Innovations Against Poverty (IAP)

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 Partners, supports companies operating in the agri-food, renewable energy, and WASH sectors in Cambodia, Ethiopia, Uganda, and 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.

Our approach:

IAP applies a strategic approach to challenge fund management as a key tool for market system development:

1. Private companies with innovative inclusive business ideas apply for IAP support through open competitive calls. Submitted applications are evaluated against pre-determined assessment criteria, and the best proposals are selected to receive funding and non-financial support services over a two-year period. The rigorous selection process ensures a competitive selection of diverse ideas in all four countries.

2. IAP funding ranges from €50.000 up to €200.000 per company, not exceeding a maximum of 49% of the total required investment, to implement innovative inclusive business ideas.

3. Tailor-made non-financial support is provided in developing, rolling out, and scaling up the inclusive business ideas from in-house expertise available, either within the IAP consortium (IB Sweden, BoPInc and SNV) or from external third parties.

4. Companies’ investment readiness is increased through facilitated introductions to investors, including through the Strategic Investment Partners (SIP) network, a partnership network of 11 leading impact investor representatives.

5. Synergies and collaboration are encouraged amongst IAP-supported investees and between investees and other development projects and initiatives.

6. Impact achievements of the inclusive business ideas, and lessons learned by the IAP team challenge fund management, are widely disseminated and contribute to broader knowledge development.

Results to date:

• 2,194,134 people with improved access to basic goods and services (clean and affordable energy, clean cooking, clean water, sanitation services, information, finance, and nutritious food).

• 693,540 people benefiting from cost savings and income increases due to the use of the products/services that IAP’s investees offer to their consumers.

• 17,090 people gained new/better income-generating opportunities (by acting as suppliers/producers/distributors to the supported companies).

• 32,361 tonnes of CO2 emissions avoided.

• EUR 19,834,731 in increased sales revenue for the supported companies since the start of the project.

Impact measurement insights:

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.

• 92% of the customers served by portfolio companies reported an improvement in their quality of life.

• 83% of customers served by portfolio companies reported accessing a product or service for the first time.

• 78% of customers served by portfolio companies reported that they could not easily find a good alternative to the product and service.

• For female customers who could generate income by using these products and services, 8 out of 10 said their ability to make decisions about the money earned has improved.

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.