Concessionaire loan pricing and flexible repayment structures are key pillars in recovering a country’s socioeconomic achievements and building flourishing low income households. This is achievable through willingness of corporate socioeconomic business entities to empower small business enterprises.
Jana Lessenich (CEO of Yunus Social Business), an impact-driven professional who doubles as a member of investment committee of InsuResilience Investment Fund stresses the need for modern social business to impute critical value of social media engagement. Yunus Funds grows local social businesses that provide employment, education, healthcare, clean water and clean energy to over 17 million people by turning donations into investments in social businesses which are reinvested.
“The world has to know the kind of sound business you are engaged in. Social Media is the best tool to create an adaptive profile to the target customers in the community and package a message that will put your products on attractive scale” said Yunus Social Business Chief Executive Officer (CEO) Jana Lessenich.
James Ododa, CEO and Co-Founder of Ndivisi, illustrated he struggled to raise funding from commercial institutions as they had high collateral requirements. He therefore got donations from families and friends among others to support his business idea. “Our fundraising journey began with seeking bank loans but collateral requirements posed a major challenge. We therefore got funds from donations made by families and friends” said Mr. Ododa. ‘This was to prove the concept to ourselves during the ideation phase which took us some time. This gave us a chance to know how to scale from one point to another.
Similarly, Molly Brown, Head of Carbon Strategy, BURN Manufacturing stated that developing the core reason to raise the money are fundamental ingredients for the success of small businesses. There are different types of capital available for research and development, project financing and normal operational needs. She says that a business that is in consonance with customers’ demands and one that attains profitability is better placed to be able to pay back the capital that has been borrowed.
The Director of Program Operations, Grameen Foundation, Mr. Alfred Kojo Yeboah, underlined the need to set up many independent micro-units in informal settlements as a major contributor to initial capital for a small business enterprise to thrive through a competitive world dominated by corporates.
“Carefully creating a business investment and dignified jobs through marketing of products and services in the country, the sale of hygienic products and development of a steady flow of income revenue is what I believe reciprocates to a successful small business” stated Mr. Yeboah.
On the other hand, the Regional Director, East Africa for Yunus Social Business, Susan W. Ngalawa, posted that the nature of the impact centered solutions, how it creates value for its customers and the accessibility of the product, the ability of the business to cover its costs, the support system around the business and alignment with investment thesis are factors that are assessed when making an impact investment.
She added that, “The factors that we look at are the impact, sustainability and the scalability of the business. Creating solutions that create value for the customers at a price that is affordable whilst still being able to cover ones’ costs is essential. The support system around the business and its alignment across factors that are important to the impact investor are also factors that are considered when making the investment decision”.
They were speaking at a panel discussion on funding the next wave of changemakers, that was held at the Tangaza University College. The panel sought to provide insights into the journey of raising capital for small businesses both from a social business perspective and an investor’s view.
According to a landscape study conducted by Yunus Social Business and IKEA Foundation, only 50% of the 43 social businesses surveyed were able to raise any capital. This is due to the ‘missing-middle’-phenomenon, where social businesses and SMEs are too big to satisfy their funding needs by own or family capital and too small for commercial or private capital.