Small Business Strife in Emerging Markets: ANDE

This originally appeared in Dowser.org.

The Aspen Network of Development Experts, or commonly referred to as ANDE, targets a missed market of small businesses in emerging markets.  By working through intermediary organizations, such as Skoll, Endeavor, Accion, Inveneo, and more, ANDE hopes that more investors, multinationals, and international organizations will take interest in this overlooked market and help build a more inclusive economy.

Recently ANDE partnered with Switzerland-based Argidus Foundation for a new competition, in search of innovative businesses that need early stage capital of $20K – $250K to get their ideas to scale.  The focus is on businesses from Burkina Faso, Guatemala, Honduras, Mali, Moldova, and/or Nicaragua. Here’s our conversation with Randall Kempner, Executive Director of ANDE:

How does ANDE contribute to economic development?
ANDE helps small, growing businesses in emerging markets.  By providing capacity development (i.e. precise technical assistance, access to investors, and universities, which provide training and educational services to these entrepreneurs, they’re able to improve and grow.  We work with intermediaries who pay a fee to ANDE to join.  Those businesses that are helped, may or may not pay a fee. They join because ANDE provides programs and services to make our members more efficient and making the industry grow.

How do you see the paradigm shifting as more of the economic activity shifts to emerging markets and developing nations?
Two perspectives here:  Development side has largely been about giving away grants.  Lack of impact.  So, we’ve got to find another model.  So, why don’t we try private sector development to build more sustainable programs that decrease poverty?  This tool is different and is much more sustainable.

Traditional Investor:  My mission is to make money.  They’re saying that maybe there is some shift to the middle where I can make social impact and make money – maybe I have to make a tradeoff now but it will be good in the long run.  Hopefully, in the future, there won’t be that tradeoff.  But, the momentum is there now and moving in the right direction.

If we look at the latter, do you see more and more interest from investors to take on these ventures or high-risk ideas in developing countries?
It’s a mixed bag.  It’s still really hard to get capital for a social enterprise but there are more investors looking at this space now.  It’s a bigger industry (impact investing) today that it was last year and so on, so forth.

Does the term social enterprise still hold relevance?  Does the term social enterprise throw off investors perhaps?
Yes, there are a lot of definitions and it doesn’t necessarily help.  So, we’re trying to make that definition clearer.  The whole investment process is challenging.  It depends on the investor and what he/she is looking for in terms of social impact and finances – or the combo of both.

Where in the world are you seeing entrepreneurship with impact thrive?  Any developing nations that have surged ahead with innovation and growth in this space?
Brazil, South Africa, and India come to mind.  But impact investing and some aspects of social entrepreneurship are actually much more advanced here in the US than in developing countries.

What are some of the ideas/ innovations that you’ve seen in the emerging markets that could be transplanted to the US or Europe?
Some of the products could have applicability here.  For example, mPESA has spread like wildfire in Kenya.  It’s a lower cost way of transferring money and we could use the same service here, if it existed.  Another is the solar powered lightbulb by Nokero.  I have it in my house in DC — could come in handy when the next hurricane comes through here (laughs).  There are a whole host of products that could be used here.

What led you to take on a career in economic development?
I grew up in a city in Texas where inequality was in our backyard.  This was not a gated community.  There was just one high school and we all studied with each other.  It was a town that had poverty and it was evident.  So, I learned about the reality of these issues first hand.  Plus,  I grew up in a family that was interested in service.  So it was ingrained in me from an early age.

The last three years at ANDE,  I’ve had the chance to build something from the bottom up that can really help individual lives.  For me, that’s important because  I want to die knowing that I’ve made people’s lives better.

Looking ahead,  what would you like to focus on this year?
This will be the year of the regional chapter.  We want to have resources on the ground and go beyond DC.  We want to empower them locally.

Would you like to see more local ownership and entrepreneurship?
Yes, absolutely.  For example,  seeing Cape Town organize an event on social enterprise themselves was great.  Because normally,  you don’t see a city host it on their own; it’s usually through an intermediary organization.  So they’re clearly taking interest at the local level.

Can you share an instance with us where you’ve seen the work of ANDE personified?
I was visiting a chicken farm in South Africa.  It was in the process of being transferred from a white family to a black family.  Members of the black family had worked on this farm for years.  An intermediary organization that’s part of the ANDE network was helping with this transfer; it’s a NY-based group that provides loan guarantees.   And for me this was like, ‘Wow!  This is what I want to see.’   Here was disenfranchised group that had raised significant capital on their own, by working hard, but would not have been able to get the bank loan that they needed.  However, an ANDE member was able to help them get the guarantee and help them move along in life.

Just being there, walking in the farm, alongside the chickens, with the gentleman who was going to take this over, that was pretty compelling and humbling.  And it showed what ANDE is all about.

Why is ANDE’s work important for the private sector that consists of big corporations?
Corporations have to realize that in the future support supply chains will be in emerging markets and they’ll play a big role.   For banks, they’ve traditionally not lent to smaller, growing businesses because they’re more risky.  That’s understandable.  But less expensive loans would be useful to these businesses.  So there’s an opportunity there.

When you meet the heads of such multinational companies and explain your work at ANDE,  what is their response? Are they on board or still hesitant?
To be honest, it’s still not standard practice.  So that’s why we have to explain why they would be interested in a network like ANDE.  But slowly that’s changing as interest and awareness is growing.

Photo Credit: Rotimi Adeoti

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