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TRANSFORMATIONAL BUSINESS NETWORK

TRANSFORMATIONAL BUSINESS NETWORK. Obscene Inequality. “One-fifth of humanity live in countries where many people think nothing of spending $2 a day on a cappuccino.

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TRANSFORMATIONAL BUSINESS NETWORK

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  1. TRANSFORMATIONAL BUSINESS NETWORK

  2. Obscene Inequality “One-fifth of humanity live in countries where many people think nothing of spending $2 a day on a cappuccino. Another fifth of humanity survive on less than $1 a day and live in countries where children die for want of a simple anti-mosquito bed net” Source: UN Human Development Report 2005

  3. Unjust Consumption • $7 billion is needed to provide 2.6 billion people with access to clear water annually • Less than we spend on perfume • Less than Americans spend on elective corrective surgery • 3 day’s global military spending ($4.5b) could send every child to school for a year Source: UN Human Development Report 2005

  4. Unfair Trade & Subsidies • $1billion a YEAR on aid for agriculture in poor countries • $1 billion a DAY on subsidies of agricultural overproduction at home • EU diary subsidy is $2.50/cow/day whilst 2.8b people live on <$2/day Source: UN Human Development Report 2005

  5. Aid is not the solution • Aid is ineffective • Distorts local economy • Encourages inefficiency and waste • Creates dependency culture • Aid is inefficient • 60% of aid money stays in donor countries • US aid was $3/person in Africa (2002). Deducting consultants, food & emergency aid, admin costs & debt relief, only $0.06 was left (Jeffrey Sachs,2005)

  6. Aid is not the solution • Aid is not linked to economic growth: ‘In Africa, whilst aid increased from 5% to 17% of GDP in the 1990s, GDP growth actually decreased from 2% to zero or negative growth’ (World Bank Dev Indicators, 2003) ‘Foreign aid had positively harmed the poor in developing countries and should end’ (Peter Bauer, Fifty Years of Failure)

  7. What is our response to this Scandal of Global Poverty?

  8. Tackling Global Poverty • Humanitarian Aid/Emergency relief • Development projects • G2G aid • NGOs • Foundations • Venture philanthropy

  9. Micro Finance Institutions • 1971 Opportunity International • 1973 Accion International • 1976 Grameen Bank • 2004 IFC and MFI partners had portfolio of $2.5b and 1.3m loans • 2006 Citigroup, ICICI and others enter the market as intermediaries – new asset class

  10. Micro credit • Fastest way to lift people out of abject poverty into ‘normal’ poverty • Advantages • Supplement income • ‘Plug & Go’ • Replacement of ‘expensive’ debt • Cash flow – critical needs • Limitations • Loans too small for enterprise • Lack of skills training for enterprise • Preference to be employee than entreprenuer

  11. Enterprise solution to Poverty • Economic growth is the fastest way to reduce poverty – China, Asian Tigers • FDI is critical to economic growth but requires political and economic stability, good governance – factors missing in poor countries • Social entrepreneurs needed to fill this gap

  12. Social Venture Capital • Social Venture Capital or Social Enterprise • Alleviation of poverty through SME private enterprise • Job creation & Wealth creation • Triple Bottom line – financial, social, environmental • Sustainable profitable businesses • Employment - dignity • Empowerment - independence • Entrepreneurship training • Uses tools, disciplines and accountability of VC

  13. Why SMEs? • Mechanism for job creation • SMEs employ 70% of the work force • SMEs represent 99% of all registered companies • Higher success rate • Source of entrepreneurship and innovation • Driver of competition

  14. Environmental Conservation SpringHill 16

  15. Social Transformation From this….. To this…. 17

  16. Hospitality intakes from Umzi Wethu Food & Beverages Marius Maart (SE) Johan Van Den (PE) Freddie Van Rhyner (SE) Danny Sauls (SE) Heather Rossouw (SE) Kosie Plaatjies (PE) Junior Chef Carla Reed (Uitenhage)

  17. Help the poor… Come on safari!

  18. Challenges of Social VC • Lack of local knowledge • Lack of trusted management • Distance & communication challenges • No exits • High risk

  19. The Social VC Universe • Private investors • Individual or club • Foundations • Odmiyar, Google • Social VC Funds • Bridge Ventures (UK) • Fusion Capital (Kenya) • SpringHill (Africa) • Unit/Investment trusts • CRU Investments • Listed investment companies/funds

  20. INQO Investments IPO • Listing on AltX, JSE 08 • Creating a new asset class: a listed social venture capital investment company • Maximise financial and social returns • Promote to private banking clients and SRI funds • Prof Jakes Gerwel (Chairman)

  21. “Social investment is going to be a new asset class. I am sure of it. Ten years from now, people will be saying that pension funds, insurance companies and corporations must allocate a certain percentage of their assets to organisations that provide a social as well as a financial return” Sir Ronald Cohen in The Second Bounce of the Ball

  22. TBN Loan Fund by Clive Moody Mike Tingling

  23. TBN Loan Fund • Loan size [$5-10k] to TBN members for projects • Match funding • Investors offered [3-4%]p.a Borrowers [5-6%]p.a • Minimum Fund Size: $150k No maximum

  24. The poor need jobs, not aid

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