Growth in a Time of Climate Extremes

Can the Philippines Get Its Act Together?

by Lawrence Ang

In my last blogpost, I outlined the current environment shaping the Philippines’ climate and energy future. Since then, SSG Advisors together with the Ateneo School of Government, concluded its joint undertaking to consult sectoral stakeholders, including regulators and major companies in the energy arena, and has now proposed policy guidelines for the Philippines to “Get Its Act Together” and align leadership along the domains of climate, energy, and an enabling environment. The complete policy briefs as well as executive summaries can be found here, much of which have been very well received by policy makers and the press alike.

I end this blog series with the most salient points of the policy studies—that of the intersection between climate change and the pursuit for an optimal energy mix in the Philippines. Excerpts of this article were published previously with my co-authors Atty. Tony La Vina and Atty. Teresa Ira Maris Guanzon here.

 

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The Philippines at the End of the Marrakesch Climate Conference

The Marrakech climate change conference, held early in November 2016, ended on a high note. The “Marrakech Action Proclamation for Our Climate and Sustainable Development” signals a shift towards a new era of implementation and action on climate and sustainable development.

According to the Proclamation: “The Marrakech Conference marks an important inflection point in our commitment to bring together the whole international community to tackle one of the greatest challenges of our time. As we now turn towards implementation and action, we reiterate our resolve to inspire solidarity, hope and opportunity for current and future generations.”

Governments hailed the Paris Agreement, noting its rapid entry into force and its ambitious goals. The Proclamation acknowledged the great momentum on climate change worldwide, a momentum that is unstoppable, driven by governments, science, business, global and local actors.

In a parallel meeting in Marrakech, the Climate Vulnerable Forum, which includes the Philippines, committed “strive to meet 100% domestic renewable energy production as rapidly as possible, while working to end energy poverty and protect water and food security, taking into consideration national circumstances.” They promised “to help each other with our respective transition plans to transform our energy, transport and other sectors, and together ensure support is made available in terms of capacity building, financing and technology.”

This CVF call is exactly right for the Philippines.

While President Duterte has already announced his decision to ratify the Paris Agreement, the Department of Energy (DOE) is not yet on board. This is because Energy Secretary Alfonsi Cusi is concerned that the department will not be able to fulfill its mandate to ensure energy security for the country if we implement the Paris Agreement.

In our view, this is a misappreciation of the Paris Agreement. In fact, if implemented properly, the Paris Agreement will lead us to a more energy secure future.

Moving forward, when we ratify the Paris Agreement, we should accompany it with a declaration that the Intended Nationally Determined Contribution we submitted in Paris is not yet final. The wording of that commitment actually implies that but we should be explicit that we will finalize our reduction number by 2018 after a bottom up process where government departments will submit their contributions to the mitigation commitment based on their respective numbers. That should give comfort to the DOE whose first order of priority should be to ensure sustainable and energy access for everyone in our country, for the private and business sector and for poor and local communities. To achieve that, the right way forward is implementing an optimal energy mix.

 

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Towards an Optimal Energy Mix

In the past months, much has been said and is being done about the country’s optimal energy mix.

The government has called for a review of the unofficial but widely known 30 coal-30 natural gas-30 renewable energy-10 oil energy mix policy to assess whether it meets quality, security, reliability, and affordability – the foremost considerations of this administration.

The current energy mix is composed of coal, renewable energy, natural gas, and oil. Coal appears to be highly favored because it is the cheapest (at least for now) despite opposition mostly from environmental groups. The supply of indigenous natural gas is under threat because of the depletion of the Malampaya reserves.

Renewable energy (RE) (at least solar and wind) costs are rapidly decreasing while the feed-in tariff allowance charged to consumers has surged by 200% (and still faces the possibility of increasing). These are some of the numerous issues facing the varying energy sources of the country amidst the national objective of achieving a rebalanced high-income economy by 2040.

“Optimizing our Energy Mix”, part two of the three-part policy brief series “Getting Our Act Together”. zeroes in on the importance of energy in economic growth, and how an energy mix policy can support that growth. The brief reviews the current energy mix of the country using the internationally accepted standards of the energy trilemma (security, equity, and environmental sustainability). Afterwards, it advocates initial steps for an easier transition towards an energy mix characterized by security, equity, and environmental sustainability.

The country’s energy mix is dominated by coal at 44.51%.

In the short term, coal addresses security (the resource and the power plants are accessible and available) and equity (it is cheap at Php 2.9 to Php 3.5 per kWh) but not sustainability (its external cost to the environment and health is Php 2.78 to 2.82 per kWh). In the long-term, coal fails to satisfy all three components of the energy trilemma. Majority of the coal is imported, and 70% is imported from just one country (due to the lower freight cost). It is more expensive when operated at less than 60% capacity factor (specifically its cost increases to Php 4 to Php 4.8 per kWh).

Still, the country expects a coal-dominated future (with 54% coal in the capacity mix and 66% coal in the energy mix by 2022). This compromises energy security, equity, and sustainability.

Following coal in the energy mix is total RE at 25.44% comprising both of conventional (hydropower and geothermal power) and emerging (solar, wind, run-of-river hydro, and biomass) RE. In the short term, RE addresses sustainability but not security (due to its intermittency and uncertainty) and equity (at least for emerging RE since the cost is pegged to the feed-in tariff rate).

In the long term, RE satisfies all three components of the energy trilemma. Advancements in RE (i.e. capture, collection, and storage technology) have emerged to cope with intermittency and uncertainty. Also, quick developments in technology are bringing the cost of emerging RE down (solar and wind are expected to decrease to about Php 4 per kWh and Php 3 per kWh respectively by 2020). This is followed by the question of whether or not FIT is still needed for solar and wind. It is important to note that conventional RE, which makes up 23.92% of the RE share in the energy mix, has not received any subsidy.

The third largest share in the energy mix is natural gas at 22.91.

In the short term, natural gas addresses the energy trilemma. It is sourced locally, is ideal as a mid-merit plant because of its flexibility, and can compete with coal when the latter is operated at less than 60% capacity factor. It also produces only one-third of the carbon emissions of coal. In the long term, natural gas fails to satisfy energy security (because the country will have to import natural gas once Malampaya is depleted), environmental sustainability (since it is after all a fossil fuel), and possibly equity (just like imported coal, imported natural gas exposes energy supply and price to volatile international market conditions).

The smallest percentage share of the energy mix is oil-based technology at 7.14%. In both the short and long term, oil based technologies fail to address the energy trilemma. Oil is imported. It is the most expensive among the fossil fuels, and its price is extremely volatile. Moreover, it is at par with coal when it comes to greenhouse gas emissions. Still, oil plants are vital because they serve missionary areas and satisfy the peaking requirements of the country’s portfolio (although simple cycle gas plants may equally be capable of doing so.)

 

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Addressing the Energy Trilemma

Considering the Philippines’ growth objectives, the government’s mandate to establish an energy mix that addresses the trilemma, and the current energy mix, it becomes clear that government’s priority should be to diversify.

Three immediate courses of action are required:

  1. Reduce over-dependence on coal to address security and efficiency issues (insofar as coal plants that do not operate as baseload and/or operate at less than 60% capacity factor);
  2. Increase, if not maintain, the share of natural gas (since it addresses the duck curve caused by intermittent RE); and
  3. Set the stage for a flexible environment to capitalize on swift market and technological changes in RE.

Optimizing the coal share in the energy mix and reducing the use of imported coal can be done through the following policies.

First, set a cap on coal plant endorsements using a portfolio based approach. This can be done by limiting the endorsements of new coal plants to the projected baseload demand of each region taking into account the changing needs of the economy.

Second, create a gold standard for coal plants. The gold standard for existing plants would be in the form of (1) performance guards because as coal plants age they become more inefficient and thus more expensive, and (2) implementation of Sec. 13 and 19 of the Clean Air Act. For new plants, the gold standard can be a policy that only ultra-supercritical plants can be built.

Third, compliance of new plants with BOI environmental criteria set in the Investment Priorities Plan and BOI Memorandum Circular 2015-01.

 

Allowing Natural Gas to Compete

Once coal’s share is reduced, natural gas will be allowed to compete and optimize the mid-merit or at the very least, maintain its share in the current energy mix given the expected depletion of the Malampaya reserves.

First, a comprehensive natural gas policy and legislative framework has to be legislated to attract private sector investment. There is a natural gas bill filed in the Senate. Hopefully it will be enacted into law, unlike natural gas bills in the past Congresses.

Second, support for the construction of natural gas infrastructure has to be given. A low hanging fruit would be streamlining and fast tracking the processing of applications for permit for the construction, expansion, operation, maintenance and modification of pipelines, transmission and distribution related facilities of natural gas.

Third, other indigenous natural gas resources have to be explored, developed and produced, and each Philippine Energy Contracting Round (PECR) has to be swiftly resolved. An existing roadblock to the past PECR (and any future PECR) is the tax issue of the Malampaya consortium with the Commission on Audit.

Reducing overdependence on one energy source increases the flexibility to take advantage of rapid RE developments. Increasing both conventional and emerging RE can be done through the full implementation of policies in the RE Act, which include net metering, FIT, renewable portfolio standards, and the green energy option.

Also, incentives and government assistance for development and construction of conventional RE can be provided. Nuclear power can be explored as a new resource in the energy mix since it is reliable and efficient, and can counter the intermittency of variable RE. However, there is a high set-up cost and long-term skill base required for nuclear plants, while special precautions must also be undertaken to avoid any radioactive leaks and/or accidents.

All of these set the stage towards achieving a quality, reliable, affordable, and more sustainable energy mix, which can be easily adjusted to meet innovations in technology, and even unexpected changes in economic growth and population.

It is the responsibility of the government to provide these aforementioned policy directions as it works with the market (contrary to the view of letting the market decide) in order to attain a high-income economy, and energy security, equity, and sustainability.

It’s time to ratify and implement the Paris Agreement. For energy, we begin with aiming for an optimal energy mix.


Lawrence1.jpegLawrence Ang is Director for Asia for SSG Advisors. He brings nearly ten years’ experience at the nexus of sustainable development and private sector engagement in the region.

Technology with Purpose

How Companies, NGOs and Communities Can Make a Better World

by James Bernard

 

image001Technology is changing the way in which individuals and markets interact worldwide. It has become the medium in which information is being transferred and plays a critical role in how we navigate the creation of new systems and processes in our communities. With our new Seattle office, SSG Advisors is now able to engage directly with many leading technology companies, NGOs and philanthropies on how a ‘purpose-driven’ approach to technology can improve the lives and livelihoods of people across the developing world. As we prepare for the annual Global Washington Conference next week, we are excited at the prospect of highlighting innovative examples of how organizations like VillageReach, Remitly, PotaVida, and Intellectual Ventures are making use of technologies to deliver lasting impacts in the developing world.

What Distinguishes Purpose-driven Technologies?

So, what distinguishes a purpose-driven technology approach from other types of technology projects? These are technological tools that address some of humanity’s toughest problems and improve quality of life. Of particular interest are technologies that are accessible for use in low-resource settings, fit into the local cultural context, are affordable, and can stimulate development. This type of impactful use of technology can have a profound impact on critical global development challenges, such as food security, climate change and education. Purpose-driven technology solutions create lasting impact, whether it is using cutting edge TV Whitespace technology to connect outlying fishing communities in the Philippines or employing the Internet of Things (IoT) to transform water conservation at a public utility in Uganda. It is important to note that purpose-driven technologies are not limited to ICTs, since many innovations can come in the form of physical devices, such as cook stoves, or business models that can allow projects to scale.

The Key to Success

The key to success and sustainability, is to work from the ground up, both from a design and implementation standpoint. Creating partnerships between private sector companies companies, NGOs and communities is key. As an African proverb states, “if you want to go fast, go alone. If you want to go far, go together.” Working together, partners are able to develop new business models that create economic opportunities and enhance sustainability. The result is that the responsibility of improving the lives of people and the communities they live in – things that are sometimes neglected — become a priority for each partner.

“If you want to go fast, go alone. If you want to go far, go together.” – African Proverb

Over the last decade, SSG Advisors has enabled a wide range of clients – companies, donor agencies, NGOs and foundations – to build these collaborative partnerships in more than 50 countries around the world. We have enabled our partners to make smart use of technologies to enhance their impacts on communities, markets and the environment. That is why we are so excited to be taking part in the 2016 Global Washington Conference, where we can share our experiences and learn more about the amazing work Seattle-based organizations are doing at the nexus of technology and impact. Look for us on December 8, at 1:30 p.m., at the “Tech for Good” panel, and join the conversation!

“The Financial System We Need”–is it finally here?

by Lawrence Ang

“We always underestimate the change that will occur in the next two years as a change that will happen in the next ten.”    –Bill Gates

Last October 25-26, the biggest names in the global financial industry converged in Dubai under the auspices of the United Nations Environment Program-Finance Initiative (UNEP-FI). The setting could not be more apt. Dubai, a land of extreme heat—and, thanks to some clever government policies, extreme wealth—hosted the world’s leading central bank governors, asset managers, institutional investors, banks, insurance providers, and investment advisories, such as SSG, to check-in on an effort launched last 2012 at Rio+20, that is, to build “the financial system we need.”

In the early 2000s, it became apparent that financing sustainable development required a completely new paradigm—one that is able to drive inclusive growth while genuinely, and maybe even profitably, addressing sustainable development challenges. While the idea has long been floated in the nooks and crannies of UN conferences, in whispers in boardrooms and chants from the NGO sector, its urgency quickly rose into the mainstream with the advent of three major global events.

Three major global events signaling a changing financial system

  1. The landmark adoption of the 2030 Sustainable Development Agenda and the Paris Climate Agreement.
  2. The 2008 financial crisis driving public demand for a more resilient and effective financial system.
  3. The rapid evolution of the financial industry itself in light of post-crisis macroeconomic reforms, the increasing influence of developing and emerging countries, and the rise of disruptive technologies and new social expectations across the financial landscape.

“The Financial System We Need”

  • Overall, it will take an estimated USD 5-7 trillion per year to meet global sustainable development goals, of which 60-70% will need to be channeled to developing countries;
  • As one example, it will take about USD 1 trillion per year to decarbonize energy; USD 400 billion per year to ensure resilient infrastructure; and USD 50 billion per year to halt tropical deforestation;
  • Less than a third of these resources are currently flowing and will therefore need to come from private sources;
  • In contrast, banks alone manage $140 trillion of assets and institutional investors over $100 trillion. Capital markets, including bonds and equities, exceed $100 trillion and $73 trillion respectively.

In light of this major financing gap, re-engineering the global financial system now ceases to be an activity reserved for academics and economic theorists, but instead now serves as a marching order for multilateral agencies, central banks, and financial institutions if these same entities are to stay competitive and relevant to their clients’ new realities. As evidenced by the groundswell being orchestrated by no less than the top financial firms in the world, this transformation will require new thinking, new business models, new assets classes, new products, new services, and new tools possibly already existing within the current system. However, it will now need a long-deserved shot in the arm and some fresh political will.

Dubai Roundtable Sentiments Expressed

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At the global roundtable, key personalities from the financial industry shared how a quiet revolution is now taking hold across various pillars of the international financial industry. To paraphrase sentiments expressed:

  • Public debate has rapidly moved forward. Central bank governors, finance ministers and regulators, and finance sector executives are being pressured to explain their contribution to advancing sustainable development.
  • Public interest institutions are playing a more important role in shaping public debate, for example about the risks of ‘stranded assets’.
  • More members of the public are taking up the opportunities to redeploy their own capital aligned to their values and longer-term interests.
  • Sustainability is becoming a major driver in the development of the world’s financial centers, with global and regional centers including Hong Kong, Nairobi, London, Paris and Switzerland exploring how best to develop rules, fiscal measures and market leadership to guide competition in the midst of new opportunities.
  • Collaborative networks are multiplying, forging partnerships and establishing fora to share best practices, information and experiences, for instance, across responsible investment, insurance, and green infrastructure.

From Momentum to Transformation

But perhaps most encouraging are some of the concrete developments happening directly out of the public and private spheres that altogether point to a sea-change in thinking among financial institutions on how a new “financial system that we need” can indeed look like.

  • In 2009, the Financial Stability Board (FSB) was established under the auspices of the G20 to utilize monetary policies to better manage risk and introduce resilience to the global financial system in light of controversies surrounding the “excesses” of the “current system.”
  • In 2015, a dedicated task force to tackle climate-related financial disclosures was set-up under the FSB to dive deeper onto how the global financial system should be compelled to act on sustainable development and be held accountable for climate change.
  • In 2016, green bond issuances totaled an estimated USD 694 billion and growing, signaling the arrival of a new and truly “green financial product.”
  • In 2016, China, arguably one the world’s most powerful economic influencers, signs a national policy package to create a “green finance system” to transform its own financial system. The EU later follows suit with a policy to create its own green financial strategy.
  • As of 2016, 60 stock exchanges across the world have joined the “Sustainable Stock Exchanges Initiative” (SSEI) under the UN to systematically promote sustainable investment and ESG disclosures.
  • And the list goes on…

SSG Advisors’ Role in Developing Promising Solutions

SSG Advisors, as a global development solutions firm and impact investment advisory, is now participating in a series of cross-sectoral discussions between multilateral agencies and investment practitioners looking specifically at “Positive Impact Finance”—an approach which aims to “finance businesses seeking to make a positive contribution to one or more of the three pillars of sustainable development (economic, environmental and social), once any potential negative impacts to any of the pillars have been duly identified and mitigated.”

SSG’s experience in discovering new business models and facilitating innovative partnerships between the public and private sectors will be shared to the ongoing discourse of identifying practical solutions to solve sustainable development challenges hand-in-hand with businesses and the financial industry. Indeed, impact investing, venture capital, blended finance and environmentally or socially oriented market instruments such as green bonds and development impact bonds will be needed. But as many point out, these may all fall short if the kinds of projects or entities most capable of providing the most promising development returns are not equally capable of providing the typical risk/return profile the mainstream market demands. As part of its participation to the global movement to create “the financial system we need”, we enjoin our colleagues from the private sector to help us imagine creative and profitable ways to make the “unbankable” potentially attractive to mainstream investors as well as connect business to promising solutions in need of urgent financing.

 


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Lawrence Ang is Director for Asia for SSG Advisors. He brings nearly ten years’ experience at the nexus of sustainable development and private sector engagement in the region.


 

Smallholder Crop Insurance in East Africa: A New Way Forward

Smallholder farmers in East Africa are increasingly vulnerable to risks associated with changing weather patterns. Climate insecurity puts their livelihoods in jeopardy and discourages investment in new technologies. As recent studies have explored, viable business models for crop insurance have the game-changing potential to reduce risks for the 2 billion people that depend on smalholder farms for income and subsistence.

Despite the promise, attempts at developing crop insurance have been rife with complications. Pilot programs have failed to scale for a number of reasons, including: insufficient climate data, low uptake due to lack of affordability as well as poor product design, unfavorable policy environments, high operational costs, and lack of scientific research to determine risk. The few that show scalability, such as the R4 Rural Resilience Initiative in Ethiopia (R4) and ACRE in East Africa, have done so by building inclusive participatory processes with strong institutional partners and by integrating insurance into other risk reduction offerings, but they continue to face a number of challenges, especially with regards to data availability, high operati
onal costs for installing and maintaining independent weather stations, and independent risk assessment.

As an implementing partner with Tetra Tech ARD for USAID/Kenya and East Africa’s PREPARED Project, SSG has developed a comprehensive public-private partnership between Jubilee InsuranceEast Africa, Kenya Meteorological Department (KMD), Rabobank, UNFAO and others to design and launch an Index-Based Weather Insurance product referred to as “Kinga Kilimo” (“Protect Farming” in Kiswahili). The product is designed to provide ICT based Agro-weather advisory to farmers via SMS prior to climatic events to provide forecasts for land preparation, timing for planting, crop variety and cultivars, crop management (fertilizer, pesticide application, cultivation, water supplementing), postharvest management, and soil conservation. It also offers parametric Weather Based Index Insurance for risk management of crop production losses associated with extreme weather events.

Both the partnership and the product are intended to address the challenges and to incorporate lessons learned from the previous attempts at crop insurance. As such, PREPARED has designed the partnership around several critical innovations to maximize success in designing a crop insurance product:

Incorporate Weather Data: To overcome the limiting factors of data quality, the partnership provided capacity building to the Kenya Metrological Department (KMD) in order to produce a blended weather dataset that incorporates over 35 years of data. This dataset uses Potential Evapotranspiration (PET) and GeoCLIM – a geospatial climate data-management and analysis software tool that integrates observed station data with satellite-derived estimates – so as to address both ex-ante and ex-post risk faced by the farmer at farm level.

Few, if any, crop insurance schemes have had such a comprehensive investment in improving data collection. Mr. Francis Ngari, the Micro-Insurance Manager at Jubilee Insurance, explains the value-added from this approach, noting, “We see this shared value approach to partnership as a big breakthrough in designing crop insurance. Previously we have had challenges accessing climate data and engaging with the Kenya Meteorological Department in designing crop insurance products, however, this partnership has made this possible. Getting credible and more robust blended data from KMD has made our premiums lower and improved the credibility of our products.”

Improve the Service Provision of Government Partners:  Guided by SSG Partnership Specialist Polycarp Ngoje, the  PREPARED project has helped transform the culture of the Kenya Meteorological Department through PREPARED’s Quality Service Improvement Program (QSIP) to be service-oriented and to focus more on potential collaboration and partnership to enhance usage of weather data.

Peter Ambenje, Director of KMD, reflects on the importance of this shift in orientation, stating that “The innovative approach to the partnership design of the Weather Index Insurance Kinga Kilimo product has opened our eyes on how we can engage with the private sector and generate products that add value as opposed to just sharing climate data. The Quality Service Improvement Program (QSIP) has changed the approach and mindset of our staff as far as service delivery is concerned. We look forward to adopting this model in engaging with other partners moving forward.”

Mr. Ngari attests that this partnership is “a breakthrough in agriculture insurance.” The United Nations Food and Agricultural Organization (UNFAO), which has contract farming for legumes and pulses in Eastern Kenya, has also found this partnership approach useful to them for downscaled weather forecast and climatological zoning based on historical data and water requirement satisfaction indexing for various crops. According to Philip Mwangi in the program office in Machaon County, “the partnership has been the missing puzzle [piece] in the contract farming. The scientific tools and downscaled agro weather advisory tool is a great avenue to disseminate crop management information to the farmers from land preparation to post harvest management.”

The new product is being test-marketed in several counties in Kenya this fall with the goal of rolling it out across much of the country for the spring growing season. It is expected to reach over 15,000 smallholder farmers in these pilots alone. Perhaps more importantly, though, the lessons learned from this partnership – including the need to bring the right partners together, the importance of using proper climate data as a base, and the need for government agencies to understand shared value and service provision – could transform crop insurance across all of Africa.

2016 ANDE Annual Conference Session Panel Recap

Providing Comprehensive Technical Assistance to SGBs: Exploring Competing Approaches


The Aspen Network of Development Entrepreneurs (ANDE) is a global network of organizations that supports entrepreneurship in emerging markets. ANDE focuses on small and growing businesses (SGBs) based on the idea that SGBs have the potential to create jobs, stimulate long-term economic growth, and produce environmental and social benefits. SGB’s, as defined by ANDE, are commercially viable businesses with 5 to 250 employees and seeking growth capital from $20,000 to $2,000,000.

SSG Advisors has been an ANDE member since 2014 and is constantly engaging with SGB’s across its diverse portfolio. Whether we are supporting capital raising for agribusinesses through the West Africa Trade Hub, or mentoring clean energy businesses in the Private Financing Advisory Network-Asia, we consistently work with brilliant entrepreneurs and dynamic businesses in a variety of capacities. Generally, our engagement comes about as part of a larger, donor-funded engagement, rather than as a direct contract with the SGB itself. In the development context, such support funded by a third party is typically referred to as “technical assistance” (TA).

At ANDE’s annual conference in 2016, SSG’s Director of Sustainable Investment, Darius Li, moderated a spirited discussion on technical assistance alongside two other panelists, Tahira Dosani, Managing Director of Accion Ventures, an impact investor, and Pedro Eikenbloom, Business Development Manager at PUM, a volunteer-based technical assistance provider. The discussion explored three main issues in the provision of TA: 1) Making the case for TA – where is it still most needed in the process, and how best can it be most effectively utilized?; 2) Discussing the different approaches and best practices in TA delivery; and 3) Identifying ways TA can be improved in its application and value to clients and beneficiaries.

Major takeaways from the discussion include:

  • Both pre and post investment TA are vital to the success of SGB’s. All participants agreed upon the necessity of TA and how it is a critical enabler to the placement of capital, and success after the fact, as the company absorbs the investment and continues to grow. The question remains, however, who is best positioned and willing to pay for that support.
  • Although the majority of TA for SGBs today is subsidized by donors, there may be a business case for investors to invest in pre-investment TA as a way of increasing overall returns. Anecdotally, doing so creates long-term financial value: supporting early stage companies increases their probability of ultimately being successful, and thereby improving exit opportunities and returns. Providing TA also helps attract better deals because it allows the investor to offer more value to potential portfolio companies, attracting a higher quality pipeline, transactions, as well as co-investors, particularly in a competitive deal situation with multiple bidders. Investors also learn from providing TA- it makes them better investors because they become more adept at understanding and solving the issues their portfolio companies face, enabling them to spot red flags early on. The combination of these benefits strongly suggest that providing TA can be a differentiator that yields greater returns for investors.
  • There are many different models of providing and paying for TA, and there may exist more effective models that better align long-term interests between TA providers and recipients. TA providers have explored a number of different models in this regard. Open Capital, for example, charges a deferred fee, payable on success. Others, like Growth Africa, take a combination of equity and success fees based on revenues, capital raised, etc. Other models for paying for TA include profit sharing models, self-liquidating exits, VPO, etc – all can be great for aligning incentives between TA providers and SGB’s, but the downside is they are also more complicated to structure. The bottom line is that there are a number of creative approaches emerging that TA funders, recipients, and providers can explore in finding better ways to work together.
  • Standardizing TA service delivery is key to reducing cost and increasing efficiency. For example, Accion always evaluates whether the TA needed is truly bespoke, or, alternatively, is an opportunity where best practices can be extracted and template-ized so that it can be shared with the broader portfolio on a more cost effective basis. Over time, Accion has recognized distinct patterns within their portfolio, with many companies sharing similar challenges. This is made possible by their narrow focus on seed stage investments for financial inclusion startups operating in emerging markets. As a result, they have met common needs for TA by developing distinct learning tools that are shared online and dramatically reduce costs over the long run. 20 such examples are available to the public in Accion’s Venturelab resource library.

 

What Works in Countering Violent Extremism

Chad / Darfurian refugees from Sudan / Djabal camp  (17 766 refugees, 4681 families), 4 kilometers west from Goz Beida UNHCR sub-office located 217 km south from Abeche, located 900 kilometer east from N'Djamena the chadian capital. The camp, created on 4/6/2004, is located 80 km from the sudanese border. Sunset on one of the playground of Djabal refugees' camp. Teenagers play football, the main sport activities. 60 % of the camp's population is under 18 years old, with 40% of old people. / UNHCR / F. Noy / December 2011

This article was originally published on the Huffington Post. To view the original article, please follow this link.

By Elise Barry

Twenty years ago, no one had ever heard of CVE. Now, CVE (or countering violent extremism if you haven’t quite caught up on the acronym) has evolved into a field of study, a strategy, a U.S. government and international priority, and a larger debate over what is effective in preventing the terrorist attacks that inundate the news these days. This is not to say that either the tactics used by violent extremist groups or efforts to prevent violent extremism are new phenomena – they are age-old. However, in the last decade, there has been a significant push by governments, multilateral organizations, and NGOs to focus efforts under the umbrella of CVE to respond to the increase of terrorism worldwide. Unlike the hardline military, security, and intelligence approach of counterterrorism, programs under the CVE umbrella seek to empower communities and build resilience to violent extremism (though many programs in the past have misunderstood or blurred this distinction).

In contrast to the sharp increase in interest being focused on this new field of CVE, there are few studies or examples that have been able to concretely pinpoint what works and what doesn’t in preventing individuals from joining violent extremist groups. Leaving aside the fact that quantifying ‘success’ in CVE is extremely difficult, the lack of hard data or success stories has created a larger debate over what works in CVE or whether it even does work. This has left many scratching their heads or worse – talking a lot, while saying little of substance.

This debate has gotten one thing right in that there are no easy answers or panaceas in CVE. However, with the benefit of hindsight on the last decade of CVE programming and from my own experience supporting development agencies, NGOs, development professionals, youth, and other stakeholders to understand the role they can play in CVE across Africa, I see a few rules of thumb that are critical for CVE to be effective:

One size does not fit all

In a world where you can customize your latte in 100 different combinations, we need to begin thinking this way in terms of CVE programming. The backgrounds of individuals who join violent extremist groups and their reasons for doing so are incredibly diverse and often very individual. Not only does it matter what country you live in, what your gender is, and your socioeconomic status, but your individual life experiences leading up to this point also play a key role in the reasons you may or may not be more likely to join or support a violent extremist group. Because of this, the unfortunate fact is that one size does not fit all and a program that might impact one individual is not going to make one bit of difference for their neighbor. For example, let’s think about a youth parliament program in Mandera, Kenya, a city on the border of Somalia that has been the scene of frequent al-Shabaab attacks. For some youth, this program could provide them with a voice and a platform to create change in their community, which may have been the impetus for supporting al-Shabaab otherwise. For others though, they may not be the least bit interested in joining a youth parliament. Perhaps they faced significant discrimination and would benefit more from psychosocial support or yet another type of program. Rather than broad projects that attempt to address all of the grievances in a community, let alone a country, CVE programs need to be as granular as possible. As a result, we need a lot of them.

Learn and act locally, with a global awareness

When we talk about addressing the drivers of violent extremism, it often requires real social change. For example, if we look at what makes violent extremist groups attractive, predominately to youth, it often comes down to the fact that many groups are offering those individuals a voice, a recognized role in a society, and an opportunity to overturn systems – whether that system is based on age or entrenched elites – that is holding them back. To address this will require that the status quo of social structures be challenged and revised. Such social change is nearly impossible to predict or plan from the outside. Moreover, it would be naïve to assume that anyone, outside of the community enacting that change, knows what is best or would work for them. Creating a space for individuals to discuss their grievances and be a part of devising the programs will not only result in better solutions, but will also give individuals a measure of control over their problems.

This does not mean we should promote CVE programs in a vacuum. Country-wide, regional, and even global trends do play into violent extremism and how it manifests around the world. This is true when looking at the overlap that often exists between organized crime and violent extremism. For example, while the grievances that cause an individual to join Al-Qaeda in the Islamic Maghreb (AQIM) are likely very localized, responses need to at least be aware of the regional criminal networks and instability that keeps AQIM in business in the first place. So, programs should be targeted, locally-driven, and localized, while keeping an eye on broader trends and patterns.

Be realistic and focused, but not discouraged

It is easy to become overwhelmed when looking at the complexity of the issues that need to be addressed to mitigate the root causes of violent extremism or the length of time it will take to see progress. CVE programs needs to go hand in hand with economic development, security sector reform, democracy and governance strengthening, and a whole host of other development objectives. Moreover, many of the drivers of violent extremism are generational problems that may very well take generations to resolve. This is not what many want to hear, but it is the truth. Even with a diverse range of programs in every at-risk community, there will not be a quick fix to terrorism. We need to accept this now, so that we can focus on what can be achieved.

Seen from another perspective, the complexity of the issues is also cause for optimism, as we realize that we can address individual parts of the problem. It is both reassuring and encouraging that one small youth parliament program in Mandera, Kenya can make a difference. No, this is not even remotely close to ‘solving’ the problem of violent extremism in the world, in Kenya, or even merely in Mandera. However, it will make a difference, and, with enough smart, locally-driven, focused, and creatively diverse programs working in collaboration with the development projects already underway all over the world, we will see progress.

Seafood Watch Partnership Announcement

by Tim Moore and Claire Swingle


In the United States alone, 1/3 of seafood has been found to be mislabeled or fraudulently sold. This means that we don’t know what we’re actually eating, or what social or environmental practices were used to supply it. Though the Food and Agriculture Organization estimates that “IUU fishing takes up to 26 million tons of fish each year, or more than 15 percent of the world’s total annual capture fisheries output,” illegal, unreported, and unregulated (IUU) fishing often goes unnoticed as a problem.SFW

On Monday, USAID and the Monterey Bay Aquarium Seafood Watch program (“SFW”) announced their partnership to change this by combatting illegal fishing, improving seafood traceability, and enhancing the sustainability of fisheries in the Asia-Pacific region, the world’s largest seafood exporter.

This partnership is a direct result of SSG’s work under the Oceans and Fisheries Partnership Activity, funded by the United States Agency for International Development’s Regional Development Mission for Asia (“USAID Oceans”), to strengthen regional cooperation to combat illegal, unreported and unregulated fishing (IUU), promote sustainable fisheries, and conserve marine biodiversity in the Asia-Pacific region.

Under USAID Oceans, SSG has been working to develop public-private partnerships with ICT firms, leading retailers, Southeast Asian seafood processors and fisheries, and the financial sector to support the development of digital catch documentation and traceability (CDT) to reduce illegal fishing and improve fisheries management. Robust, digital catch documentation and traceability, central to USAID Oceans’ mission, will enable seafood to be traced from “boat to plate,” enhancing transparency and visibility in complex global seafood supply chains, all the way through to export to US, EU, and neighboring ASEAN markets.

SSG facilitated the Seafood Watch partnership through its proven STEP methodology to partnership development in order to leverage SFW’s influence on North American seafood markets — where it assesses over 80% of seafood by volume consumed in the US market, and informs seafood purchasing at more than 100,000 business locations. This partnership also leverages SFW’s strong connections to major seafood buyers, including the largest food service companies in North America – such as Compass Group, Blue Apron, and Sea to Table –and business partners like Mars Petcare, to strengthen responsible sourcing commitments and action plans to promote and co-invest in the expansion of digital traceability and transparency in key seafood suppliers in Southeast Asia.

The Seafood Watch Partnership can significantly mitigate IUU fishing and increase the sustainability of fisheries in the Asia-Pacific – a serious concern given that 90% of all fisheries worldwide are now fully exploited, over-exploited, or have collapsed – as well as promote an ethical seafood supply chain and improving marine biodiversity conservation.

Indeed, according to Senior Partnerships Advisor to USAID Oceans, Timothy Moore, “Together, the partnership with Seafood Watch will harness technical experts, major seafood business partners, and on-the-ground fishers to bring about dramatic and positive changes in Southeast Asia’s seafood supply chain and serve as a model of collaboration for other regions around the world.” The partnership with Seafood Watch is a testament to the innovative approaches SSG takes to engineer sustainable solutions to the most pressing global development challenges.


Get involved in the conversation: #SustainableFoodInstitute2016 #USAIDOceans @seafoodwatch #seafoodtraceability #baittoplate

Find out more about what SSG is doing: http://ssg-advisors.com/

Giving Victims a Voice: Personal Narrative in Violence Prevention in Central America

Incorporating the stories of real people can add a personal layer to violence prevention, and can humanize the way that communities talk about violence. Historically, I’ve thought that a strong violence prevention program might include a few key components: raising awareness through education, providing alternatives to violence, and an approach that takes into account the local context. If a community rallies behind the cause and is really engaged and hopeful for change, all the better. This year, however, while conducting research for a citizen security evaluation, I was struck by an additional element being used by local NGOs on the Caribbean coast of Nicaragua. I learned about the power of the voices of the victims of violence, as well as the voices of their families and friends. It is those people who know intimately how violence has affected them, their loved ones and neighbors, and those people who can help shape more effective violence prevention.

Local organizations on Nicaragua’s coast know well that these stories can be vital promoters and drivers for change. In order to raise awareness about alternatives to violence, the Foundation for the Autonomy and Development of the Atlantic Coast of Nicaragua (FADCANIC), uses short, highly produced documentaries that share the stories of community members in their own context, languages, and circumstances. The documentaries showcase both formerly violent community members, and also victims of violence. I was struck by the openness and the vulnerability that is required to share stories about domestic violence, but it is perhaps that frankness that allows the documentaries to really reach people in the community.

I was impressed too by the stories of young people who were part of youth journalist diploma programs with Universidad de las Regiones Autónomas de la Costa Caribe Nicarguense (URACCAN), Bluefields Indian and Carribbean University (BICU), and Centro de Derechos Humanos, Ciudadanos y Autonómicos (CEDECHA). The participants learn how to educate others in their community about their rights, and the paths to take to prevent violence. Several of these “citizen journalists” were victims of violence, while some of the other young people were formerly violent themselves. The journalism program gave them the tools to talk about violence, and to identify alternatives to violence. They can use these tools to reach out to peers and community members. This is especially important in communities where it is taboo to talk about domestic violence, and where there are few services available to victims.

So much can be learned from the people who experience violence, and if they are willing to share, they can reach the community in an impactful way. By taking the first steps to share stories with their neighbors, and with the support of local NGOs, their voices can empower others by letting them know that they are not alone, that they have rights, and that change is possible. Their stories make violence prevention more rooted in the realities of a community and are a vital tool available to effect change.

On Collaboration

Before joining SSG, I worked at Oxfam on policy and advocacy issues for several years. Last week, my former Oxfam coworker Jo Cox was killed while working in service to those she represented as a UK Member of Parliament. Those who knew Jo far better than I have shared about her fierce commitment to justice, delivered kindly and humbly, with a genuine desire to connect with people regardless of their background or circumstance. Jo fought for integration; she believed that through collaboration, people can achieve far more than they could on their own.

Collaboration helps us find solutions that would be otherwise unimaginable. It is additive: we achieve a greater outcome together than we do as individuals. We don’t always know exactly how to work together, with whom to work, or where we’ll end up. But being willing to accept that we can do more with others leads us towards far better outcomes than resolutely limiting ourselves to whatever we can accomplish on our own.

This is why we do what we do – helping people work together to solve tough problems, such as improving health, education, and economic outcomes. Collaboration doesn’t have to be complicated; often the simpler, the better. We bring together those who need, say, books or fertilizers or medicines or jobs, with those who have these things. We help them find the conversation about how to work together. It can be difficult: trust takes time to build, and different types of organizations tick in very different ways. But helping people focus on finding their common goal is worth the effort, because getting there together means we achieve far more than we would alone – something Jo understood and lived by throughout her life.

How do we Expand Connectivity to the Last Billion?

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Tuesday marked the culmination of over six months’ worth of information gathering, interviews, and workshops focused on finding successful business models for connectivity.

On a sunny afternoon in Washington D.C., FHI 360 hosted the launch event for the mSTAR report titled Business Models for the Last Billion: Market Approaches to Increasing Internet Connectivity. Attending the event were representatives from the White House, USAID, the State Department, and major corporations such as Microsoft and Cisco, as well as other experts in the field of ICT4D.

But importantly, and in line with the recommendations in the report itself, both entrepreneurs who have started successful businesses that increase connectivity, and the investors who have helped them scale so far, were present and spoke during the event.

In this report, written by SSG, we make the contention that both the technology and the business models exist for increasing connectivity to the so-called “last billion.” Of the approximately 4 billion people who currently do not access the internet, we focused on those with the lowest income, most of whom live in rural areas in Sub-Saharan Africa and the Indian Subcontinent. By addressing those hardest to reach markets, we found truly innovative ideas that may well work for the “middle billions” as well.

In both our launch event, and during the workshops (termed “white boarding sessions”) that informed our conclusions, we invited a variety of stakeholders from various points throughout the connectivity ecosystem, and brought together perspectives that don’t often mix. In New Delhi, we heard heated discussion between government regulators and Internet Service Providers. In Silicon Valley, the development experts explained more about the procurement process to members of large technology companies. Creating these networks within the process of the report brought to light a key element of our recommendations: in order to create a fully successful system that allows effective business models to scale, we need to encourage and develop relationships within finance, information-sharing, and technological expertise. As we write in the report:

Bringing together the resources of donors, philanthropists, investors, industry, and local communities means that scaling last billion connectivity business models and closing the digital divide does not require substantial new infusions of funds or the creation of entirely new tools.

The entrepreneurs and financing bodies represented at the launch event were a perfect complement to this thesis. Lauren Kickham of Vulcan, and Jim Forster, Chairman and angel investor in Air Jaldi and Mawingu, discussed the way they came together to finance one successful connectivity business model called Mawingu. As he introduced the 12 grant recipients of the new Affordable Access Initiative, Namema Amendi, of Microsoft, detailed the reasons why, as a firm, increasing connectivity not only provided social good, but also increased the company’s potential market. Michael Ginguld of Air Jaldi shared his hope of connecting the Internet infrastructure that he was building with other forms of infrastructure, including water and electricity, and Paul Talley, of ViRural, discussed his realization that working on a connectivity play in Nigeria meant that he could not only focus on more traditional types of investment, but that he could also look for types of financing interested in supporting the social impact his model would have as well. Philip Zulueta, of Wi-FI Interactive Network (WIN), described the investment opportunity, by declaring that “data is the new oil.”

In the launch event, we saw the excitement surrounding the recommendations we lay out in our report. We found models that work, the technology that already exists, and the potential partners who are ready to be a part of a broader network to support the scaling of these models. We hope to see the momentum for this network building, and continued support from members interested in connecting the last billion.

Want to learn more? Start by reading our report.