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Innovations Against Poverty (IAP) is a specialised fund that challenges private sector companies to innovate products, services and business models that benefit people living in poverty (PLIP) while delivering commercial benefits for the private sector. The programme, funded by Sida (Swedish International Development Cooperation Agency) and managed by SNV in partnership with BoP Innovation Center and Inclusive Business Sweden, supports companies operating in the agriculture/food, renewable energy, and WASH sectors in Cambodia, Ethiopia, Uganda, or Zambia. The programme pays significant attention to gender and environmental sustainability as part of its screening criteria. It provides companies with tailor-made advisory services, including mentorship from impact investors, thus helping them develop and roll out their inclusive business idea.
Low-income markets represent a significant business opportunity. The four billion people living on less than US$ 8 a day constitute a global consumer market with a shared purchasing power valued at US$ 5 trillion. By thinking innovatively, private companies can develop businesses that solve social and environmental issues while at the same time maximising their competitiveness and profitability. However, many of these initiatives face commercial, technical and financial risks. They have limited access to finance as they are frequently too large for micro-financing but too small and risky for mainstream commercial debt and venture capital. The IAP fund functions as a risk-sharing mechanism to stimulate private sector development initiatives that otherwise would not occur.
During Round 1 (2017 – 2021), IAP disbursed EUR 3.2 million to 35 contracted companies. In April 2021, IAP selected additional 21 companies, with a total committed grant size of approximately EUR 3.8 million.
IAP applies a strategic approach to challenge fund management as a key tool for market system development:
IAP commissioned 60 Decibels to conduct an impact measurement for selected portfolio companies. The focus of the study was to evaluate the 1) effectiveness of the fund, 2) outreach to PLIP, 3) depth of impact created, and 4) gender impact.
As part of this exercise, each company that participated received a results analysis presenting the survey results for their individual customer base to encourage further reflection and action based on the new insights.