Using Mobile Technology for Marine Biodiversity Conservation

As Secretary of State John Kerry implores world leaders to focus attention on the plight of the world’s oceans, a unique partnership on a remote island in the Philippines is demonstrating the power of public-private collaboration in preserving marine habitats.

Tawi-Tawi is a distant island in the Philippines archipelago, not far from Malaysia. The waters surrounding the island are pristine and rich with marine life. This rich natural resource is under increasing threat as illegal fishing and smuggling are on the rise due to the rapidly growing demand for fresh seafood across southeast Asia and beyond. “Dynamite and cyanide fishing are rampant,” says Tawi-Tawi’s governor. These illegal practices destroy delicate marine ecosystems, threatening the livelihoods of the island’s fishing communities.

Thanks to a new partnership between USAID/Philippines, mobile operator SMART, and the local government in Tawi-Tawi, that situation may be about to change. The 700-DALOY partnership is designed to provide community fisherfolk, enforcement agencies, and local governments with a new tool to report illegal fishing activity and expedite enforcement. SSG facilitated this partnership in support of the USAID ECOFISH project.

Through the partnership, SMART is creating an SMS-based platform that allows fisherfolk to report violations. Violations are captured in a database, processed and passed on immediately to local authorities, enabling a much more rapid and coordinated enforcement response. In addition, the data will allow the government to analyze violation patterns, strengthening prevention efforts. The ECOFISH project is working with fisherfolk, LGUs, and SMART to deploy the system in Tawi-Tawi. 700-DALOY will empower fishing communities to be partners with local governments and enforcement agencies in preventing the destruction of marine habitat. If this initial pilot is successful, the plan is to roll out the system nationwide in 2015.

According to ECOFISH project Chief of Party Gerry Sylvestre, “You can have all the good ordinance, all the good programs, but if we cannot implement them, then we are in trouble.”

By leveraging a proven technology, such as SMS, with a concerted effort to build the capacity of local stakeholders, the 700-DALOY partnership is providing the people of Tawi-Tawi with a powerful new mobile technology tool to strengthen coastal enforcement and preserve the island’s rich natural heritage.

Fishackathon Competition for Sustainable Fishing

Fishackathon

For many of the world’s coastal communities, fisheries remain essential to overall economic livelihoods, in particular for small-scale fisherfolk and their families who depend on daily catches for overall food security. Worldwide, small-scale and artisanal fisherfolk catch half of the fish consumed by humans. At the same time, growing populations and excessive fishing have led to smaller average fish sizes, shifts in species, steep declines in fish abundance of valuable species, and lower catches/lower incomes for fishers. In the coming decades these threats will be buttressed by climate change and the rise in ocean acid levels – anomalous variations that will erode the fish habitat function of coral reefs and related ecosystems.

Playing a part to meet these challenges, SSG and the ECOFISH Project in the Philippines joined forces with the US Department of State and the GSM Foundation’s collaborative initiative – mFish: Empowering the Sustainable Fishery Ecosystem – to seek technological solutions, in particular innovative coding and applications, for sustainable fishing. This month SSG/ECOFISH participated in a multi-day “Fishackathon” competition held simultaneously in multiple cities throughout the US in which developers and coders worked continuously to design applications and technology tools to address specific challenges. The ECOFISH Project prepared a challenge designed to improve the quality and effectiveness of catch data measurement. In the Philippines currently, government officials and scientists struggle with antiquated systems to measure the number, type, and quality of fish being pulled out of the ocean. These catch data are essential in understanding declines or improvements in fisheries.

Coming together on Friday, June 13th in New York City, Silicon Valley, Boston, and other locales, hundreds of developers worked continuously through the weekend of June 14th to design innovative technology prototypes to address the ECOFISH challenge, along with other management problems provided by other researchers and fisheries experts throughout the world. US Secretary of State John Kerry was to announce a number of winning solutions several days later at the US Department of State Oceans Conference held in Washington, DC. Winning developers would receive a range of prizes, including cash and a sponsored trip to the Philippines.

As recognized by the US Department of State and the ECOFISH Project, the grand challenges facing fisheries management must be met through the application of technological solutions. The Fishackathon represented a bold step to leverage technological innovation and the information and communications technology sector to bolster the sustainability of fisheries crucial for human development.

Fishackathon

SSG Awarded USAID Public-Private Partnerships Program

SSG Advisors is pleased to announce that we have been awarded the Partnership Services Program (PSP), a global IQC out of the USAID/Center for Transformational Partnerships Global Partnership Team (CTP/GP). The Center is part of USAID’s new Global Development Lab –a new entity that seeks to increase the application of science, technology, innovation, and partnerships to achieve, sustain, and extend the Agency’s development impact to help hundreds of millions of people lift themselves out of extreme poverty.

SSG began working with the Global Partnerships team in 2005. Since 2007, SSG has provided training, analytical services, and partnership building support under the GDA Support IQC. Under the new PSP, SSG will provide partnership support services to USAID Missions and offices, facilitate corporate engagement, foster thought leadership, and deliver partnership training and capacity building.

Says SSG’s President Nazgul Abdrazakova, “It’s an exciting time to be engaging with USAID as it launches the new Global Development Lab, which will be at the forefront of innovative public-private collaboration. We look forward to supporting USAID’s leadership in public-private partnerships and private sector engagement.”

Engagement: The Key to Unlocking Growth in Frontier Markets

For the past two decades as growth has slowed in the developed world, investors have relied on the BRIC economies to deliver above average returns. With growth in BRICs slowing, investors and companies are looking increasingly at frontier markets in the less developed parts of Asia, Africa, and Latin America for new growth opportunities. Many of these economies have posted impressive GDP gains in recent years and appear ripe for investment. While frontier markets hold great potential, they present a series of challenges that differ radically from other emerging markets. Limited infrastructure, low incomes, food insecurity, and weak education and health systems means that these countries require a fundamentally different approach. Conditions in these countries do not allow for a ‘business as usual’ approach. Rather, companies and investors that understand how their business models can address the development needs of frontier markets are more likely to be successful in unlocking revenue growth in frontier markets.

Traditionally, many companies have approached development as a subset of CSR — essentially a combination of compliance and philanthropy. While CSR is certainly important, it is not sufficient to assure success in frontier markets where the challenges to development are more fundamental and require a different approach that goes beyond CSR and charitable contributions.

Companies and investors are increasingly using Engagement as a key tool for growing in frontier markets, but also in actively contributing to a country’s development. What do we mean by ‘Engagement’? ‘Engagement’ is a very inclusive term to describe the broad range of interactions between companies and stakeholders – consumers, communities and others. Through Engagement, companies do not simply address CSR needs or requirements; they bring all aspects of their business – marketing, technology, distribution, purchasing to help grow local markets through co-creation, and investment. By leveraging these core competencies, smart companies not only assist in a country’s development, they create and expand business opportunities in the market.

What is the Value Proposition of Engagement in Frontier Markets?

Engagement is not a short-term process that will yield results in a single quarter or even a single year. Rather, it is a key element to a longer-term strategy in frontier markets, typically revolving around one or more of the following drivers:

  • Base of the Pyramid (BoP) Market Opportunities. More than half the population of many frontier markets survives on less than $2/day. While historically this segment of society has been perceived as too impoverished to merit focus, the explosive growth of mobile telephones, microfinance, and other industries in frontier markets has largely been fueled by demand from this segment. However, many companies struggle to adapt their product offering and market strategies to meet the challenges at the BoP. Through engagement, companies have an opportunity to collaborate with BoP consumers and co-create products and strategies that deliver value and improve lives.
  • Workforce/Human Capital Development. As China’s labor costs continue to rise, a growing number of companies are looking to frontier markets as a new source of low-cost labor for manufacturing and service sector jobs. In Africa alone, the workforce will expand by more than 120 million by 2020 – a truly staggering figure. While Africa’s growing workforce presents a tremendous opportunity, weak education and job training systems present major barriers to tapping into the workforce potential. Increasing numbers of companies are collaborating with governments and communities to strengthen education and workforce skills development.
  • Local Supply Chain Development. As investors move into frontier markets, they often find they need to develop supply chains. While some companies will simply rely on international suppliers this is both costly and cumbersome. Increasingly, we see companies focusing on developing local supply chains in frontier markets, creating economic opportunity for suppliers and reducing long-term costs.
  • Social License to Operate. Many companies face significant challenges when entering frontier markets in developing and then maintaining social license to operate – i.e. the consent of society and opinion makers –at all levels – to invest in and operate assets in a given market. Historically, social license to operate has been a significant issue in frontier markets for the extractives sector, but increasingly social license is emerging as a challenge in other industries including agri-business and even IT. Many companies are finding that they need to have a proactive Engagement strategy that enables them to map out the interests of stakeholders and collaborate with them.

Engagement Modalities — How does Engagement work?

How a company chooses to go about Engagement will depend greatly on its industry sector, target market, and corporate culture. Here are three common forms of Engagement in frontier markets:

  • Partnerships/Co-Creation. In West Africa, international seed companies, African inputs companies, NGOs, farmer cooperatives, and donors are forging a partnership to create a market for high-quality seed across West Africa. By working together, the partners can address regulatory barriers, foster research and development of hybrid seed, and exchange best practices. Together, they are both creating a growth market for a hybrid seed with millions of potential farmer-customers and improving food security through increased agricultural yields on key crops.
  • Technology/Crowd-Sourcing. In East Africa, technology companies, telecommunications companies, tourism firms, governments and NGOs are working together to develop a powerful anti-poaching tool using crowd-sourcing that technologies that empower communities to preserve and protect natural capital. Crowd-sourced data will not only enable instant reporting of poaching incidents, advanced analytics will help park rangers to predict and anticipate where poaching is likely to occur. As East African governments begin to realize the power of ‘big data’ and analytics, it is opening up new business opportunities for technology providers.
  • Community Investment. In South America, one of the world’s leading technology companies is making a major infrastructure investment and recognizes that the local economy lacks the skilled technology workforce, which can actually use its products. Therefore, the company is collaborating with NGOs and the local government to invest in a locally developed Science Technology Engineering Math (STEM) job training programs to ensure that the community surrounding its investment has the skills to participate fully in the knowledge economy.

Successful Engagement in Frontier Markets

Companies and investors that want to win in frontier markets need to understand that they need to play a role in these countries’ development. That role will vary by industry, company size and market opportunity, but here are some key attributes of a successful engagement strategy:

  • Effective Engagement is integral to a long-term strategy and should not be tied to short-term results. Engagement requires a sustained commitment to build the necessary relationships – not just with government, but also with civil society and communities. Building these relationships requires a significant investment of senior management time. This means that Engagement is only effective when the eventual return is sufficiently large to merit the investment of scarce management and financial resources.
  • Engagement requires an open mind. Too often companies and investors come to the table with ‘the solution’ – most often their product or service. Engagement requires a fundamentally different mindset. It requires companies to listen, respond, and adapt their approaches based on feedback received, rather than simply prescribe solutions or approaches. Equally as important, it requires a willingness to collaborate across sectors –government, communities, civil society, donors and business.
  • Lastly, effective Engagement requires commitment. Promises are easily made, but much harder to keep. While no strategy is ever 100% successful, failure to live up to commitments is fatal 100% of the time. When a company pulls out of a commitment due to poor quarterly earnings, it pays a steep price with stakeholders in terms of lost credibility and trust.

As economies in developed countries continue to stagnate and the established emerging markets slow, investors are rightly focusing on frontier markets as the next great growth opportunity. While frontier markets offer great promise, they require a fundamentally different approach if their potential for growth is to be realized. To capitalize on the frontier market opportunity, companies and investors need to do more than simply invest; they must have effective Engagement strategies that make them partners in unlocking a country’s potential for development.

Impact Investing: Moving into the Mainstream

We just returned from Chicago where we attended the Impact Capitalism Summit, a gathering of family offices, fund managers, asset managers, and foundations. It was an impressive event that highlighted just how far the notion of impact investing has come in the last several years. Here are some of our key takeaways from the event:

Impact investing is moving into the mainstream. Perhaps the most inspiring takeaway from the event is the degree to which impact investing has moved into the mainstream, with a high demand from investors across a range of asset classes generating impressive returns. Moreover, recent analysis highlights that impact investing strategies are yielding better average returns than many mainstream portfolio management approaches.

‘Impact’ is still a bit amorphous and subjective as a concept. Perhaps the most heated discussions at the event centered around what constitutes impact and how that impact is measured. For readers from the development field, it is somewhat gratifying to see Wall Street-types and others grapple with impact and how to measure it – challenges we have been facing for decades!

There is now a full range of asset classes in impact investing. The range of investment types – from grants to public equities to private debt – is truly impressive. Investment strategies vary from socially responsible investing in public companies to venture-type ‘solutions’ investing in areas such as clean technology and access to finance. Impact investing strategies should be considered along two axes: impact profile (aka theory of change) and asset class.

Climate, climate, climate. If there was one impact area in which there seemed to be universal interest, it was climate. Fund managers are increasingly screening companies not only for their negative impact on climate change, e.g. extractives and carbon footprint, but also for their resilience and adaptation strategies. At the same time, the ‘solutions’ investment community is growing beyond renewables and expanding into other critical elements such as water, agriculture, and efficiency.

There is growing interest in frontier markets, but a dearth of investment vehicles.   To date, most impact investing in frontier markets has focused on microfinance, where fund managers such as Microvest have built impressive track records. There was quite a bit of discussion about impact investing in frontier markets in other sectors, particularly in healthcare and education. However, unlike microfinance, there is a lack of vehicles for investors. Those platforms that do exist are often philanthropic and do not return capital (or generate return on capital). Demand appears strong for more investment-grade vehicles across asset classes: private equity, public equity, and debt. This is an area where donor agencies and DFIs can play a critical catalytic role, both in creating the vehicles and in buying down various forms of risk through guarantees, risk insurance, and project preparation facilities. USAID’s DCA, OPIC, MIGA, and others have a vital role to play in adjusting the risk profile of frontier impact investments, especially for first movers into the space.

In our work in frontier markets, SSG Advisors sees tremendous opportunity for impact investors in a range of sectors, impact profiles, and asset classes. We also see significant need to bridge the gap between the high demand for deals among the investor community, on one hand, and the limited supply of bankable deals on the other. By combining impact capital with donor and DFI capabilities, we are driving investment to address development challenges, ranging from food security to biodiversity to clean technology.

Public-Private Partnerships to Improve Livelihoods for Conflict Victims in Pakistan

SSG Advisors is developing innovative partnerships with the private sector in Pakistan to improve livelihoods among conflict-affected people in the country’s most vulnerable areas.

Using its proprietary Sustainable Transparent Effective Partnerships (STEP) methodology SSG fosters public-private cooperation to enable conflict victims in the Federally Administered Tribal Areas (FATA) and Khyber-Pakhtunkhwa to resume a normal life.

SSG’s strategic partnerships with private sector actors are designed to leverage private sector resources for project activities to support job training as well as education, medical, social, and other needs of conflict victims seeking to reintegrate into the Pakistani economy and society.

Through partnership training activities tailored for Conflict Victims Support Program (CVSP) project staff and implementing partners, SSG has built the project’s capacity to launch development of key partnership opportunities reflecting the needs and priorities of the project’s target institutions and stakeholders, ranging from medical support to income generation.

Says Alberto Abadia, SSG’s Partnership Advisor for CVSP, “Pakistan has plenty of private sector actors who are aware of the challenge of working in conflict-affected areas and understand the clear economic and social benefits of working on livelihoods initiatives such as CVSP.”

CVSP 1

CVSP partnerships contribute to the larger US government effort to reduce key Sources of Instability (SOI) by engaging and supporting at-risk populations in the FATA/KP, building trust between citizens and their government, and encouraging local populations to take an active role in their development.

To date, SSG has fostered the development and design of over 10 public-private partnerships in a broad range of industries, including pharmaceutical, telemedicine, skills training, microfinance, medical, and finance.

Most recently a group of almost 20 beneficiaries had their first day of training at the ZXMCO motorcycle factory in Lahore. The partnership is conceived as a pilot, designed for a larger endeavor in the future and contributing to the CVSP project objective of creating new jobs for people living in conflict-affected areas.

At this phase in the partnership, ZXMCO will engage these beneficiaries in a mechanical course over the course of two months. Following this, the trainees will have the opportunity to set up outlets for repair or sales of ZXMCO products.

CVSP 2

Agricultural Productivity through Collaboration: Broadening the Market for Seed in West Africa

Despite the fact that nearly 65% of the African workforce earns their livelihood through agriculture, the continent as a whole remains a net importer of food. The total area of land under cultivation has risen in recent decades, and yet food security and nutrition metrics have failed to keep pace. West Africa in particular faces severe food insecurity, largely due to the poor yields that all-too-frequently characterize farms in the region.  One particular factor that underlies West Africa’s yield problem is a lack of access to – and lack of demand for – commercially distributed improved and certified seeds.

Recently, SSG Advisors spent a weekend with stakeholders from the USAID/West Africa, the West Africa Seed Program (WASP), the West African Council for Research and Development (CORAF) and the Economic Community of West African States (ECOWAS) validating a strategy to establish an Alliance for the Seed Industry in West Africa (ASIWA), which will help seed producers, farmer groups, agro-dealers, grain buyers and agro processors work collectively in efforts to increase the quality and availability of improved seed varieties across the region. The ASIWA Strategy, developed by SSG, will be the basis for the structure and launch of the alliance over the next 12 months. While focusing on the seed sector, ASIWA’s success will contribute to USAID and ECOWAS efforts to boost staple crop yields, raise farmer incomes, enhance regional staple trade, and improve food security across West Africa.

The concept of utilizing an alliance model to improve farmer incomes is not a new one. In 2005, the USAID-funded West Africa Trade Hub co-founded the African Cashew Alliance with a consortium of public and private industry stakeholders across the region. Since then, the Cashew Alliance has evolved into a foundational industry player, demonstrating that industry alliances can be effective tactics for spurring economic growth in West Africa. A similar West African example can be found in the Global Shea Alliance.  The Cashew Alliance and Global Shea Alliance examples prove that product-based agribusiness alliances can simultaneously offer real value to private sector companies and development stakeholders alike.

The alliance model undoubtedly offers a wide array of success stories across sectors and geographies. However, the Alliance for Seed Industry in West Africa will address a fundamentally different set of challenges than those that are mitigated by other ongoing alliance efforts. Whereas past alliances have served to aggregate and focus existing demand around particular products, ASIWA will need to push past proven alliance models and craft a strategy for popularizing the use of improved seed in the region to grow demand for certified seeds and strengthen a market that is presently characterized by fragmentation, a challenging regulatory environment, and weak levels of cooperation between the public and private sectors. ASIWA’s success will be determined by the degree to which it can to actually generate new demand for improved seed varieties among West African farmers.

Critically, the ASIWA platform will provide a forum in which seed producers, certification agencies, farmers, processors, and end-product buyers can discuss solutions to specific challenges and weaknesses within the West African seed market(s). SSG Advisors is working closely with the West African Council for Agricultural Research and Development to frame and implement the alliance, which will launch a community of practice and host national and regional seed stakeholder forums during its first year. Drawing on SSG’s broad experience with development alliances and their own technical expertise in the West African seed sector, CORAF is equipping ASIWA with industry-leading tools and approaches for seed partnership development.

Integrating Social Enterprises into High-Growth Value Chains in the Philippines

Despite multiple natural disasters in 2013, the Philippines had one of the highest rates of economic growth in the world last last year and its prospects in 2014 appear brighter still. Some investors have christened the country the lead member of the PINEs – Philippines, Indonesia, Nigeria and Ethiopia – a grouping of high growth frontier market economies, successors to the BRICs. With a young, increasingly educated population of 94 million and a reform-minded government, the country’s prospects appear promising.

While Philippine economic performance is impressive, major challenges remain.  The country’s growth is very uneven. Much of the country’s economic growth is focused in major cities and concentrated in a small number of sectors. Many coastal communities remain poor and heavily reliant on subsistence fishing, putting ever-greater strain on already dwindling coastal fish stocks.

Social Enterprise Photo

A key goal of the USAID/Philippines ECOFISH project is to identify and nurture opportunities for outlying and economically deprived coastal communities to participate and benefit from the country’s growth in ways that reduce pressure on the country’s coastal marine natural capital. In that regard, SSG Advisors is developing and piloting an innovative approach to mobilize investment into social enterprises based on integrating those social enterprises into high-growth value chains. Working in conjunction with communities, NGOs, companies, local government units (LGUs), and leading Philippine business schools, the new model has several components:

  • Community Asset Mapping. As a very first step, SSG worked with community leaders to conduct asset mapping – a participatory process by which the community itself identifies its natural, human, and capital assets.
  • Value Chain Analysis. The ECOFISH team is conducting an analysis of various high growth value chains that align with community assets. The team is then engaging with companies along the value chain to identify ways social enterprises can integrate into those value chains, creating jobs and livelihood opportunities. One example is in furniture manufacturing where demand for mother-of-pearl is growing rapidly – a great opportunity for a sustainable product from coastal communities.
  • Social Enterprise Business Plan Development. Having developed opportunities, community-based social enterprises will develop business plans with mentoring support from Philippine MBA students. These business plans will forecast not only the financial returns, but also the social and environmental impacts of the social enterprises.
  • Mentoring. With a business plan in place, social enterprises will have access to support from volunteer mentors who can assist them in strengthening the organizational and operational development.
  • Impact Investment Mobilization. Once the business plans are developed, SSG will work with national and international impact investors to mobilize financing for the social enterprises.

While it is still early days, this new model appears promising. By combining the principles of social entrepreneurship with a value-chain approach, SSG is catalyzing investment into marginalized communities, enabling outlying communities to be full participants in the economic resurgence in the Philippines.

African Bamboo: Impact Investing for Small-hold Farmers

Bamboo is one of Mother Nature’s super products. It grows quickly and can be used in a wide range of building and consumer products. It has the potential to be a sustainable and lucrative cash crop for small-hold farmers in Africa. The challenge is getting finished bamboo products to markets in Europe and North America.

African Bamboo, an Ethiopian agribusiness, is taking a big step towards becoming a major manufacturer of bamboo floorboards.  The company recently signed a grant award from the Agriculture Fast Track (AFT) Fund, a facility established by SSG Advisors at the African Development Bank (AfDB) and funded by USAID, Sida, and Denmark.  SSG Advisors identified African Bamboo as a high impact investing opportunity for AFT support. With AFT funding, African Bamboo will conduct the market and feasibility studies needed to enter the US and EU markets. It is estimated that more than 2,000 small-hold farmers will benefit through increased incomes resulting from African Bamboo’s growing exports.

According to Steve Schmida, Managing Director, “SSG is thrilled to see the Agricultural Fast Track supporting African Bamboo.  When SSG researched the company and met with the management, we saw tremendous potential, both as a growth enterprise and as a means for bolstering rural incomes in Ethiopia. We look forward to seeing the company break into the lucrative EU and North American markets.”

SSG Sheds Light on Municipal PPP Opportunities to Improve Economic Outlook in Bosnia & Herzegovina

Bosnia and Herzegovina (BiH) still feels the effects of war twenty years ago, especially economically. Today unemployment is at 44 percent and youth unemployment is the highest in the world, at 63 percent.

Public-private partnerships (PPPs) have enormous potential to help meet these economic challenges. Through PPPs, municipalities in BiH can leverage their local resources to attract private partners able to invest in and contribute to sustainable local economic development—combining public and private financial, human, management, and technical capabilities toward shared goals.

Last month, SSG trained project and municipal staff to identify and shape sustainable, transparent and effective partnerships that will spur local economic development in BiH through the Growth-Oriented Local Development (GOLD) project. GOLD is a 5-year initiative led funded by USAID and Sida that centers on promoting investment, jobs, exports, and sales in 48 municipalities in BiH. Through the GOLD Project, SSG is helping open eyes to the promise of PPPs in BiH.

SSG has identified a number of interesting partnership opportunities around geothermal clusters, industrial park development, industry-led workforce development, strategic value chain development, recycling and waste management, and infrastructure development and management, such as irrigation systems.

Why haven’t public-private partnerships already gained momentum across BiH? Initially, many in both the public and private sector point to challenges in the legal and regulatory framework. But a closer look suggests that the paucity of partnerships is more rooted in a lack of a partnership mindset, mistrust between the public and private sectors, and a dearth of knowledge about how to identify and structure effective partnerships. Many also only consider contractual PPPs that must go through formal procurement processes and fail to recognize opportunities for development partnerships that leverage public and private resources to achieve common objectives without legally binding agreements.

Over the coming months, SSG will continue to work with the GOLD team and municipalities to promote the concept of partnerships, share tools to achieve local economic development objectives, and help structure these partnerships—resulting in new, higher paying jobs, new investment, and new sales and export revenue in communities across BiH.

BiH