Private sector development has proven to be a real catalyst of change when it comes to creating the opportunity for low income people to lift themselves out of poverty. Additionally, low income markets represent a large business opportunity: the four billion people living on less than $8 USD a day constitute a global consumer market with a shared purchasing power valued at 5 trillion USD. The low income population provides the potential to increase labour, supplier and distribution channels that can support expanded production and market supply. This offers significant scope for entrepreneurship and private sector development to make a positive impact on low income people’s quality of life.
Innovations Against Poverty (IAP) challenges the private sector to develop innovative products, services and business models that can contribute to the fight against poverty, unlock their entrepreneurial potential, catalyse inclusive growth, and fuel more sustainable economic development. IAP provides funding to companies that engage the urban and rural low income population as innovators, entrepreneurs, producers, consumers, or distributors. Companies can apply for funding from IAP through open calls. IAP is funded by Sida (Swedish International Development Agency) and managed by SNV in partnership with BoP Innovation Center and Inclusive Business Sweden.
Are you interested in applying to The Innovations Against Poverty Fund? Click here, to learn more.
Innovation and risk-sharing
By thinking innovatively, companies can develop business ideas that solve social and environmental issues while at the same time maximizing their competitiveness and profitability. However, many of these initiatives are exposed to commercial, technical and financial risks, and have limited access to markets. Most companies initiating an innovative Inclusive Business idea traditionally lack the technical support required and are too large for micro-finance, and too small and risky for mainstream commercial debt and venture capital, making them part of the so-called “Missing Middle” gap.
In this context, the Swedish International Development Cooperation Agency (Sida) launched the Innovations Against Poverty Fund (IAP) to stimulate private sector development initiatives which otherwise would not have taken place. The IAP fund functions as a risk sharing mechanism, with the specific mandate to identify and support innovative Inclusive Business models that deliver both commercial benefits for the private sector and developmental benefits -such as the creation of jobs, income increase and access to basic goods and services- for low income people, with specific attention to gender and environmental integration.
Background of IAP
The IAP fund was initially launched in 2011 by Sida (Swedish International Development Cooperation Agency), taking on a pioneering role in promoting innovations and social entrepreneurship aimed at the low-income population. Following the success of the pilot phase, Sida launched the second phase of the IAP fund in 2016, managed by SNV Netherlands Development Organization in collaboration with Inclusive Business Sweden (IB Sweden) and BoP Innovation Center (BoP Inc.). IAP-II has committed to provide financial and technical advisory to 25 companies for the period of 2017 to 2020.
IAP-II is now calling for a second round for proposals in 2020, to seek new inclusive businesses that will bring positive social and environmental impact.The selected candidates will be offered funds and advisory support from IAP for the period of 2020 to 2022.
Applicants are invited to propose innovative solutions to pressing development challenges that will benefit low-income people and the environment. The proposed inclusive business ideas should ideally be aligned to any of the themes listed in the table below, but Applicants are free to propose solutions to other pertinent development challenges within the three focus sectors not mentioned in the table.
IAP advisory and financial support
IAP will provide a mix of advisory and funding to selected innovative Inclusive Business cases as a result of competitive open calls. The support provided by IAP is defined as follows:
IAP will provide non-reimbursable funding ranging from €50 000 up to €200 000 not exceeding a maximum of 49% of the total required investment to implement the innovative Inclusive Business idea.
The advisory support offered by IAP will be provided through training and coaching, covering areas such as Inclusive Business development and innovation, to enhance and efficiently achieve the targets of each Inclusive Business initiative. In addition, IAP will select and train a number of local consultants that will be available to support the businesses on a fee for services basis.
IAP secures a transparent evaluation and selection process by working with a multi-player independent appraisal process so that no single person can influence the process and/or the final outcome in any way. Applicants can contact directly the IAP Executive Manager at firstname.lastname@example.org to denounce any corruption practice or case.