Poverty rates in a region often hinge on specific local conditions, necessitating tailored solutions. Innovations against poverty are essential in this context. Yet, other factors affecting socio-economic well-being, like infant mortality and global food security, present uniform challenges across different areas. Establishing a fund dedicated to innovation in combating poverty can tackle both specific and widespread issues.

It enables the development of creative solutions for unique challenges and fosters large-scale collaboration among diverse stakeholders to address global problems. As a World Bank official emphasized in 2015, “Without collaboration that is both broad and deep, we have little hope of ending extreme poverty by 2030 and to boost shared prosperity.”

The Innovations Against Poverty (IAP) Challenge Fund

The program aims to carefully select innovative projects for their potential to benefit large numbers of people living in poverty and their scalability. It challenges private sector companies in the agriculture, energy, wash and ICT sectors across Cambodia, Ethiopia, Uganda and Zambia to innovate products.

Acting as a risk-sharing mechanism, the fund effectively supports innovative producers, offering them economic protections otherwise unavailable. This approach assists companies that fall between the cracks of microfinance and commercial lending. The top proposals receive up to €200,000 in funding per company.

The Challenge Fund is financed by the Swedish International Development Cooperation Agency (SIDA). It aims to support ambitious entrepreneurs overcome a lack of capital to innovate. The fund works via an announcement that the fund is looking for proposals for the best solution to a pre-defined development problem that is not addressed by market forces.

Competitors are assessed against each other. The businesses that best fill several pre-set criteria are given a grant to implement their ideas. Following the first round of investments in companies from the four countries, more than 1.5 million people were calculated to have benefitted from improved access to basic goods and services, as well as more than 500,000 benefitting from cost savings and income, with knock-on effects for the wider communities.

The multi-stakeholder partnership approach plays a crucial role in reducing poverty. It brings together innovators, NGOs and investors, each contributing unique skills and experiences. Numerous instances document the success of this process through the Innovations Against Poverty program.

Agriculture: Afriseed

The  IAP program demonstrates its effectiveness through the financing of Afriseed. IAP not only provides initial funding but also helps entrepreneurs build relationships with local financiers. With an IAP grant exceeding €300,000, Afriseed expanded its legume production. It engaged more smallholder farmers and aimed to enlarge its market share in Southern Africa. Consequently, smallholder farmers enjoyed better access to quality seeds, higher crop yields and incomes, better integration into value chains and new market connections.

Sustainable Business: Raising Gabdho Foundation (RGF)

RGF, a social enterprise, provides clean cooking solutions and energy-efficient products. Through its collaboration with the IAP, RGF launched a new factory in June 2023 to develop effective ways to reduce air pollution from production. This partnership has already led to more than a doubling of the enterprise’s bio-briquette production capacity, with potential for even more expansion.

Furthermore, RGF introduced its Zeed Energy brand in Uganda, serving as a community marketplace for clean energy products. As the business expands, it will create more jobs, increase local revenue and benefit the environment by reducing the carbon footprint and promoting more sustainable practices among consumers and producers.

The initial opportunity presented to RGF has grown and grown into something with huge potential. RGF aims to establish a waste collection system to secure the biomass needed for briquette production. The foundation also aims to expand its sales routes beyond the capital city.

Looking Ahead

When we challenge creative individuals and small companies to innovate, the results can be transformative. Supporting anti-poverty innovations through targeted ventures that unite stakeholders seeking profit with workers aiming to improve their living conditions enhances the well-being of entire communities.

An independent impact assessment measured the success of the IAP. It revealed customers experienced better quality of life and access to new products and services. Additionally, 80% of female customers generating income from these offerings reported improved decision-making power over their earnings.

Incentivizing innovations against poverty among various stakeholders yields widespread and significant benefits for local communities. Encouraging and initiating creative solutions to persistent poverty-related issues across the developing world is well-supported by evidence.

– Arshiya Eslamdoust
Photo: Pixabay