2013 seep ac_plenary_impact investing
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SEEP Annual Conference 2013Partnerships and Cross-Sector Approaches
Impact Investing for Inclusive Markets and
Financial Systems Paula Goldman, Omidyar Network
Frederick Kellett, Aga Khan FoundationMaria Cavalcanti, FIRST Brazil Impact
Roger Oakeley, Springfield Center, Moderator
Investment at the FrontierNovember 6th, 9am-10:30am
Impact Investing for Inclusive Markets & Financial Systems
November 7th 2013SEEP Annual Conference 2013
Roger Oakeley
Why Inclusive Markets?• The poor – excluded
• The firm – seeks to apply more inclusive practices
• How do better practices become the norm to impact at scale in The market?
• Improved practices are common – not isolated models
Impact
• Improved practices are driven by the commercial incentives of competitive advantage
Sustain-ability
• Other market players recognise the competitive advantage of first movers
Scale
Building firm capacity...
Inclusive Business
Information
Related services
Infrastructure
Informal rules & norms
Laws
Standards
Regulations
Skills
Enabling Environment
Supporting Functions
Inclusive Business
InformationRelated services
Infrastructure
Informal rules & norms
Laws
Standards
Regulations
Skills
Complexity? Cost?
Realistic?
Inclusive Business
Information
Related services
Infrastructure
Informal rules & norms
Laws
Standards
Regulations
Skills
Enabling Environment
Supporting Functions
..or building market system capacity?
Private sector
Government
Civil society
Membership organisations
Representative bodies
Reducing thetransaction costs facing
all firms
Scale
Prepare
Validate
Blueprint
Grants
Grants
Investment
Grants
“Soft’ Investment
Investment
Coordination (or competition)?
Investment Cycle
Challenge Funds
Innovation Funds
Patient Capital
Evolution of experience over time?
Tailoring the Instrument to
the Opportunity
Strategyvs
Tactics?
Process vs
Tools?
Market Systems Development
Market systems development - building on lessons learned
USAID MicroLinkshttp://microlinks.kdid.org/
The Market Systems Development Platform – tbc
‘Making Markets Work for the Poor’ (M4P) Approach:- The Synthesis http://www.springfieldcentre.com/wp-content/uploads/2012/10/sp0806.pdf- The Operational Guide http://www.springfieldcentre.com/wp-content/uploads/2012/10/sp0804.pdf
The Springfield Centre for Business in Developmenthttp://www.springfieldcentre.com
Donor Committee for Enterprise Development (DCED)http://www.enterprise-development.org/page/m4p
The Monitor Group, 2013:
“The scale, range and complexity of market failure...is such that the odds are stacked against any one firm attempting to address and overcome these failures”
Priming the Pump:The Case for a Sector Based Approachto Impact Investing
#PrimingThePump
Market Acceleration
The Promise of Impact Investing
A Fundamental Shift is Needed
From just growing individual firms
To scaling entire industry sectors
Alvaro Rodriguez, IGNIA
“ Single firms are born, they mature, they get lazy and they die. But industries
prosper over time and reach scale as competition fosters the delivery of better
products at lower cost. “ “ “
What’s at Stake
d.light
1. Invest early stage in innovators
2. Bring more resources to sector-based infrastructure
3. Engage seriously on sector-based policy and regulatory issues
Priming the Pump
INNOVATORS SCALERS
RISK High Medium
RETURNS Highly Variable Commercial
MF EXAMPLE Grameen Bank SKS
Ma
rke
t A
do
pti
on
Time
Example: Grameen Bank
1. Investing in Innovators
Total Impact of BridgesInternational Academies
TOTAL SOCIAL IMPACTOF BRIDGE ACADEMIES
MILLIONS OF STUDENTS SERVED
DERISKING OFSECTOR
2. Invest in Sector-Based Infrastructure
3. Engage Seriously on Issues of Policy and Politics
# OF ACTIVE MFI BORROWERS
IN INDIA
SOURCE: Microfinance Information Exchange (MIX)
Policy and Politics – India Example
35
30
25
20
15
10
5
0
MIL
LIO
NS
MAR00
MAR01
MAR02
MAR03
MAR04
MAR05
MAR06
MAR07
MAR08
MAR09
MAR10
MAR11
The Path Forward
Where Different Types of Capital Can Play
Thank You
#PrimingThePump