TRANSFORMATIONAL

BUSINESS

NETWORK

Obscene Inequality

“One-fifth of humanity live in countries where many people think nothing of spending $2 a day on a cappuccino.

Another fifth of humanity survive on less than $1 a day and live in countries where children die for want of a simple anti-mosquito bed net”

Source: UN Human Development Report 2005

Unjust Consumption

• $7 billion is needed to provide 2.6 billion people with access to clear water annually

– Less than we spend on perfume

– Less than Americans spend on elective corrective surgery

• 3 day’s global military spending ($4.5b) could send every child to school for a year

Source: UN Human Development Report 2005

Unfair Trade & Subsidies

• $1billion a YEAR on aid for agriculture in poor countries

• $1 billion a DAY on subsidies of agricultural overproduction at home

• EU diary subsidy is $2.50/cow/day whilst 2.8b people live on <$2/day

Source: UN Human Development Report 2005

Aid is not the solution

• Aid is ineffective– Distorts local economy– Encourages inefficiency and waste– Creates dependency culture

• Aid is inefficient– 60% of aid money stays in donor countries– US aid was $3/person in Africa (2002).

Deducting consultants, food & emergency aid, admin costs & debt relief, only $0.06 was left (Jeffrey Sachs,2005)

Aid is not the solution

• Aid is not linked to economic growth:

‘In Africa, whilst aid increased from 5% to 17% of GDP in the 1990s, GDP growth actually decreased from 2% to zero or negative growth’ (World Bank Dev Indicators, 2003)

‘Foreign aid had positively harmed the

poor in developing countries and should

end’ (Peter Bauer, Fifty Years of Failure)

What is our response

to this

Scandal of Global Poverty?

Tackling Global Poverty

• Humanitarian Aid/Emergency relief

• Development projects• G2G aid• NGOs• Foundations• Venture philanthropy

Micro Finance Institutions

• 1971 Opportunity International • 1973 Accion International• 1976 Grameen Bank • 2004 IFC and MFI partners had portfolio

of $2.5b and 1.3m loans • 2006Citigroup, ICICI and others enter the

market as intermediaries – new asset class

Micro credit

• Fastest way to lift people out of abject poverty into ‘normal’ poverty

• Advantages• Supplement income• ‘Plug & Go’• Replacement of ‘expensive’ debt• Cash flow – critical needs

• Limitations• Loans too small for enterprise• Lack of skills training for enterprise• Preference to be employee than entreprenuer

Enterprise solution to Poverty

• Economic growth is the fastest way to reduce poverty – China, Asian Tigers

• FDI is critical to economic growth but requires political and economic stability, good governance – factors missing in poor countries

• Social entrepreneurs needed to fill this gap

Social Venture Capital

• Social Venture Capital or Social Enterprise– Alleviation of poverty through SME private enterprise – Job creation & Wealth creation– Triple Bottom line – financial, social, environmental– Sustainable profitable businesses

• Employment - dignity• Empowerment - independence• Entrepreneurship training

– Uses tools, disciplines and accountability of VC

Why SMEs?

• Mechanism for job creation– SMEs employ 70% of the work force– SMEs represent 99% of all registered

companies

• Higher success rate

• Source of entrepreneurship and innovation

• Driver of competition

16SpringHill

Environmental Conservation

17

From this…..

To this….

Social Transformation

Hospitality intakes from Umzi Wethu

Carla Reed (Uitenhage)

Freddie Van Rhyner (SE)

Danny Sauls (SE)

Heather Rossouw (SE)

Kosie Plaatjies (PE)

Food & Beverages

Junior Chef

Marius Maart (SE)

Johan Van Den (PE)

Help the poor… Come on

safari!

Challenges of Social VC

• Lack of local knowledge

• Lack of trusted management

• Distance & communication challenges

• No exits

• High risk

The Social VC Universe

• Private investors • Individual or club

• Foundations • Odmiyar, Google

• Social VC Funds• Bridge Ventures (UK)• Fusion Capital (Kenya)• SpringHill (Africa)

• Unit/Investment trusts • CRU Investments

• Listed investment companies/funds

INQO Investments IPO

• Listing on AltX, JSE 08

• Creating a new asset class: a listed social venture capital investment company

• Maximise financial and social returns

• Promote to private banking clients and SRI funds

• Prof Jakes Gerwel (Chairman)

• “Social investment is going to be a new asset class. I am sure of it. Ten years from now, people will be saying that pension funds, insurance companies and corporations must allocate a certain percentage of their assets to organisations that provide a social as well as a financial return”

Sir Ronald Cohen

in The Second Bounce of the Ball

TBN Loan Fund by

Clive Moody

Mike Tingling

TBN Loan Fund

• Loan size [$5-10k] to TBN members for projects

• Match funding

• Investors offered [3-4%]p.a

Borrowers [5-6%]p.a

• Minimum Fund Size: $150k

No maximum

The poor need jobs, not aid