NextBillion - An Initiative of the William Davidson Institute at the University of Michigan

The challenges facing Africa are well-known. But so, increasingly, are the unique assets the continent possesses, from world-leading digital payments ecosystems, to a youthful and entrepreneurial population. It’s up to the development sector to address those challenges and leverage those assets, with an eye toward emerging practices, and evidence that highlights what works – and what doesn’t.

To that end, Next Generation publishes an annual report that focuses on the social investment and development industry trends impacting Africa. Based on extensive research, literature reviews and personal interviews, the report compares development practices globally and continentally, providing insight into past, present and future approaches – and what they mean for social, community investment and development practitioners working in the region.

As with any research study, the evidence from case studies provided a whole new layer of insight that informed and guided not only funding strategies, but development practice and programmes. These studies celebrated the success of meaningful, innovative and large-scale interventions that crossed physical boundaries and led to collaboration amongst stakeholders in the entire ecosystem.

Next Generation’s annual research report provides an overview of past, present and future practice and is aimed at challenging existing constraints whilst providing evidence of innovation that showcases the resilience and advancements of a continent that is working together to become more competitive, sustainable and self-reliant.

For the 2020 research report we first considered prevailing trends in the global humanitarian system, in a section of the report that’s themed as “hindsight.” We then identified trends that are evident across Africa, to find aspects of uniqueness and innovation: This section of the report is themed as “insight.” And lastly, based on these insights and research, we also try to provide guidance for a longer-term future – themed as “foresight.”

On that latter theme, the research identified the following trends that will have an impact on future practice.

The global humanitarian and development sectors are deeply affected by political uncertainty

The sweeping forces of nationalization and patriotism, trade wars between the East and West – as well as national elections across Africa and the eminent environmental crises across the globe – had a massive impact on the continent’s investment and development strategies. Increasingly, funders and development institutions must choose between dealing with persistent social challenges, emerging global crises, or their own national development priorities.

• Foreign aid from official donors fell in 2018 by 2.7% from 2017, with a declining share going to the neediest countries
• Official development assistance (from OECD members) to the least-developed countries fell by 3% (in 2018)
• Bilateral aid to Africa fell by 4% while humanitarian assistance overall (globally) fell by 8%.

These numbers show that diminished financial resources for socio-economic development is crippling an already constrained social sector.

Development priorities have shifted

Globally, development aid was reduced (as countries focused on internal crises), and corporate funding declined due to reduced profitability. Meanwhile, the existence of multiple, competing global issues (ranging from climate change, to inclusion and diversity, to youth and women empowerment, employment, education and health) had an impact on which causes were supported and funded. In addition, local communities became much more vocal about their own needs and development priorities, often leading to increased conflict between government and society. This conflict is making the focus and priorities of actors in the development sector a moving target.

There is increased demand for support and services

This demand is driven in part by higher unemployment and lower household incomes, and reduced government capacity to deliver basic services to society – coupled with decreased government spending on social services (resulting from corruption, collusion and bribery) and a declining tax base. These factors all had an impact on the type of interventions and organizations that were funded, and the amount of funding that was available. This contributed in part to massive competition for resources amongst organizations, which led to a much more ineffective social system.

Yet despite this bleak picture, development practices and approaches are undergoing positive changes. The social impact and development sectors have become much more business-like, and the recognition of better practices across the African continent is increasing. And while the core concept of philanthropy is being challenged and debated internationally, in Africa, the philanthropic ecosystem has become less defined, with new organizational entrants, structures and development models emerging. For instance:

The boundaries between the public (government), private (business) and social (non-profit) sectors have blurred

Many pioneering organizations have blended financial, social and environmental aims/objectives and outcomes. Blended value organizations, social businesses, impact investors, venture philanthropists, social enterprises and B Corporations have become part of an integrated ecosystem.

New influences and goals are reflected in programme design

A focus on inclusivity, equality, human-centred and co-designed themes and portfolios, as well as scalable development practices, has become standard practice.

New benchmarks of development best practice have emerged

Blended value, shared value, social capital, inclusive development, collective impact, collaborative partnerships and integrated (asset-based) community development are amongst these new benchmarks. Evidence-based theories of change, integrated logic model frameworks, credible baseline data, continuous stakeholder engagement, indigenous monitoring and evaluation practices have become standard practice.

The use of technology is on the increase

In its quest to deliver effective, efficient, scalable solutions, development practice across Africa is turning to tech innovation to drive the next generation of practitioners and their ensuing practice.

This accelerating focus on technology gave the 2020 research report its theme – “Disruption With Impact.” Consequently, the report set out to find evidence of new tech-based practices across Africa that not only change lives, but that work collectively across ecosystems to deliver increased and sustainable impact and return.

Examples from the research report include:

Financial inclusion

Paga is Nigeria’s market leader in mobile payments and digital financial services. It’s driving financial access and usage for the mass market by using a large and rapidly growing agent network (based in small kiosk shops, pharmacies and retail outlets) to deliver a variety of financial services. These services include person-to-person money transfers, transfers to bank accounts, bill payments, airtime purchases, sending and receiving remittances, and savings, and Paga is continually introducing more meaningful financial services through its platforms.

Increased access to basic services

CityTaps in Niamey, Niger has developed a solution that bridges the gap between water utilities and the urban poor. It is a prepayment service that comprises smart water meters to enable clients to use mobile money to prepay for water. Social entrepreneur Nthabiseng Mosia co-founded Easy Solar, which employs a similar approach. Inspired by the lack of access to electricity in 90% of Sierra Leone, Easy Solar uses a rent-to-own and pay-as-you-go financial model to provide customers with high-quality appliances and other products.

Increased employment

Harambee is a social enterprise active in South Africa and Rwanda which works with business and government to create employment opportunities for Africa’s vast number of unemployed youths.  Using data, innovation, partnerships and on-the-ground experience, it also focuses on disabled or otherwise disadvantaged youth who are either unemployed or under-employed. It offers them access to job coaches, transport, assistive technology, specialized job training and individually tailored supervision, to help them become more competitive applicants, and to better prepare them for future job markets.

Gender equality, empowerment and inclusion

Customs and traditions in some African regions make it difficult for women to own land and assets. As a result, financial institutions often don’t consider these women to be creditworthy, and their assets may become vulnerable to expropriation by partners or spouses. In response, Selfina in Tanzania helps women to acquire productive assets – such as sewing machines, livestock and ovens – over time, and to use these assets to grow their businesses and earn revenue. It also employs micro-leasing to enable women (without a credit history or any collateral) to access capital, and it allows women to use each other’s assets in exchange for specified periodic payments. When leases are complete, these assets become the property of the women who took out the lease, and can then be used as collateral for subsequent loans.

Digital social innovation

Lukami in South Africa seeks to address the challenge of house fires in informal urban settlements and townships. The company not only provides insurance products to financially excluded households and small businesses, it has also distributed thousands of fire alarms. This is drastically reducing fires in community settlements, ensuring that the most vulnerable are able to protect their most valuable assets, and are provided with a sense of security and dignity.

The circular economy

The Appliance Bank in South Africa recruits unemployed men, and gives them the relevant technical skills to repair appliances and sell them for a profit in their communities. This not only creates employment, it also prevents damaged appliances from being disposed of in landfills. Not only do participants receive extensive financial, business and life-skills training, as well as coaching and mentoring, the holistic programme also explores deeply held believes concerning patriarchy and gender roles. The same organization also runs the Clothing Bank, which has entered into strategic partnerships with most of South Africa’s major clothing retailers, who donate their excess stocks. Unemployed mothers join a two-year training programme and quickly start small businesses by trading (mainly in the informal sector) the clothing they buy from The Clothing Bank at discounted prices.

Technology

In Botswana, digital identification through biometrics has provided the government with 25% savings in pensions and social grants, by identifying duplicated records and deceased beneficiaries.  Likewise in Nigeria, digital identification has reduced the federal pension roll by 40%.

In Rwanda, M-Funding is helping entrepreneurs crowdfund for their social impact projects, and it has raised enough funding to start 23 projects.

Looking Toward the Future

Moving into a new decade, four pillars – the impact economy, impact ecosystem, impact technology and impact management and measurement – are predicted to lead to a stronger, more sustainable, effective and efficient development ecosystem in Africa.

The intersection of innovation and technology, coupled with new financial structures and arrangements – such as blended finance, performance-based finance and impact investing – are set to transform the sector. This will enable it to provide opportunities to leverage and de-risk resources, while simultaneously providing commercial opportunity, impact and return on investment. Additionally, the African Continental Free Trade Agreement now positions the continent as an attractive and unique opportunity for investors looking to make an impact, using its abundant human resources and deep-seated expertise in development.

With our annual research report, we aim not only to provide information, but also to highlight evidence of innovative new development practices across the African continent. We hope that it will spark debates that will lead to even better practice, while encouraging more collective approaches that will empower both private sector and social sector actors as engines of change.

The 2020 Research Report “Disruption with Impact” – can be downloaded for free from the Next Generation website.

Reana Rossouw is the owner of Next Generation Consultants. 

Photo courtesy of ArtisticOperations.