1
BOP Business and Impact Investing in Africa
JICAs Activities towards Achieving Developmental Impact
TICAD V Official Side Event by FASID The Potential of Impact Investing for African Development
May 31, 2013
Jin Wakabayashi Director
Private Sector Partnership Division Private Sector Partnership and Finance Department
2
JICAs Overall Activities and Assistance
JICA Technical Cooperation
Grant Aid
Japanese ODA Loans
Administrating all ODA
including Technical Cooperation, ODA Loans and Grant Aid.
Resumed support to private projects thru PSIF
The worlds largest bilateral aid agency, operating in over 150 countries and regions
Private Sector Investment Finance
Technical Cooperation, 168.8
Loan Aid, 677.7
Grant Aid, 102.4
Fiscal 2010 JICAs Operation Scale Unit: JPY Billion
0 50 100 150 200 250
Electric Power and Gas
Transportation
Irrigation and flood control
Agriculture, forestry and
Mining and manufacturing
Social services
Commodity and other loans
Others
Contribution by Sector (ODA Loans, worldwide) Unit: JPY Billion
< Through Government >
< Through Government >
< Through Government >
< Directly to Private Entities >
3
JICAs Support for Private Projects : Roles and Activities
Project Development - Assistance in Policy Making - Feasibility Study for private-led projects (PPP infrastructure, BOP business, SME projects)
Enabling Environment
- T/A for Strengthening PPP Legal/Regulatory Framework - Assistance to Related Infrastructure Development - Connecting private entities with Governments, NGO and other important development partners - Helps increase reliability and credibility to private entitys activities
Financing - Equity/Debt Finance for Private Projects - Related TA/advisory services for both private & public sectors
4
Contract
(Off Take, etc.)
JICAs Support thru Public Private Partnerships
JICA
Government Policy and Framework
Government Portion (if any) (Government Support)
Private Portion
(Project Company)
Govern
ment
Win
dow
(R
eg
ion
al a
nd
Se
cto
r D
ep
t.)
Pri
vate
Win
dow
PPP Project
Technical Cooperation
(Law and Regulation,
Tariff Framework,
Feasibility Study (F/S), etc.)
Technical Assistance
(Capacity Development, Management Improvement, etc.)
PSIF Technical Assistance (PSIF T/A) (Capacity Development, Management Improvement, etc.)
JPN ODA Loan (Long term, Low Interest)
PSIF (Loan/Equity)
(Long term, Low Interest)
PPP F/S, BOP/FS (Private Initiated F/S)
Govern
ment A
gen
cie
s
(eg. W
ate
r S
up
ply
Co
mp
an
y, R
ailw
ay C
om
pa
ny)
5
Objectives The BOP Business Promotion Program is to promote private
sector BOP business (inclusive business) in developing countries which contribute to meeting and responding to development challenges.
By partnering with such businesses, JICA tries to match its development goals as underscored by our Mission Inclusive and Dynamic Development (eg. achievement of MDGs, including poverty reduction, and broader economic/social development) with the private sectors business interests, thereby making the BOP business more sustainable and enhancing its social values.
Development Challenges
JICA
BOP Business Development Perspective
Improved Development
Impact
Business Interest
Private Sector
Enhanced Business
Sustainability
BOP Business F/S Assistance: Objectives
6
Project image: Loans for Japanese company selling and leasing solar lanterns in developing countries
JV in developing country
Equity
Loan
Japanese Company Local partner
Customers BoP
Equity
JICA PSIF
Product sales and rental
TA: supply chain management, capacity building of employees
Expected development outcome
Improvement of lives of the poor
BOP Business F/S Assistance: Project image Assistance to businesses which improve lives of the poor
7
Growth Project Implementation
Business
Plan
Development of
Business Model
Research &
Development
BOP Business F/S Assistance: Scheme
JICAs support program started in 2010.
JICAs support program for Preparatory Survey (F/S)
Study Cost : Max JPY 50mil (USD 0.5 mil.)
Study Duration : Max 3 years
Call for Proposals : Biannual
Open to only Japanese Companies, but encourages partnerships with local entities
Has held 4 calls for proposals. Received 340 proposals and selected 65 projects so far, mostly in South East/South Asia and Africa (15).
JICAs financing scheme (Private Sector Investment Finance)
Can either provide debt or equity finance to BOP business
JICAs TA program To facilitate and accelerate inclusive businesses by enhancing investment climate E.g. Capacity Building of BoPs, enhance regulatory reforms, etc.
8
Developed microbial products as toilet sanitizer and fertilizer, with local ingredients such as rice and maize
Expected to improve hygiene in elementary school, hospital, health school and in slums
Holds hygiene promotion with the relevant ministry in Rwanda
Tied up with community health workers and promoted hygiene education with their products
Provide technical assistance for farmers Has already opened a local entity, and looking to scale
up the business
Examples of BOP businesses conducted in partnership with JICA
Organic Solutions Japan (Rwanda) Microbial products for toilet and fertilization(2010-2012)
This business model aims to develop and establish a local distribution network of nutrient enriched food in Ghana for children during the weaning period.
On May 30, 2012, Ajinomoto Co., Inc., the United States Agency for International Development (USAID) and JICA signed a memorandum of understanding, confirming collaborative efforts to increase the nutritional well-being of children during the weaning period.
Ajinomoto is working in partnership not only with USAID and JICA, but also with Ghana Health Service, Ghana University, GAIN, Plan Japan and Care International.
Ajinomoto Co., Inc (Ghana) Nutrient Enriched Food Business(2011-2014)
Ref: JICAs World (May 2013)
9
Profitability
Social Impact
Unsuccessful projects
Traditional Investment
Philanthropy; ODA
Threshold
Thre
sho
ld
ReferenceBridge Ventures 2010 Investing FOR Impact http://www.adb.org/themes/poverty/impact-investing
Impact Investment
Finance First Investors
Socia
l Firs
t In
vesto
rs
Crowd Funding
Institutions/ NGO
IFIs PFIs
PE Funds
Impact Investing Impact investing aims not only to secure financial returns, but also to generate positive social and environmental impacts.
10
Geographical focus as well as sector wise targets coincide with the regional/sectoral coverage of JICA assisted BOP business proposals by Japanese companies.
ReferenceJP Morgan and GIIN 2013 Perspectives on the Progress: The impact investor Survey Global Social Finance, Jan 7, 2013
Impact Investing
11
ReferenceJP Morgan and GIIN 2013 Perspectives on the Progress: The impact investor Survey Global Social Finance, Jan 7, 2013
Impact Investing
Despite growing interest in BOP businesses, impact investors in fact concentrate their investment in Venture/Growth stages of a particular project, thus a lack of capital at Seed/start-up stage.
12
Missing Middle A Missing Middle is the gap of capital financing in emerging markets that stands between micro enterprises, typically financed by microfinance institutions and medium-large enterprises, which are leveraging on traditional institutional financing. The Missing Middle provides a unique opportunity for emerging market investors to achieve competitive financial returns and positive social impact.
Sourcehttp://goldenmeancap.com/about/
Impact Investing
Source: The Missing Middle Initiative (WEF, Forum of Young Global Leaders) http://www.sacca.biz/backend/media/2272010113630PM/MissingMiddleInitiativeWEFJan.10.pdf
13
Critical factors for success
Local
Partners
Access
to
Finance
Effective
business
model
Capacity
Building
of BoPs
Optimum
Pricing
and
Targeting
Regulatory
Clearance
Critical factors for success of BOP Business ~ suggestions from JICA assisted surveys
14
Sustainable and reliable local partners
Strong commitment by top management
Keys to success
Bottlenecks
Critical factors for success of BOP Business ~ interviews with companies supported by JICA
Government regulations
Lack of information of finding suitable and reliable local partners
Difficulties in establishing a dist
