Business co-financing: an alternative approach to realize SDG1
Sustainable Development Goal One (SDG1) calls for over one billion people to begin earning more than $1.90 a day by 2030. For a household of five, this equates to $3,500 per annum.
There is significant interest in the donor community in using private sector partnerships to help realise SDG1. Such partnerships have typically focused on donors providing funds to a business. Businesses are asked to put forward a new business activity which will increase household incomes. A common activity is to source a product from poor families. However, by definition, the activity has a negative business case. The business and its competitors would not normally take part. Thus, the donor must choose from a range of negative business cases, which are only made worthwhile by the donor’s contribution. This presents a number of challenges; principally, that donors are typically ill equipped to make such decisions.
This article sets out an alternative approach – in which businesses co-finance the cost of a largely donor-funded asset for households, rather than donors co-financing the cost of a private sector business activity.