Swedish International Development Cooperation Agency pledges €7.4 million-fund for inclusive businesses

The Swedish International Development Cooperation Agency (Sida) has just pledged a €7.4 million-fund to a four-year programme that will foster social innovation in Cambodia, Uganda, Zambia and Ethiopia, aiming to improve the lives of millions of people living in poverty.

The project, “Innovations against Poverty - Phase II” (IAP2), will stimulate the private sector to focus their efforts, innovative skills and resources on developing and investing in social products, systems and services that contribute to alleviating poverty.

Private sector development has proven to be a strong catalyst in creating opportunities for people to lift themselves out of poverty. The four billion people living at the base of the pyramid (BoP) constitute a global consumer market with a shared purchasing power valued at $5 trillion (IFC.org). This offers significant scope for entrepreneurship and private sector development to make an impact on poverty relief. Yet, in order to fulfil this potential, an enabling environment and inclusive approach towards business development are paramount. The key challenges faced by private sector companies in BoP markets in developing countries include a lack of available or accessible investment capital, as well as a lack of business management skills and innovation capacity.

The IAP2 project will address these challenges through our proven approach in challenge fund management and technical assistance delivery at both global and country level. It has two main objectives:

• Improved growth opportunities and access to markets for inclusive businesses (sustainable businesses that benefit low-income communities).

• Improved delivery of goods and services for the BoP population.

The programme is designed as a risk sharing mechanism. It bridges the gaps common to early-stage entrepreneurial ecosystems by catalysing innovative inclusive business models and providing grant funds to ventures developing social products and services. The grants will support these businesses through critical stages such as market research, prototype development and testing, trialling new distribution networks, building strategic partnerships, and initial capital investments.

The increased private sector investment is expected to contribute to the development and delivery of new and improved products and services, creating opportunities for poor people to actively benefit not only from these offerings, but also from increased income and job creation.

Funded by the Swedish International Development Cooperation Agency, the project will be implemented by SNV, Inclusive Business Sweden and BoP Innovation Center, with SNV being the leader of the consortium. Our main role will be to manage the challenge fund and provide technical advisory services.