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Watch the Video – Vikas Bali, CEO, Intellecap at the Catalyst 2030 webinar speaking on ‘Catalyzing Collaboration between Companies and Social Enterprises’
Watch the Video – Vikas Bali, CEO, Intellecap at the Catalyst 2030 webinar speaking on ‘Catalyzing Collaboration between Companies and Social Enterprises’
Mumbai, 09 July – Vikas Bali, CEO, Intellecap was a Speaker at the Resonance & Catalyst 2030, on the topic ‘Catalyzing Collaboration between Companies and Social Enterprises’ talking about how & why companies partner with social enterprises to scale impact in their value chains and beyond.
Moderated by Steve Schmida, Founder and Chief Innovation Officer of Resonance, the panel comprised of Alexandra van der Ploeg. Head of Corporate Social Responsibility at SAP and Naa Akwetey, Senior Vice President, Strategy and Business Development, at mPharma.
To watch the webinar video – Click Here
More on the Session ‘What happens when large companies join forces with Innovative Social Enterprises’:
Over a relatively short period, sustainability has become central to the corporate world. In 2011, 20% of S&P 500 companies published sustainability reports. By 2019, 90% did. And this shift is global: A 2020 survey of 5,200 companies across 52 countries found that 80% now report on sustainability, with a significant majority linking their business activities to the UN Sustainable Development Goals (SDGs).
The question is: what next? How should companies turn pledges and promises and reports into lasting and effective action?
The short answer is that collaboration is key—and leading companies know that they need to bring new partners to the table. Catalyst 2030 and Resonance just released new research on how large corporates are teaming up with innovative social enterprises in creative and powerful ways to advance social and environmental impact.
To build on this work, Resonance’s Steve Schmida, spoke with three cross-sector leaders who are pioneering corporate-social enterprise partnerships:
Alexandra van der Ploeg, Head of Corporate Social Responsibility at the global technology company SAP, where she is responsible for setting the global direction of CSR through strategic partnerships and programs.
Naa Akwetey, Senior Vice President, Strategy and Business Development, at mPharma, an award-winning healthcare social enterprise headquartered in Ghana and operational in Nigeria, Kenya, Zambia, Rwanda, and Malawi. mPharma partners across pharmaceutical supply chains to expand access to affordable healthcare in Africa.
Vikas Bali, CEO of the global impact advisory Intellecap, which works to build enabling ecosystems and channel capital to create a more sustainable and equitable society. At Intellecap, Bali is focused on developing innovative business models for emerging markets across Asia and Africa.
Below are three key takeaways on how companies and social enterprises can work together to solve pressing challenges and advance corporate sustainability.
3 Takeaways on How Companies and Social Enterprises Can Work Together:
Huge value can be unlocked by making social enterprise partnerships “core business”—but there are challenges to scale.
For more than a decade, SAP has been engaging with and supporting social enterprises. But a few years ago, “We became aware of this completely new opportunity to partner with social enterprises that we’d not had on our radar yet—and that’s social procurement,” SAP’s Alexandra van der Ploeg said. Social procurement allows companies to engage social enterprises—as suppliers and service providers—directly within their existing value chains. “We were quickly convinced about the business case for social procurement, and we realized that we had an opportunity to unlock significantly higher investments for social impact than what any corporate philanthropic vehicles could do.”
The World Bank estimates that 2019 global procurement spend was at least $14 trillion. As van der Ploeg noted, directing only a small fraction of this money—which gets spent regardless—toward social enterprises and diverse suppliers would accelerate impact in ways unimaginable through traditional CSR. SAP alone has determined that, through procurement, it could channel $60 million per year to social enterprises and diverse suppliers by 2025. Across Fortune 500 companies, this number is around $25 billion.
“This is not about being philanthropic,” added van der Ploeg. “It really engages the whole of SAP’s business—including procurement, sales, product development, and CSR. It’s about doing more with the money that we are spending anyway through procurement—and making that money go further by delivering social impact as well.”
The potential is big; yet there are challenges for scale. Much needs to be done to help social enterprises build their capacity to be “corporate ready”—and for corporates to adapt systems, procurement policies, and internal incentives to better integrate social enterprises. Another challenge for companies? How to identify, verify, and connect with viable social enterprise partners. SAP is using existing tools to help create solutions: For example, the SAP Ariba Network is the largest B2B marketplace in the world, supporting nearly $3.5 trillion in transactions each year. In partnership with leading social enterprise organizations, SAP is working to use Ariba to connect corporate-ready social enterprises to other companies eager to engage in social procurement.
When done right, partnering with social enterprises offers corporations tremendous strategic value.
The value that corporations offer to social enterprises may be obvious: Access to capital, markets, consumers, research, infrastructure, and so on. “There are millions of reasons for them to partner,” said Intellecap CEO Vikas Bali. But he also offered three key reasons why corporations should invest in partnerships with social enterprises.
First, social enterprises often bring intimate, boots-on-the-ground access to the first and last mile—to the billions of people who will increasingly act as producers and consumers across global value chains. Second, social enterprises provide a pathway to innovation and invention that large, bureaucratized companies struggle to replicate. Social enterprises can pivot their models quickly; they can experiment; and this gives corporates a low-cost method to understand and solve for new consumers and markets.
“Third, and this is a little controversial, instead of access to stock market value, companies are understanding that they need access to societal value creation,” Bali said. Companies are recognizing that the market value of their business must now be measured in parallel with how valuable it is to society. “I do clearly see a trend where large corporates are saying we need to do the right thing, we need to be seen to be doing the right thing. This is not just giving away small amounts of money through CSR, it’s about being a responsible, sustainable, resource-efficient business ourselves, and thereby there is this need to partner with social or impact enterprises.”
mPharma’s Naa Akwetey added that social enterprises, which are embedded in local communities, can provide corporates with essential “perspective,” on-the-ground understanding, and market data that otherwise get buried in global value chains. mPharma, for instance, can give feedback to multinational pharmaceutical companies about patient behavior, preferences, and buying choices in specific markets and across countries. All of these insights are of particular importance given that the markets where corporations tend to have limited optics and sparse data—those in emerging economies—are often the markets where the most growth is expected in coming decades.
Partnerships between corporations and social enterprises don’t exist in a vacuum. True success often calls for an ecosystem approach.
A great idea is not enough. To grow, an enterprise needs access to capital, to talent, to markets, and to legal and technical assistance. “All of these things have to be kept in mind as large corporates start dealing with impact enterprises,” says Bali. “It’s not just buying into a great idea; it’s buying into an idea and saying we will develop the ecosystem for this idea to sustain, to flourish, to become scalable.”
Van der Ploeg noted that SAP’s social procurement programs are, at the moment, focused more on investment in capacity building than social procurement proper. SAP is taking the time to build the foundation that will make social procurement viable—for SAP, for social enterprises, for other companies, and for the ecosystem at large. Two examples of ecosystem building efforts currently underway are SAP and MovingWorld’s S-GRID Accelerator and the work of the COVID Response Alliance for Social Entrepreneurs.
“This work is trying to address problems that society has not been able to solve for thousands of years, so there are no quick fixes, there are no easy solutions, and these solutions are not one-dimensional. It will require an ecosystem approach,” Bali said. “Ecosystem-building is a fine art, and lots of stakeholders need to come together to take the journey forward.”
Reimagining Agriculture in Kenya: Five Steps for Building Resilience and Food Security After a Catastrophic Year
Nairobi, April 14, 2021 : Michael Omega, Rachael Wangari and Daniel Kitwa, from Intellecap Africa coauthored the article ‘Reimagining Agriculture in Kenya: Five Steps for Building Resilience and Food Security After a Catastrophic Year’ as part of our strategic content tie up with Next Billion.
To say that we need to reimagine the agricultural and food systems in Kenya would be an understatement. Indeed, 2020 brought an unholy trinity of crises that threatened both lives and livelihoods, and which served as a wake-up call about the fragility of the country’s agricultural sector and overall food system. First, the COVID-19 pandemic disrupted practically everything that was previously considered normal. This was followed by the largest desert locust upsurge in 70 years and flash floods that affected more than three-quarters of the country — including the food-producing counties in Kenya’s Western, Rift Valley and Central provinces.
The following numbers put these three threats into perspective:
-The announcement of the country’s first COVID-19 case in March 2020 and the resultant containment measures had far-reaching effects on the flow of goods and services across the food system, straining the livelihoods of millions of urban and rural dwellers while increasing food prices for consumers. As of last September, 6.2 million Kenyans were in a food-insecure situation, with an even higher number unable to access and/or afford safe and nutritious foods.
-Desert locusts are considered the most destructive pest in the world, with an average swarm (estimated between 40-80 million locusts covering one square km) eating the same amount of food in one day as about 35,000 people. Hence, the impact of the swarm covering 2,400 square kmsand containing billion of locusts that was reported in Kenya was more than catastrophic.
-The flash floods the country experienced were only comparable to the 2016 El Niño flooding that was responsible for severe food insecurity in the country. Between March and May 2020, the floods affected more than 233,000 people, with 116,000 people displaced and 194 deaths. Further, acres of farmland were destroyed and thousands of livestock killed, while key infrastructure such as roads, bridges and schools were left in ruins.
These grim statistics remind us that it is possible for a single catastrophic event to wipe out decades of progress for communities, while multiple catastrophes can easily overwhelm entire countries. And as the world gets increasingly connected, we’ve become more vulnerable than ever before to these types of compounding crises.
THE NEED FOR RESILIENCE IN KENYAN AGRICULTURE
Kenya’s recent struggles are also a reminder that climate change is already accelerating and intensifying natural disasters. The warming climate is closely intertwined with the performance of food systems, and crises that impact these systems often disproportionately affect the vulnerable. For that reason, resilience is a goal that should not only be discussed in boardroom meetings, brainstorming sessions and keynote addresses, but rather one that should be translated into the everyday business environment in cities and villages worldwide. Essentially, resilience should be a way of life, a lens through which policy is designed, strategy is implemented and commerce is facilitated. And the agricultural sector should be a key focus of these efforts.
Kenya, a perennial net importer of food, imported about KES 17.2 billion in December 2020 alone. For a country with an increasing population and a continued dependence on rain-fed agriculture, this spending is bound to go up if nothing is done about it. Kenya’s situation with respect to food security and its chronic dependence on imports is not unique in sub-Saharan Africa. However, its position as an economic hub in East Africa suggests that any efforts it makes toward building resilience in its food systems may offer transferable blueprints, models and pathways that can be implemented in other emerging markets and contexts. So it’s particularly valuable to explore solutions to Kenya’s current food security challenges.
The following points (in no particular order of importance) highlight some of the ways we can reimagine Kenya’s entire agricultural value chain and food system.
REIMAGINING FARM LABOR
Experts estimate the average age of the Kenyan farmer to be 61 years. In a country where 75% of the population is under 35 years, this essentially means that the sector does not attract the most productive labor assets — young workers. With older farmworkers, the risk of decreased productivity and overall output is ever-present. Further, this population is slow to adopt technology and innovation. We, therefore, need to explore policies, incentives and interventions that increase the youth’s participation in the agriculture labor force. This should be a holistic approach that includes enhancing access to technology, capital and knowledge for prospective young farmers so that the barriers for entry are not only reduced but ultimately eliminated over time.
REIMAGINING THE FOOD STORAGE INFRASTRUCTURE
For a country that loses up to 20-30% of its production post-harvest, increasing and innovating on both national- and farm-level storage should be a top priority for key stakeholders. At a national level, food reserve storage is a relatively cheap public insurance policy against the tremendous uncertainties caused by climate change for the country’s food system. However, the National Cereals and Produce Board — the national food reserve agent — has faced multiple financial and operational challenges that have led to calls for the privatization of the institution. At the farm level, the adoption of productive renewable energy in activities such as refrigeration (cold storage), drying (solar dryers) and especially milling can increase the nutritional and monetary value of farm produce, and lengthen its shelf life.
REIMAGINING AGRICULTURE POLICY
Public policy plays a key role in the agricultural sector’s prospects. Kenya’s leadership will need to explore new and ground-breaking policy frameworks that set a path toward resilience. For instance, some critical measures include: developing policies to enhance food processing; establishing “localized” (county-level) climate change action plans and climate risk policies; and expanding budgetary capacities to respond to climate-related events that impact farmers. These approaches should be developed at both the national level and at the county level where implementation happens. Continuous monitoring and progress checks should be embedded into the process flow, to ensure that momentum is not lost and transparency is maintained.
REIMAGINING AGRICULTURE FINANCING
The cost of capital remains high for farmers and aggregators, especially given the risk-averse nature of the pool of local institutional capital available. Some farmers may not have a credit history outside of their co-operatives and SACCO funding partners, thus limiting their ability to tap into the additional sources of capital that exist. Access to finance should involve creating localized startup hubs away from the big cities, so that funding networks are available to agricultural players outside the country’s metropolitan areas. (Sadly, most incubation hubs are located in Nairobi.) The challenge then becomes how to localize these networks. Working with agricultural departments and the small and medium enterprise-focused infrastructure provided by counties can be one way of directing this support to businesses at the local level. Public and private investors can also explore innovative financing solutions such as: gender lens investing targeting women farmers; crowdfunding platforms that invest in African-owned farming infrastructure; portfolio-based lending where smallholder farmers can be aggregated and their assets securitized into a sizeable financing round; and impact-linked interest rate lending models.
REIMAGINING FARMING ITSELF
Behavior change among farmers should definitely be a key focus area in Kenya’s quest to become more resilient. This involves everything from the most basic of strategies, like crop rotation, to the most complex — such as a completely mechanized end-to-end approach to agriculture. Farmers need to unlearn common but less-effective methods, so as to relearn new ones. Behavior change should also involve consumers, who need to embrace new dietary patterns above and beyond the traditional staple foods, so as to trigger the market demand that would motivate farmers’ decisions, which are ultimately driven by what the buyer wants. For instance, can public school feeding programs incorporate diet choices that incentivize new, positive farming behavior and build new agricultural value chains, such as including new types of fruit orders, or even exploring camel or goat milk instead of cattle?
While the above list is certainly not conclusive, it represents a new way of thinking and includes the critical building blocks that define what resilience really means from an agricultural point of view. Kenya’s Vision 2030 aspirations are closely aligned with the United Nations’ SDG ambitions, and food security is part of the current government’s “Big Four” agenda. But while these intentions are encouraging and praiseworthy, long-lasting progress in boosting food security and agricultural productivity and improving livelihoods for farmers and vulnerable communities will only be achieved through an action-based and resilience-focused approach. Kenya must learn from past failures, build on our successes and strive to reimagine our future. To that end, the traumatic events of 2020 were an important lesson for us: As George Santayana said, “Those who cannot remember the past are condemned to repeat it.”
Farm laws 2020: Efficiency vs equity – Sudhanshu Dikshit and Vivekanandhan T of Intellecap writes for India Development Review (IDR)
Mumbai, March 30 –Intellecap’s Sudhanshu Dikshit and Vivekandhan T co-authored an article, “Farm Laws 2020: Efficiency Vs Equity” for India Development Review (IDR).
In the article, talking about the new farm laws, the coauthors opine that while there is agreement on the importance of improving food production and productivity, there are differing views on the ways to achieve both.
The new farm laws have become a politically contentious issue nationally, but if one were to steer clear of the political rhetoric, it becomes apparent that at the heart of the issue is the long standing efficiency vs equity debate.
Those on the efficiency side highlight the long overdue agri-sector reforms to move the sector from its stagnancy to higher levels of production and productivity. People on this side also bat for reduction of the government’s direct participation and an increased role for market forces (including more private players in agriculture).
On the other hand, those arguing for equity look at agriculture as a livelihood option for large numbers of small and marginal farmers. As a result, they oppose a reduction of the state’s role and express reservations about whether the farmers’ interests will be protected in a free market scenario.
Understanding how small and marginal farmers work
As per the Agriculture Census of 2015-16, approximately 86 percent of the farm holdings in India fall under the small and marginal category (up to two hectares). This small and marginal land holding, in turn, contributes to about 47 percent of the total agriculture land under cultivation. Looking at these figures, it is abundantly clear that small and marginal farmers’ productivity plays a critical role in improving the overall productivity of the sector.
Successive partitioning of agriculture land over generations has reduced the average size of the operational farm holdings, from an average size of 2.28 hectares in 1971 to 1.08 hectares in 2016. This small land holding is the core challenge for increasing farm productivity: The cost of producing one quintal of wheat varies drastically across different farm holding sizes.
Approximately 86 percent of the farm holdings in India fall under the small and marginal category
So, while one might argue that the productivity of a small farm holding is likely to be high because of better control on farm practices, it is important to understand that in these smallholdings, contribution of self and household labour is not monetised as a cost. There is actually an opportunity cost to this household labour; however the absence of gainful employment opportunities in rural areas makes way for this disguised unemployment.
While large and medium farmers are in a better position to leverage technology and manoeuvre economies of scale to their benefit, small and marginal farmers are unable to do either.
Small holder farmers face challenges regarding economies of scale on farm inputs as well as outputs. In comparison with large and medium farmers, they spend more on per unit of farm inputs (seeds, fertilizer and pesticides) but experience lesser realisation on per unit of commodity sale. This disparity does not get compensated in a free market scenario wherein small holder farmers have to compete on equal footing with large and medium farmers.
Looking at the farm laws through the lens of small and marginal farmers
In this context, it becomes important to analyse the new farm laws 2020 and see how they may potentially play out for small holder farmers.
If free market forces are unleashed on an existing set of actors, the existing power dynamics will determine who gets how much
The larger intent of the farm laws is to increase private sector investment across the entire agriculture value chain. Among the laws, the contract farming act enables legal provisions for private sector to enter into contractual arrangements with farmers and improve primary production. These contract farming arrangements have the potential to leverage private investments to improve farm level infrastructure like irrigation facilities, poly houses, trellis, etc. Improving infrastructure, along with the price assurance provisions in contract farming can provide the right incentives for small holder farmers to move away from subsistence cereal crop farming to commercial cash crop farming. This market oriented incentive for small and marginal farmers has the potential to reduce, and in certain cases, replace the existing need for support from development intervention agencies like nonprofits and government departments.
However, the above economic argument does not factor in prevailing power dynamics among different economic actors in the current agriculture market. Practitioners with even little exposure to ground realities will appreciate that if free market forces are unleashed on an existing set of actors, the existing power dynamics among the actors will determine who gets how much. This is the fundamental premise of the equity school of thought, which has concerns regarding the protection of small holder farmers’ interests and hence they are opposed to the removal of government participation.
The average farmers’ share in the end consumer rupee for 16 major food items is in the range of INR 28 paise to INR 78 paise
In its publication Supply Chain Dynamics and Food Inflation in India (2019) the RBI has estimated the average farmers’ share in the end consumer rupee for 16 major food items is in the range of INR 28 paise to INR 78 paise. The report also highlighted that among factors critical for increase of farmers’ realisation, are the literacy levels and the availability of market information, as these two factors empower the farmers to negotiate better with their buyers and get a better price for their outputs. In the absence of market information and low literacy, small and marginal farmers are at a greater risk of being exploited by other market players (traders, processors etc).
Where do we go from here?
As a country, we do have examples of market liberalisation in many sectors, the most prominent one being the economic liberalisation of the 90s. Those reforms did increase production and productivity. The private sector had championed these initiatives and they were duly aided by increased supply of credit, access to technology, and favourable government policies. As a consequence, employment opportunities increased in these sectors and the overall economy boomed. It therefore appears that as long as there is growth in market demand, micro and small producers can coexist with large producers.
But there are larger questions that we must consider-
- Is it prudent to compare the predicament of relatively well organised sectors like manufacturing to that of agriculture, which is less organised and has higher levels of disaggregated production?
- Have we exhausted all other means and is this the only route left to improve total crop production and average crop productivity?
- Have we focused on small and marginal farmers as a separate constituency in our efforts to improve food production?
- In the overall efficiency vs equity debate, there is no opposing view regarding the importance of improving production and productivity to meet the future food demand in the country. However, there are differing views on the ways to achieve it. By taking a free market approach, the new farm laws have been criticised as inequitable, as they fail to account for empowering small and marginal farmers.