Sustainability and Scaling
The goal of the IAP Challenge Fund is to maximize long-term positive social and environmental impact for people living in poverty. IAP can achieve this by consciously selecting inclusive business ideas that, once proven commercially and technically sustainable, have the potential to be scaled up and to continue generating benefits for larger numbers of people living in poverty. IAP aims to pursue three different pathways towards scaling:
- Replication and adaptation of IAP-supported innovations/inclusive business models that have been tested and are considered valuable solutions to pressing development challenges.
- Market expansion and growth of individual well-performing and impactful businesses supported by IAP through securing follow-on investment.
- Extension and/or replication of the IAP programme (something similar to IAP but elsewhere).
IAP is fully cognisant of the importance that impact at scale should be able to sustain itself and continue to grow over time. This requires systems change, so that large numbers of people can exit poverty and social exclusion. Through engagement with multiple stakeholders active in the social impact ecosystem, we try to consciously contribute towards influencing systems whenever possible, and ensure we capture any evidence of how this came about and what the effect is.
Innovations Against Poverty (IAP) is a Challenge Fund financed by the Swedish International Development Cooperation Agency (Sida). It is managed by SNV Netherlands Development Organization and supported by BoP Innovation Center (Bopinc) and Inclusive Business Sweden (IBS). Management of the IAP Challenge Fund is hosted by SNV in Phnom Penh, Cambodia.
IAP is designed to provide co-financing and capacity building support to small and growing businesses in Cambodia, Uganda, Zambia, and Ethiopia for implementation of innovative inclusive business projects that deliver both commercial benefits for the companies and developmental benefits for people living in poverty. Those benefits include job creation, income improvements, access to basic goods and services, and increased resilience or adaptation to climate change. The IAP Challenge Fund focuses on supporting inclusive business ideas in the Agriculture/Food, Energy, and Water, Sanitation and Hygiene (WaSH).
Innovations Against Poverty (IAP) is a specialized fund that challenges private sector companies to innovate products, services and business models that benefit people living in poverty (PLIP) while delivering commercial benefits.
The programme supports companies operating in the agriculture/ food, renewable energy, and WaSH sectors in Cambodia, Ethiopia, Uganda, and Zambia.
Low-income markets represent a significant business opportunity. By thinking innovatively, private companies can solve social and environmental issues while maximising their competitiveness and profitability.The IAP Challenge Fund functions as a risk sharing mechanism, to stimulate private sector development initiatives which otherwise would not take place. The fund assists those companies that are either too big for micro-finance or too small for commercial lenders, and acts as a catalyst for selected companies in testing and developing their innovative and inclusive business ideas.
Private companies with innovative inclusive business ideas apply for IAP support through open competitive calls. The best proposals are selected to receive grant funding and non-financial support services over a minimum of two-years. IAP funding ranges from €50,000 up to €200,000 per company, not exceeding a maximum of 49% of the total required investment.
Tailor-made non-financial support in testing and developing the inclusive business ideas is provided through in-house expertise from SNV, BoP Innovation Center and Inclusive Business Sweden, as well as from third parties such as the Strategic Investment Partners (SIP), an impact investor network established by IAP, the PUM senior experts programme from the Netherlands, and local and international consultants.
A first round of investments in 20 companies concluded in March 2021 and second round with an additional 20 companies is underway until 2023. Total funds earmarked for company investments is EUR 6.7 million.
Key Results to Date
Results from the first round of investees (20 companies) across the four countries include the following:
- More than 1.5 million people benefitted from improved access to basic goods and services (clean and affordable energy, clean cooking, clean water, sanitation services, information, finance, and nutritious food).
- More than 548,000 people benefitted from cost savings and income increases due to the use of the products/services that IAP’s investees offer to their consumers.
- Around 10,600 people gained access to new/better income-generating opportunities as suppliers/producers/distributors to the IAP-supported companies.
- About 28,000 tons of CO2 emissions were avoided.
- More than EUR 14.4 million in increased sales revenue recorded by the companies since the start of the project.
- 92% of the customers served by IAP companies reported an improvement in their quality of life.
- 83% of customers served by IAP companies reported accessing a product or service for the first time.
- 78% of customers served by IAP companies reported that they could not easily find a good alternative to the product and service.
- 80% of female customers who could generate income by using these products and services said their ability to make decisions about the money earned has improved.