Impact investments, incubation model: Solutions to poverty in Africa

Impact investments, incubation model: Solutions to poverty in Africa

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Impact investments, incubation model: Solutions to poverty in Africa 

 

By Ibrahim Nureni 

 

Africa is a continent rich in land, culture and natural resources. Despite the richness of the continent in so many ways, there is one major limitation: poverty.

This limitation has affected the lives of the people by restraining their social status, preventing them from accessing good health care and even playing a strong negative role in the health sector.

At 4ITAFRICA, an investment management firm based in the country, we are concerned about the economic constraints that affect entrepreneurs. It is in view of this that we came up with research on poverty in Africa and the probable solutions.

Africa has become the world’s poverty estimate. Reports reveal that by 2023, 80 per cent of Africans would be very poor; and in 2030, the percentage would increase to 90 per cent.

This is not good for Africa’s economy because an increased number of poor people means a lack of capital to invest in businesses that would make the African economy grow. There is no gainsaying that poor people do not have access to good food, clean water, health care, education and even political positions.

The people affected by poverty in many African countries are women and children. Other problems confronting Africans include hunger, illiteracy, poor governance, ill-health and lack of access to finance. All of these challenges are linked to poverty. In view of this, there is a need to eliminate poverty in Africa, to avoid leaving the continent in dark.

In order to achieve the above goal of eliminating poverty in the African continent, impact investments are needed. They are investments made into organizations, funds, and corporations to make a profit and achieve a measurable social impact.

Therefore, impact investments are ways of making money while helping others to contribute positively to the development of society. A recent survey in the United Kingdom done with 1,800 individuals revealed that 56 per cent had a moderate interest in impact investments.

It is apt to mention in this piece that it has become a common phenomenon to see the interest of firms of all sizes in sourcing impact investments, which do not have to be economic; they could be activities that promote skill acquisition and employability, thus fulfilling a social need.

Equally important, research has also shown that businesses based on impact investments do well, if not better than their counterparts. At this organisation, we help entrepreneurs and social innovators who are interested in impact investments. One can go to the organisation for advice about impact investments, as it will be glad to be of help.

In its modern incubation model, which involves supporting the growth of business ventures and is a known catalyst tool for economic growth in a nation, it sees a business incubator being a company that helps to provide office space and management services for startups and new emerging businesses.

In fact, it is understood that business incubators do not work only with startups; they support small businesses irrespective of the stage of business they are at. They help grow businesses by providing management services, lessons on business etiquette, access to loans, business training programs and even advisory boards.

Some business incubators take equity from their clients, others do not.

It is important to highlight here that business incubators are funded primarily by economic development organizations or academic institutions, while others are self-funding and in some cases non-profit. Indeed, they have helped many businesses grow and boost Africa’s economy.

Another model is that of the Igbo apprenticeship or what can also be called as the traditional incubation. It is a point of reference to say that after the nation’s Civil War, many Igbo people lost their businesses and homes and that petty trading was the way they generated their incomes because there was nothing else to do.

Based on this premise, the Igbo people created an apprenticeship system that served as a way to encourage young entrepreneurs and keep the youth off the street. It involved older businessmen going into the villages to get young teenagers who would then learn the informal, cut-throat business.

It was understood that under this model, the apprentices were not paid, but they were given food and accommodation. The training lasted between five and seven years after the Civil War, and at the end of it; the apprentices were given a loan to start-up their own business and payback in the future.

This piece similarly tries to look at the differences between modern incubation and the Igbo traditional apprenticeship system.

Now, the modern incubators are usually very calculative and risk-averse, but the Igbo traditional apprenticeship system is based on giving people chances to be successful in life.

Secondly, they (modern incubators) offer a space for learning, training, co-creation and cultivation of business models, but the Igbo system offers a cutthroat business approach and lastly, in the modern incubation, business owners pay rent and participate, but in the traditional apprenticeship system, the apprentices are employees saddled with responsibilities.

From both incubation models (modern and traditional or Igbo models), one will discern or learn that they are designed to help businesses to grow. They help entrepreneurs establish their businesses and in their way, contribute to the development of the society. Always, it is important for entrepreneurs and social innovators who need assistance to reach out to business incubators to receive the help that will make their businesses wax stronger.

In the final analysis, this piece also suggests ways on how entrepreneurs can solve the problem of poverty in Africa. As we all know, Africa is a continent that is blessed with enough resources to thrive, but unfortunately, poverty is one challenge that has held many people in the continent down.

As such, apart from investing in businesses that give back to society, and thus creating avenues to help young businesses grow, we, Africans, need to do something to end poverty in the continent. We can also achieve that by business collaboration: small businesses can come together and put their ideas into work. Entrepreneurs and social innovators can help each other achieve their business goals and reduce poverty in their regions.

For the point of emphasis, what is worth noting, is that experts at the 4ITAFRICA, apart from their roles of assisting businesses to grow as highlighted earlier in this piece, they are also involved in the fight to end poverty in Africa: as they assist entrepreneurs and social innovators to help businesses grow.

In fact, with financial and consulting collaboration among entrepreneurs, they are building a system where poverty will be minimal, if not completely eradicated, in Africa.

Ibrahim, a communication consultant, can be reached via 08183348308 or e-mail: 4itafrica.com. 

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