NexThought Monday – Moving Beyond Capital: Designing Technical Assistance that Works as Hard as Entrepreneurs
Investors targeting the base of the pyramid in Africa often struggle to identify quality opportunities, citing early-stage enterprises’ capacity gaps as key barriers. The Strengthening Health Outcomes through the Private Sector (SHOPS) project, led by Abt Associates, sought to address this through the creation of the HANSHEP Health Enterprise Fund, co-financed by USAID and DFID. We tested whether providing substantial technical assistance alongside grant capital would increase enterprises’ chances of success. We found that early-stage enterprises need more than just capital. But providing effective technical assistance is more art than science; here are three lessons for development partners supporting early-stage enterprises.
- Diverse problem-solvers have diverse problems
We targeted early-stage private enterprises working on health problems in three sub-Saharan African countries. Our grantees ran the gamut, from Ethiopia’s first medical device manufacturer to a 60-bed hospital seeking to expand access for slum communities. The entrepreneurs leading these enterprises were just as varied – doctors, engineers, business professionals – all with different levels of experience in business and health. Also, the grantees operated within the very different political and regulatory contexts of Ethiopia, Kenya and Nigeria, each of which came with its own barriers to entry.
An assumption behind many challenge funds is that attracting new players from a diverse set of disciplines will increase the likelihood of identifying an innovative solution. While this may lead to greater innovation, it almost certainly yields a pool of multidisciplinary awardees with very different knowledge levels across content areas. There’s also significant heterogeneity at the organizational level, even when funds target small to medium-size enterprises, or the missing middle. As a result, applying a standardized technical assistance solution across a portfolio is challenging, and risks being wasteful.
- The “how” is just as important as the “what”
We put a lot of thought into our grantees’ capacity-building needs – we asked investors, conducted site visits and continuously asked grantees about their priorities so that we could get support right. During this process, we learned that how technical support was provided was just as important to successful technical assistance as the content of that support.
Longer, individualized engagements allow support providers to get to know the enterprise’s team and operations. Sourcing and overseeing local expertise is cost-effective and has the potential to create a business relationship that outlives program support. At the same time, these engagements are only as valuable as what the enterprise puts into them. It’s therefore essential that the entrepreneur understands and accepts the time commitment that comes with support.
Group trainings and workshops can deliver higher value for money; however, they also run the risk of being overly broad, theoretical or off-the-shelf. Our group technical assistance received mixed reviews. When done well, delivering technical assistance via a group platform can create a sense of community, expose organizations to new perspectives on their internal and external challenges, and provide development opportunities for mid-level staff.
A shared technical resource that enterprises can access individually can achieve a happy medium. We retained a local legal firm in each country, which grantees could access as needed. For early-stage enterprises, priorities constantly shift and staff time is precious. Thus, having a mechanism that enabled grantees to access support only if and when they wanted it was appealing. Using one firm across grantees also decreased the administrative burden of providing individualized support.
- Development partners can play to their strengths and provide value in three key areas
High-quality business support services. Early-stage enterprises do not have in-house expertise across the range of business support services they require: accounting, human resources, legal, marketing. Identifying relevant and affordable support can be difficult: In a survey of young entrepreneurs in East Africa, 47 percent mentioned accessing business advisory services as a major challenge. Even in “Silicon Savannah,” Monitor Group found that only 30 percent of Kenyan enterprises believe business support meets their needs, and 13 percent believe that services are affordable. Development partners can offer a suite of business support services directly or vet relevant service providers to save entrepreneurs time and money.
Deep technical expertise that complements core business. Entrepreneurs tackling development challenges must often go beyond their core expertise to be successful. For instance, many of our grantees proposed insurance or savings schemes to support their core business of health service delivery. They had little or no experience with health financing, but this is an area where Abt Associates could bring its significant expertise and apply global learnings to support our grantees. Development partners’ own technical experts in areas like evaluation, mHealth and behavior change can offer invaluable insights as early-stage enterprises build out their business models and try new things.
Making connections and building networks. Connecting our grantees with business partners, regulators, peers and onward funders was a low-cost way to provide significant value. There’s a nearly endless list of things one must figure out to get a business off the ground: licenses, access to land and equipment, supply and distribution chains. Navigating this ecosystem is challenging, and despite their persistence, entrepreneurs rarely have the networks and access that global development organizations have. On-the-ground support is equally important. We employed a regional business advisor with a strong local network who used our in-country teams and reputation to open doors for our grantees that led to new relationships with partners, government and funders.
Demand-driven development partners
Technical assistance can be extremely valuable to early-stage enterprises, but they are a diverse group with different priorities, with limits on the amount of technical assistance they can absorb. With expertise, capacity and networks, development partners have a responsibility to listen to the entrepreneurs they support and to think creatively about how to best deliver demand-driven, flexible technical assistance. Let’s take a note from the entrepreneurs’ playbook and push ourselves to continually innovate to make our service as valuable and user-friendly as possible.
Photo (top): Women in Kisumu, Kenya, sew and package I-Care Pads – an affordable, reusable sanitary pad option that was identified as an innovative solution through the HANSHEP Health Enterprise Fund. Photo by April Warren
Photo (small, on the homepage): Drs. Sam Gwer and Moses Ndituru, senior leaders of Afya Research Africa, a Health Enterprise Fund grantee that seeks to bring affordable health care to underserved communities through their chain of M-Afya kiosks throughout Kenya. Photo by Mamihasina Raminosoa, DDC-International
- Health Care