W. K. Kellogg Foundation Africa Program

1. W. K. Kellogg Foundation Africa Program “Helping people help themselves” • Presentation to the Africa SMME Conference and Awards • Gold Reef City Hotel, Ormonde, Johannesburg, South Africa

2. Outline of Presentation • The WKKF Africa Program • What the Program is about • Prior Investments • Lessons learnt since inception in SA • Current Focus within Economic Opportunities & Relevance to SMMEs • WKKF’s new Investment Products • Conclusion

3. What is WKKF Africa about? • Helping people to help themselves • To support the social and economic transformation of Southern Africa; • Reverse the cycle of rural poverty and; • Build healthy, viable, and sustainable rural communities

4. How do we achieve the social and economic transformation? • Civic engagement; • Economic opportunities (EO); • Skills and leadership development; • Health and well being for families, women and youth.

5. Prior Investments in Economic Opportunities-(EO) • Focus on community driven, bottom-up interventions • Building the capacity of rural businesses in agriculture & non-agricultural sectors • Strengthening commodity associations • Major Investments included: • agriculture; • art and craft; • eco-tourism; and • rural finance

6. Lessons • There is great potential to leverage agricultural and cultural products to improve the livelihoods of rural people • With appropriate support, communities can become the agents of their development • There’s visible progress and impact at community level

7. However…, Some Challenges • Impact on a few: • Production levels low • Quality of product inconstant • Many lack requisite skills • to establish, manage and grow businesses- • Poor understanding of the business and value-chain • Poor understanding and access to markets; • No representation in export markets • Poor access to financing • Weak organization of rural producers • High number of failed SMMEs

8. Current Economic Investment focus • Market-led Approach • Objective to support co-creation of wealth with rural producers, entrepreneurs & communities • Focus on partnership building along value chain of specific commodities with high market potential • An integrated business development approach • market analysis, organized commodity associations, supported by input finance and supplies, & policies on land and financing

9. Current Economic Opportunity focus cont.. • Approach beneficiates commodities; commercializes; increases asset-base • Private sector and government partnerships critical • Approach has wide range of applications

10. Application of model-Cultural Industries • Objective to invest in the value chain: • To enable access to local and global markets for artisan products • The gathering of credible and non distorted feedback form host markets • Invest in product development and innovation cycle; • Packaging, warehousing and distribution of goods in export; • To support local producers and entrepreneurs to acquire equity in businesses that sell their produce • Support an infrastructure for partnerships and enabling policy and programmes frameworks

11. Example: Meropa Heritage Business Venture • Partnership between professional designer, local entrepreneurs and rural crafters • Designs and manufactures high-quality African fashionfor women • Combines African tradition and modern technology and design

12. Participation in the value chain • Rural Women involved from production to fashion shows • Traditional art forms and techniques incorporated into modern fashion and décor • A growing international interest for product made by the company • Higher quality commands higher prices.

13. Co-creation of wealth through Partnership • 700 rural women trained to do high-quality beadwork on garments; • They get a better price for their products marketed by the company • Through WKKF’s investments and involvement….. • Rural women acquire a stake in the design, marketing and distribution company.

14. Lessons Learnt • The benefits of technical partners in rural enterprises; • Financial risk taken by entrepreneurs needed, beside sweat equity; • Importance of community champions in rural ventures; • Practical sector knowledge and business expertise necessary.

15. WKKF’s (New) APPROACH • Goal to : • co-create wealth with entrepreneurs and communities through partnership building; • establishment of an infrastructure for partnerships along the value chain of rural commodities; • Build local capacity to play a substantive role in the sector • Support through regular grant, and or Mission Based Investing

16. Social Venture Fund • A 10 year rural development equity fund of $ 100 millions • To demonstrate that social impact and market returns are mutually achievable • Main focus: agriculture and rural development (art & craft; eco-tourism) • Geographic coverage: Southern Africa • Priority to countries covered by the Kellogg Foundation

17. Key Features of the Fund • Partnership between WKKF and SANLAM; • Strategy Partners Ltd, is selected as Fund Manager. • SANLAM and the Foundation sit on the board, investment and management committees; • They contribute to deal flow generation;

18. Investment Criteria: Social Impact • Consistent with African culture and values; • Build on existing natural and human resources and provide appropriate stewardship; • Encourage growth of family/community enterprise; • Provide action oriented skill building; and • Create jobs, partnerships and profit sharing. • Grow a rural middle class and opportunities for shareholding

19. Investment Criteria: Financial Impact • Transfer both business and financial skills • Rate of return--20-25% in Rand terms • Quality of deal flow • Quality of management and governance • Diversification • Vertical integration: primary and secondary production, supply chain, marketing, tertiary • Balance between late/early stage investments • Scale

20. Venture Fund’s Expected Outcomes • Successful rural ventures: • solid market connections; qualified management and marketing systems. • A network of rural institutions and entrepreneurs: • to participate in the value addition processes • An asset base for rural producers and communities: • regular income streams, & shareholding in lucrative companies.

21. Conclusion • Empowerment through co-creation of wealth; • Mindset shifts: • Focus on what we have, not what we don’t. • New partnership arrangements and intervention tools: • Business, rural communities, government • Funding, mentoring, asset development; • Triple bottom line • Build on the energy and aspirations of women and youth.