2011) 1 To learn more about how products and services can generate development effects by developing what is referred to as an inclusive business model, please refer to the briefing note on Sida s web site: iap and at our UK partner web site Business Innovation Facility: Published by: Sida, 2012, Edition 3 Department: Business for Development, Global Cooperation Copyright: Sida Authors: PricewaterhouseCoopers AB This publication can be downloaded/ordered from

3 Introduction Innovations Against Poverty is an initiative by the Swedish International Development Cooperation Agency (Sida), to support businesses to develop services, products and processes that will benefit people living in poverty. Innovations Against Poverty is designed for companies which are based or operate in a poor country. First, the programme focuses on smaller organisations which have a wealth of good ideas with great potential, but need the support of their business strategy and resources to penetrate new markets. Second, Innovations Against Poverty also seeks to work with larger companies, to help support the development of inclusive business models for these markets, which expands opportunities for the poor and disadvantaged in developing countries. Companies can be active in any sector where innovation leads to poverty reduction, from agriculture and infrastructure to health and education. Johan Åkerblom Senior Adviser Business for Development

4 What Innovations Against Poverty offers Financial Assistance Innovations Against Poverty functions as a risk sharing mechanism for sustainable business ventures (commercial companies or market oriented organisations), which have strong potential impact on poverty reduction. Companies are invited to apply for grants twice a year. There will be two parallel application processes; one for small grants (under 20,000) and one for large grants. The expectation is that over the course of three years, about 60 grants will be awarded to companies. As a third option, the Innovations Against Poverty programme can link companies and their financiers to Sida s Guarantee programme, through which Sida offers guarantees for those who finance ventures with a strong developmental dimension. According to EU regulations, a company in the EU may receive a maximum of 200,000 in public funding from European authorities during a three year period. Sida also applies the same rule also to companies which are not based in the EU. Small Grants Innovations Against Poverty can provide a matching grant (maximum 50% of total project cost) up to 20,000 for the purpose of exploring an innovation or a new market. The grant can be used for travel and prefeasibility studies, stake holder needs assessments, or for networking with local organisations. Large Grants Innovations Against Poverty can provide a matching grant (maximum 50%) in the range of 20,000 to 200,000 to a company for the purpose of undertaking a development project aimed at a product, service, system, business model or a concept ready to be put to market test, or adaptation of existing products to be affordable and accessible by the poor. Guarantees For a company ready to invest in scale-up of a proven business model with a strong development potential Sida also has a flexible guarantee instrument for reducing the risks of ventures with a strong developmental dimension, which will be available for innovations at a stage of launching at full scale or for replication. A financial institution willing to provide a commercial loan to such a company can get a guarantee from Sida covering 50% of the loan. 1 In accordance with EU state aid rules; Commission Regulation (EC) No 1998/2006 of 15 December 2006 on the application of Articles 87 and 88 of the Treaty to de minimis aid

5 Advisory support Innovations Against Poverty is offering limited advisory support to companies which approach the programme for financial and funding assist- ance, both during the application process and later when successful applicants have been granted financial support. Companies which do not apply for funding can apply for the advisory support only. This advisory offering is intended for companies that wish to gain a better understanding of how to fine-tune their business models and operations in developing countries for greater inclusion of poor people as suppliers, distribution partners, consumers and so forth, or to help identify appropriate local partners to work with. Who and what Innovations Against Poverty supports The criteria listed below defines the challenge to the private sector to bring innovative and sustainable business propositions to Innovations Against Poverty for support. For a company to be eligible, the proposed project must satisfy all the eligibility criteria. This does not mean that the project will be funded automatically, as the applicants will compete with each other when the number of applicants exceeds the amount of available funds. The assessment of whether a specific project and company meet the criteria is done by means of a thorough selection process and Sida makes the final decision. Eligibility criteria Commercially driven Development effects Cost-sharing commitments Innovative Additionality 1. Clear commercial driver and potential for commercial viability 2. Potential to reach scale 3. Managed by a company or a market oriented organisation 4. Poor people benefit (income, products, environment, opportunities, gender equality) 5. Avoid negative effects (environmental, market distortion) 6. Clearly defined elements of cost-sharing (With the company itself providing at a minimum 50% - which should not come from other public financing) 7. Innovative; going beyond what exists now, in terms of the product /service, the delivery mechanism/business model and/or market reach 8. Project would not take place at the same scale or have the same development impact without IAP funding

6 Ethical Considerations In addition to satisfying the eligibility criteria above, there are some ethical considerations, which means that Innovations Against Poverty cannot support certain types of projects led by certain companies. Companies are unable to acquire Innovations Against Poverty support if a company is in violation of fundamental human rights or international labour standards, including forced, bonded or child labour. Companies that are involved in the manufacturing, distribution or sales of arms, tobacco or gambling products and services are also excluded from this programme. How to Apply Application forms and FAQs are available to download from or by contacting the Innovations Against Poverty team. Check online for current submission dates. The applications should be sent by to the address innovationsagainstpoverty@se.pwc.com Small Grant Application Process For small grants, applicants fill in an application form describing the proposed initiative including a complete budget and the expected results, according to the instructions in the application form. The application process takes approximately two months from the application deadline to decision. Deadlines for submissions are end of April and end of November every year. Call for proposals Application Window Assessment & Selection Contracting Project start-up Small Grant Application Process MILESTONES Deadline Nov April Contract signing Feb Aug Large Grant Application Process For large grants, applicants are first invited to submit a concept note that describes the business or project idea and estimated costs and results. Companies can submit their notes either by end of April or end of November every year. The Innovations Against Poverty team will assess the concept notes and invite the most promising applicants to submit a full business or project plan. The application process for large grants is expected to take approximately six months from the first submission deadline to decision.

7 Call for proposals Submissions of Concept Assessment Full application Large Grant Application Process MILESTONES Deadline Concept Notes Nov April Shortlisting of Concept Notes Deadline full application March Sept Assessment & Selection Contracting Project start up Contract signing May Nov Reporting Requirements Innovations Against Poverty needs to understand the results of its support, both to account for public money and to share new lessons on inclusive business with others. For those receiving financial assistance, there are three main obligations: Completion of a Baseline form, after selection and before grant disbursement. This will confirm or clarify information from the Application Form, and fill any gaps, so as to represent the snapshot of your project at the start of our support. Completion Report after finalisation of the activities done with an Innovations Against Poverty grant. This will report on how the project is developing, reasons for success or problems, and trends going forward. An update will be requested in 2013 for all Innovations Against Poverty projects, for the purpose of evaluating the outcome of the programme. Those who receive grants in multiple disbursements, will also need to provide Progress Reports, to confirm activities are ongoing as planned, between each disbursement. Further information for applicants about results tracking and exchanging ideas via Innovations Against Poverty is available on the in the How To Apply-section.

8 Sida works according to directives of the Swedish Parliament and Government to reduce poverty in the world. The overall goal of Swedish development cooperation is to contribute to making it possible for poor people to improve their living conditions. Innovations Against Poverty is a part of Sida s Business for Development (B4D) programme, which contains proposals for new forms of dialogue and collaboration with industry. The purpose is to mobilise resources and encourage companies to develop their core activities so that they can contribute to better conditions for poor people in a more efficient manner. To explore more about inclusive business and what others are doing, join the Practioner Hub, co-sponsored by Innovations Against Poverty org. For contact with the Innovations Against Poverty team and applications, please innovationsagainstpoverty@ se.pwc.com Photo: istockphoto & John Lund/Matton Images SWEDISH INTERNATIONAL DEVELOPMENT COOPERATION AGENCY Adress: Valhallavägen 199, Stockholm sida@sida.se