How One Pension Fund Identified Investment Opportunities in Africa

July 2021

In 2019, Chicago Public School Teachers’ Pension and Retirement Fundmade its first commitments on the African continent. Since 2017, Chief Investmhttps://medium.com/usaid-invest/how-one-pension-fund-identified-investment-opportunities-in-africa-c63d719cdd87nt Officer Angela Miller-May participated in the U.S. Government’s Mobilizing Institutional Investors to Develop Africa’s Infrastructure (MiDA) Program. Through the program, Miller-May learned about the continent’s investment opportunities, and, for the first time in her life, she visited Africa.

After traveling to Africa, Miller-May’s preconceived ideas about the continent disappeared. Where she once perceived risk, she now saw growth and opportunity — for Africa and for Chicago’s teachers.

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Institutional Investor Emphasizes the Advantages of Investing in Emerging Markets Across Africa

June 2021

U.S. pension funds have approximately $18.8 trillion under management, but less than one percent is invested in Africa. This investment gap represents a missed opportunity given that Africa was home to more than half of the world’s 10 fastest growing economies last year, the continent has one billion consumers, and over the next two decades, its workforce will grow to contain 1.1 billion people, making it the largest on the planet.

Africa needs investment. The gap between the continent’s infrastructure spending and the amount required to ensure electricity, water, and sanitation access alone stands at about $3.3 trillion. This amount far surpasses the budgets of all the world’s aid agencies and donor resources combined, but it’s just a small fraction of the world’s more than $89 trillion in assets under management.

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What USAID India is Learning From Working with Private-Sector Partners to Improve the Delivery of Public Services

May 2021

When it comes to achieving the 2015 Sustainable Development Goals targets for education, energy, housing, and water, sanitation, and hygiene (WASH), government and donor resources alone will not be sufficient for financing and implementing solutions. As a result, governments around the world are reexamining their policies around the delivery of critical public services and working to create an enabling environment that can leverage more funds into these areas.

Seeking additional financing to achieve their development goals, many of these governments have recognized the need for private-sector capital and expertise. Over the past two decades, new policies have enabled an increase in private sector involvement in achieving development outcomes; however, the complexities of navigating public services sectors and perceived risks can deter private sector partners from participating in these projects.

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Using Co-Creation to Construct a Portfolio for Women’s Economic Empowerment

May 2021

When women have access to employment opportunities, economies grow. In the past 50 years, increased educational attainment for women accounts for nearly 50 percent of the economic growth in OECD countries, and achieving parity in labor force participation rates between men and women in these countries could boost global GDP by more than 12 percent over the next 20 years.

Evidence shows that lower levels of gender inequality correlate with increased income, economic growth, and national competitiveness. At the same time, increases in gender equality are associated with reduced poverty, a more equitable distribution of income, and improved living conditions for individuals, families, and societies.

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How USAID Brought Co-Creation Online in the Era of Social Distancing: A Four Part Series

November 2020.

Mexico’s forests are hubs of historical, cultural, and environmental riches. For centuries, the Mayans built their extraordinary civilizations there. They house jaguars, macaws, monkeys, tapirs, and many other animals. Unfortunately, they are also disappearing at an alarming rate. In the last 20 years, Mexico has lost between 580 and 1,160 square miles of forest each year. In the last three years, that number has averaged approximately 1,080 square miles — an area larger than Mexico City. This rapid deforestation leaves harmful environmental, social, and economic effects in its wake.

Agricultural expansion, livestock production, illegal logging, and urbanization are the primary drivers of Mexico’s deforestation. Stopping this land degradation requires systemic change: many people and organizations must help the local communities and producers responsible for managing the land overcome the financial barriers that discourage them from implementing sustainable practices.

USAID’s Mission in Mexico understands that the most effective and long-term solutions should be informed by a variety of organizations and people. USAID Mexico decided that using a co-creation process — a participatory approach to problem-solving that brings people together to design a solution with mutually shared benefits and value — through a Broad Agency Announcement (BAA) — was the best strategy to identify viable solutions.

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Blended Finance, Clean Energy, and Lasting Peace in Colombia

November 2020.

In June 2016, former Colombian President Juan Manuel Santos signed a cease-fire accord with the revolutionary group Fuerzas Armadas Revolucionarias de Colombia (FARC), taking the first step towards ending a violent civil conflict that began in 1964. The following year, the FARC disarmed, handing its weapons over to the United Nations, and formally announced its transition into a legal political party.

The peace agreement lays out processes for dismantling the illegal drug trade, which had played a role in financing the FARC’s activities, and creating a system for providing truth and reparations to victims of the conflict and their families. However, a significant portion of the accords focuses on developing Colombia’s rural regions. Unequal land ownership contributed to the start of the conflict, and years of violence and instability have hindered the development of rural areas, exacerbating the country’s rural poverty, which remains significantly higher than in urban areas.

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Voices from the USAID Finance and Investment Network: Open Capital Advisors

September 2020.

Open Capital Principal Reza Fazel explains: “Our work is really about advancing African economies, building scalable opportunities, and delivering unique solutions that have impact.”

Fazel’s team recently worked with USAID INVEST to analyze the investment landscape for scaling the productive use of solar energy technology in Uganda. Solar energy has the potential to power water pumps, refrigerators, and mills, creating a way for off-grid rural households to increase their incomes. Through INVEST, OCA provided support to companies to promote scalable business models and help them adapt to challenges brought on by the COVID-19 pandemic.

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Voices from the USAID Finance and Investment Network: Convergence Blended Finance

September 2020.

Convergence CEO Joan Larrea explains: “When the Sustainable Development Goals were promulgated, there was a recognition that not enough capital was going into the areas necessary for advancing these goals. The question was: ‘Where can that capital come from?’ And the answer was, ‘Where most of the world’s economy comes from: the private sector.’ So, if the private sector is the answer to achieving sustainable development, and the private sector needs something in return, then there is some reason — some rationale — for encouraging donor capital to work in ways that create transactions that are investible to achieve ambitious development targets. Convergence provides data intelligence and deal flow that accelerates blended finance transactions in the market.”

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Delphin Investments and USAID: Working Together to Mobilize the Haitian Diaspora to Invest “Back Home”

September 2020.

In the late 1960s, the United Nations (UN) created a set of criteria to identify the countries that needed the most assistance to improve the lives of their citizens. These countries became known as the Least Developed Countries (LDCs). Their residents have, on average, shortened life expectancy, limited access to healthcare, low levels of educational attainment, and meager household incomes.

The UN published its first list of LDCs in 1971. Haiti has been on the list ever since. It is the only LDC in the Americas. Over 60 percent of the population lives on less than US$2.00 a day, and in 2018 approximately 14 percent of Haitians were unemployed.

“If you go to Haiti, you realize that one of the country’s fundamental problems is the lack of employment. People want to work, but there exist few opportunities for them to do so,” explains Jean-Marc Cuvilly, a finance expert who lived in Haiti until he moved to the U.S. for college. Cuvilly serves as the Platform Lead for Haiti INVEST, an activity under USAID INVEST that aims to assist Haiti’s small and medium-sized enterprises (SMEs) in accessing financing for growth.

“To combat the lack of unemployment, you have to find a way to support small and medium businesses because they are the backbone of employment,” explains Cuvilly. “Unfortunately, it’s an uphill battle to mobilize investment into any place that’s facing instability. Haiti does not score well in terms of countries to invest in, so it’s difficult for local companies to grow and create jobs because they have trouble accessing finance.”

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A New Way Forward for Southern Africa: USAID Pilots a New Approach to Private Sector Engagement

with Kristin Kelly Jangraw.

September 2020.

On the outskirts of Johannesburg, in the eastern part of Soweto Township, lies South Africa’s most famous street. Vilakazi Street, once home to former South African President Nelson Mandela and Archbishop Desmond Tutu, is the only street in the world to have housed two Nobel Prize winners.

Historically, Soweto needs little introduction. A worldwide symbol of the South African people’s resistance against the apartheid regime, the township’s 1976 protests against the mandatory use of the Afrikaans language in school resulted in nearly 200 deaths at the hands of the police.

Nowadays, visitors stroll on Vilakazi from the Hector Pieterson Museum to Mandela’s home, soaking up the history. Artists, performers, and restaurants, catering to the many walking and bus tours, line the neighborhood’s streets. Elsewhere in Soweto’s Orlando suburbs, residents have used their newly gained affluence to expand their homes or build new ones, purchase new cars, and dine at upscale restaurants.

However, less than a few miles away, many of Soweto’s other suburbs, such as Klipspruit, look very different. Here, unpaved and narrow alleyways weave their way past overcrowded homes, cramped shacks with dirt floors and metal roofs. Neighborhoods like these, which are still home to many of Soweto’s 1.2 million residents, have limited electricity and no indoor plumbing.

The story of the two Sowetos mirrors the larger story playing out in South Africa. Each year, millions of tourists come to visit its wineries, waterfronts, national parks, and historical sites. Likewise, investors and multinational companies seek out opportunities in one of Africa’s most diversified economies that has deep connections to global markets and an advanced financial and banking sector.

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Voices from the USAID Finance and Investment Network: MiDA Advisors

August 2020.

“We connect U.S. financial markets with African financial markets and U.S. institutional investors with opportunities in Africa,” explains Aymeric Saha, CEO of MiDA Advisors.

MiDA’s work began in 2017 under the grant-funded Mobilizing Institutional Investors to Develop Africa’s Infrastructure (MiDA) program, a partnership between USAID and the National Association of Securities Professionals. When the program concluded in 2019, some of its principals, including Saha, established MiDA Advisors, an investment advisory firm dedicated to continuing the program’s work.

“We started with a grant from USAID to work with U.S. pension funds, foundations, and endowments because they are long-term investors, and they invest with scale. By mobilizing them to invest into Africa’s infrastructure and private equity, we can create impact and help them further diversify,” says Saha, “Now, we’re part of the INVEST network, and as a subcontractor with INVEST, we are working on some very fascinating instruments in financial markets. The United States has the best and most innovative financial markets to provide long-term liquidity for development purposes. That is exactly what Africa needs. If you want to invest in infrastructure, power, water, and other vital assets for development, you need long-term capital provided at scale. We’re also working with African institutional investors — pension funds in Kenya and South Africa — and co-investing with them in those vital assets.”

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Voices from the USAID Finance and Investment Network: Connectivity Capital

August 2020

Jim Forster, Co-Founder and General Partner, explains: “Connectivity Capital at its simplest provides financing for ISPs [internet service providers]. In general, we like to provide secured debt for data infrastructure in frontier markets. We find that there are a number of interventions that are possible with ISPs, but we think that this financial intervention has the best leverage.

ISPs in the United States have access to a lot of financial mechanisms — small business banking, community banking — that are simply not available in sub-Saharan Africa or South Asia. We hope to fill the missing middle of finance in between micro-finance and large-scale finance. If you want to borrow ten million dollars, there are plenty people to talk to. If you want to borrow a couple hundred thousand, even five-hundred thousand, it’s very very difficult to get a loan. So, we’re doing that. We’re providing this “missing middle” in finance for ISPs, or broadly data infrastructure, in frontier markets.

We founded Connectivity Capital because fundamentally we both would like to improve the world a little bit, to do our part. We think that communications help people in a number of ways, both in their business and personal lives. It leads to greater efficiencies in businesses, greater transparency in government, greater education possibilities, and personal things too. We think that the whole world could use it. So, that’s what we’re trying to do — help the ISPs build more infrastructure and supply good connectivity at a good price.”

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International Development Agencies Need Private Sector Partners: USAID, Connectivity Capital, and Expanding Internet Access to the Next Billion People

July 2020

In today’s technology-driven world, having access to the internet is an essential for building educated societies, pathways out of poverty, and competitive economies.

Unfortunately, approximately 3.7 billion people around the world — a little less than half of the globe’s population — do not have access to the internet. Most of the world’s offline population lives in developing nations, with approximately 3.5 of those 3.7 billion living in the world’s least developed countries (LDCs). In Europe, only 15.5 percent of the population lacks internet access; meanwhile, in Asia and the Pacific, that number is as high as 50 percent and over 70 percent in Africa.

Access to broadband internet has a ripple effect on communities because internet connectivity helps strengthen other sectors — such as education and healthcare — that are integral for social and human development progress.

For instance, high-speed internet at healthcare facilities enables medical professionals to rapidly access information that helps them diagnose medical conditions, share patient records when consulting with other specialists, and prescribe appropriate treatments. Moreover, as the Covid-19 pandemic has shown, access to internet plays a significant role in sharing critical public health information with communities.

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Gender-Lens Investing Shouldn’t Be a Niche Strategy. It’s Time to Apply It Broadly

March 2020.

“INVEST is giving us the opportunity to perform the deep dive needed to analyze a company’s business model and structure with a gender lens. By working with INVEST, we can expand our ability to find and test solutions and continue to build evidence that supports the business case for gender-smart investing.” ~Christine Roddy, executive director, AlphaMundi Foundation

Like many women, Wamahoro, a native of Rwanda, once worked two jobs, one of which was in the informal sector. “I used to sell my baskets at the local market to supplement my farming income,” she says.

At the local market, however, Wamahoro’s handmade baskets sold for only 82 cents a basket — not much in the way of supplemental income.

Women across the world live out a similar story. Many struggle to find secure employment that provides a living wage. According to UN Women, for women age 25 to 54, labor force participation is only 63 percent globally, compared to 94 percent for men. In 2018, 104 out of 189 economies still had laws that prevented women from working specific jobs. Worldwide, women are more likely to be unemployed than men, and they are over-represented in informal sectors and vulnerable positions.

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Women’s Economic Empowerment: Smartphones, Fintech, and Indonesia’s Fisheries

February 2020.

Throughout the Indonesian archipelago, women play a vital role in the fishery ecosystem. An important source of protein, fish is an integral part of the diet of many Indonesians, and the local industry couldn’t operate without women fish sellers. Although they are present in every fish market throughout the country, no official or formal record exists for total number of women vendors, nor for the volumes of fish that they sell.

While some women vendors are suppliers who sell large amounts of high-value fish to national and export markets, most are tibo-tibo, who buy and sell low-value species on a smaller scale in local markets. Unlike suppliers, the tibo-tibo typically do not have access to traditional banks or government-subsidized credits: they only have access to local credit providers who charge high interest rates. This limitation hinders them from growing their businesses and exacerbates the economic disparities between the two groups.

Aiming to support the economic empowerment of the tibo-tibo in North Sulawesi, Indonesia, USAID INVEST launched “Access to Finance: Integrating Financial Tools into Traceability Systems for Small-Scale Fisheries,” a project designed to help these women overcome barriers to financial inclusion.

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A Watershed Moment for the Future of Corporations

with Charlotte Davidsen.

February 2020.

In 2018, Unilever’s purpose-led Sustainable Living Brands grew 69 percent faster than the rest of its business. One of the nine “Green Giants” — the first companies with sustainability and social good at their core to generate over a billion dollars in revenue — Unilever has shown that sustainability is profitable. The Green Giants’ stocks have outperformed a portfolio of rival, conventional companies by 11.7 percent a year. These companies may be the first Green Giants, but they certainly won’t be the last. Recently, another wave of popular, do-gooder companies, such as Patagonia and Warby Parker, has been joining this billion-dollar club.

The trend shouldn’t be surprising. A 2016 study published by the Harvard Business School surveyed 500,000 employees in 429 firms over five years and found that companies that communicate their purpose with clarity experience better accounting and stock market performance. Furthermore, 63 percent of Americans who responded to a 2017 Cone Communications study said that given the continuing absence of government regulation, they hope businesses will drive positive social and environmental change forward.

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From Candy Princess to Toilet Paper Queen: How Haitian Entrepreneurs Like Myrtha Vilbon Are Improving Their Country and Why Investors Should Pay Attention

January 2020.

Myrtha Vilbon is no stranger to running a business in a fragile country. Born in Haiti, she grew up as the daughter of one of the country’s best-know candy manufacturers. As the owner of Menthes Alta, Vilbon’s father had a life-long career as a successful entrepreneur despite living in the Western Hemisphere’s poorest country.

Haiti ranks 179 out of 189 countries on the World Bank’s Ease of Doing Business Index, yet Vilbon, like her father, has spent her entire career working in the country’s private sector. After getting her start in the family candy company, Vilbon entered the world of distribution, working for 17 years as agent for Dutch Dairy. There, she took over the distribution of a product line with a negative local reputation and transformed it into one of Haiti’s most popular brands.

Unfortunately, when a multinational bought Dutch Dairy, the new leadership decided that Haiti’s market no longer required a local agent. Vilbon was let go in a breach of contract for which she was never compensated.

However, what others would view as a setback, Vilbon saw as an opportunity.

In June 2015, she founded Glory Industries, a tissue converting company located in Port-au-Prince. By tailoring the company’s products to meet the needs of low-income consumers, Vilbon has transformed toilet paper from a luxury, imported good to a locally-made, accessible one.

In Haiti, 40 percent of the population lacks access to toilet paper. Approximately 90 percent of tissue paper products are imported, largely from the Dominican Republic, which increases their cost. Most Haitians live on less than US $2.00 a day, and imported toilet paper costs about 40 cents a roll.

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Meet the Entrepreneur Who’s Making Clean Water Accessible Across Haiti

November 2019.

Jim Chu loves flying. The Silicon Valley entrepreneur and investor began paragliding in 1993. Over the last two decades, he’s participated in the sport all around the world.

“My favorite place [to fly] would have to be the Indian Himalayas,” Chu says. “You’re right up against the mountains, so on good days you can see some well-known trekking trails. You can see corn drying on people’s roofs. The landscape is this intensely lush green. People live all over in that area, and they tend to be very welcoming, so you can land anywhere and usually get a ride.”

Chu flies planes, too. He recently became interested in Alaska bush flying, where short takeoffs and landings are common because the rough terrain often lacks prepared takeoff and landing strips.

These days, however, Chu’s hobbies are the less adventurous part of his life. As the CEO of dloHaiti, a water treatment and production company, he has spent the last seven years working daily to expand the accessibility of clean water throughout Haiti.

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Mobilizing $100 Million in Private Capital for Women’s Economic Empowerment

November 2019.

In September of 2012, the International Space Station had been experiencing electrical problems for over a week after one of its four Main Bus Switching Units malfunctioned. Armed with technical tools, astronauts Sunita Williams and Akihiko Hoshide ventured outside to repair the unit. Over eight hours later, they aborted the mission; metal shavings had accumulated around the unit’s bolts, and their tools were incapable of clearing away the debris.

The situation became more dire in the days that followed. One of the station’s switching units also failed, further diminishing the power supply. Williams and Hoshide went outside again, armed this time with a common household tool: a toothbrush. The team had modified it slightly, attaching the brush to an Allen wrench and an ACME bolt. After four hours of scrubbing, Hoshide and Williams successfully removed the debris and repaired the unit.

Even though they were working in the “final frontier,” Hoshide and Williams discovered that they could best achieve the results they needed by using a familiar tool.

Recently, the United States Agency for International Development (USAID) — the federal agency that leads U.S. Government humanitarian and international assistance efforts — has been venturing into a new frontier and learning similar lessons.

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Investments in Off-Grid Energy Businesses Are Bringing Electricity to Hundreds of Thousands in Kenya

October 2019.

On New Year’s Eve, 1879, approximately 3,000 people traveled to Menlo Park, New Jersey, to witness an extraordinary sight: an entire street was alight by electric lamps. Only three months after successfully prototyping what would become his most well-known invention, Thomas Alva Edison introduced his light bulb to the public by illuminating his laboratory and its neighboring Christie Street with over 60 carbon-filament bulbs. When one visitor inquired after the cost of powering the lamps, Edison quipped, “After the electric light goes into general use, none but the extravagant will burn tallow candles.”

Unfortunately, nearly 140 years later, Edison’s vision of affordable and accessible electricity remains unrealized for much of the globe.

Progress has been made. From 2007 to 2017, the global access to electricity grew by over 6.5 percent, making 2017 the first year that the number of people without access dropped below 1 billion. South Asia saw a dramatic increase in the number of people with access to electricity, growing from 67 percent of the population in 2007 to nearly 90 percent in 2017.

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Charity vs. Investment: USAID’s Journey to Self-Reliance and the INVEST Initiative

October 2019.

Words matter. Although current scientific research is still in the process of discovering the extent to which language affects thought, linguists have long understood that a word’s denotation — its literal or primary meaning — can differ vastly from its connotation — the feelings, ideas, or intentions that the word evokes.

For years, the public has viewed international development agencies as donors responsible for the distribution of foreign aid. In one sense, foreign aid — a term defined in the Oxford English Dictionary (OED) as “material help given to a country by another country, especially economic assistance to a poor country” — conjures feelings of a global generosity. However, the term also connotes a relationship based on charity, in which one nation provides another with handouts. One nation deserves praise, the other pity. The nature of this donor-receiver exchange leaves the receiver nation in a position of dependence.

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