TL -Investment Conference –Dili 7th June 2016 Fatima Elsheikh- Chief Technical Advisor Social Business UNDP Timor-Leste

“Private international capital flows particularly foreign direct investment are vital components to national and international

development efforts”

The 2002 Monterrey Consensus on Financing Development

No Definition of SMEs

IFC/WB: Micro:1-9 employees

Small 10-49 employees

Medium: 50-249 employees

Big =Small

Access to finance study UNDP

Start up (Hopeseller)

Technology transfer (salt business)

Existing social enterprise scale up (Timor Vita)

Evidence base Access to finance model

Enabling Policies (Industrial Policy and Food safety)

Plastic Bottle recycling Social Business Partner: NGO Hopeseller

TIMOR VITA- Timor Global SOCIAL ENTERPRISE

TIMOR GLOBAL (TL) LDA.

WFP initiated project in 2008, employing social business model to tackle nutritional challenges in Timor-Leste

Through partnership with Timor-Leste Government and Timor Global Company The Project:

• Established local factory to produce highly accepted nutritional powder called Timor Vita • Established Timor Vita as a Social Business Type 1(i.e. business dealing with social objectives),

finance by multiple contributions from the government, donors and Timor Global • Aimed to create market for farmers for maize and soya beans by procuring local grains • The formula for Timor Vita’s fortified blend is composed of:

64% of corn 23% of soybeans 9% of sugar 2% of oil 2% of essential micro nutrient

Maximizing Potential to Assure Markets for Local Farmers

:

The first National Laboratory for Aflatoxin will be operational in July 2016

Development of Procurement and Supply Management System linking farmers to the company

Ongoing Establishment of LaboratoryPartnership DFAT funded programme Market Development facility

Purchased crops from 25 local farmers Small pilot to test the model designed by the SB project. The quality of maize and soybean were tested overseas

Partnership with MDF

LOAN GUARANTEE

5UNDP - MOBILIZING SOCIAL BUSINESS TO ACCELERATE MDGs ACHIEVEMENT

Social Business Project

Selected Social Businesses

Loan ContractInterest Rate: 6%

Adm. Cost: 2%Period: up to 1 year

Loan Amount: up to $100,000

Offer management consultancy and technical

assistance for approved social business ideas

Bank Partner (BNCTL)

Term-Deposit Account

Interest Rate: 0.5% (6 months commitment)

to 1% (3yrs commitment)No Adm. Cost

Term-Deposit Account

Technical Assistance Team

Policy issues

Lack of skills

Lack of access to finance

Committed National counterparts

Private sector skill development

Social and impact investor

What was TL merchandise import and export value in 2014?

External trade statistics annual report 2014

TL Top Trading partners Top commodities

1

2

3

$32M

$4M $1M

$2M

External trade statistics annual report 2014

Pre-industrialization

In itial FDIabsorption

Internalizingparts and

technology

Internalizingskills and

technology

Internalizinginnovation

Creativity

JapanUSEU

TaiwanMalaysia KoreaThailand

Vietnam Glass ceiling forMyanmar ASEAN countries

Timor-Leste (middle income trap)

Agglomeration(acceleration of FDI)

Stage Two

Have supportingindustries, but still

under foreignguidance

Technologyabsorption

Stage One

Simplemanufacturingunder foreign

guidance

Stage Zero

Monoculture,subsistence

agriculture, anddependency

Arrival ofmanufacturing FDI

Stage Four

Full capability ininnovation andR&D as global

leader

Stage Three

Management &technology

mastered, canproduce highquality goods

Stages of Catching-up Industrialization

“Bringing business closer to people”

• Mobilizing long-term private finance for

sustainable development; • Generating more innovation in

technologies and business models; • Building mechanisms to hold the private

sector accountable for development results.