Oxfam GB Enterprise Development Hugo Sintes hsintes@oxfam.org.uk November 2012
Background on Oxfam
Background on Oxfam Essential Services Right to be heard Gender Justice Economic opportunities
Two initiatives on SME development/finance Enterprise Development Programme SEIIF The Small Enterprise Impact Investing Fund Managed internally at Oxfam Targets rural, agricultural enterprises Early-stage, sales: 0-$250,000 Staff: 0-10 Typical loan: $90,000 (similar grant) Philanthropic donation to Oxfam Managed by Symbiotics, experienced fund manager Invests in existing SME funds SMEs 10-100 staff Typical investment: $1m Mix of equity/loan Target net return 5% per annum USD
Enterprise Development Investing in rural SMEs
Why did Oxfam set up the Enterprise Development Programme? To identify, invest in and nurture early-stage, rural and agricultural SMEs in developing countries SMEs are essential for job creation, but are ignored by banks and microcredit (the missing middle ) Oxfam targets the toughest SMEs - Rural, agricultural, remote (500 km from capitals) - Limited capacity and track record
What does EDP do? Since 2008: - Raised 3.7m raised - Reviewed 100+ business plans, selected 17 - Committed 2.8m, disbursed 2m Oxfam provides: - Loan finance - Business support - Social grants Enterprises selected on business & social criteria By Investment Committee and supporters Investment Committee EDP Board Rachel Crossley Nicholas Colloff Oxfam David Pitt-Watson Hermes Chris West Shell Foundation Jo Barnett Virgin M. Vincenzo Sandy Penny Morelli Arbuthnot Lawrence TPG Oxfam
EDP Portfolio today New Farm C, OPT (processed food) FORUS, Russia (microfinance) Let Agogo Haiti (dairy) Belle Vue St Lucia (vegetables) Assosa, Ethiopia (sesame) Pabitra, Nepal (vegetable seeds) DAFACOS, Nepal (veg. seeds) Dairy coops Colombia APROALCE Honduras (vegetables) AMENU Liberia (rice) Zembaba, Ethi. (honey) Chenab, Pakistan (dairy) ULBCS, Sri Lanka (dairy) BN, Rwanda (mushrooms) Sisal processors Tanzania LIBAS, Philippines (moringa) WMY Indonesia (vanilla)
EDP Portfolio today Case study 1: Tanzania sisal Shinyanga - northwest of Tanzania; sisal drought-resistant, high market growth 5 small sisal processors selling into large Tanzanian manufacturers Enterprises profitable after 2 years sales ranging from $3,000 to 30,500/month, average 27% operating margin. 25 jobs created, purchasing from over 1,000 farmers (40% women) Investment: 63,000 in loans, 87,000 in grants
EDP Portfolio today Case study 2: Liberia rice South east Liberia 400 km from Monrovia; rice main staple food in Liberia Amenu, cooperative initially set up by 1,000 farmers After 3 years enterprise not still trade (most consumed by households) Improved land/irrigation for 1,500 farmers (50% women) Yields from 1.6MT/ha to 3MT/ha with massive increase in food security Investment: 150,000 grants
EDP Portfolio Performance Indicator 2010 2011 2012 Target 2014 Total revenue enterprises Up 40% Up 45% - Social indicators Baseline 2011 2012 Target Farmers in the enterprises Full Time Equivalent jobs in the enterprise only Women participation (%) Total 19,000 24,000 29,000 40,000 Average 1,340 1,700 2,000 Total 32 69 81 120* Farmers members 21% 32% 37% 50% FTE Jobs in enterprise 34% 42% 40% 50% General Managers 17% 22% 21% 35% Directors on Board 24% 27% 34% 45% Highlights: Enterprises revenues up by 45% last year Average jobs in enterprise from FTE 0-5 to 3-10/enterprise; #Farmers up by 20% to 29,000 (women now 37%) target 40,000 farmers Loans disbursed $1.2m, $300,000 repaid.
Portfolio performance Enterprise profitability 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 Business Performance 3 not viable short term Social performance 7 early to judge (market, product, management in progress ) 5 profitable 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 Social Impact -women -climate -poverty
Lessons on managing a fund Resources intense and hands-on - requires significant staff Feasibility better financial, environmental and social analyses Mentoring Open to local, international, sometimes both Partnership with expert organisation Need to be cautious on projections presented to investors
Lessons from supporting SMEs Essential leadership, and management skills but not easy in rural, remote areas! Test new technologies/methods bring expert skills, plan in enough time Leader or Manager? Will it grow? Will it arrive? work? Often, sell through established brand, but seek alternatives Own brand? Taking on large manufacturers?
Lessons from supporting SMEs Understand risks of climate, disasters Understand what barriers women face and commit to specific targets Pakistan floods Listening to women Women-led enterprise Women leadership Understand policy risks/opps Accounting and finances
Your questions, stories