Village Enterprise has raised $3.5m of working capital to provide first-time entrepreneurs who live in extreme poverty with seed capital, training and mentoring to start more than 4,600 small sustainable businesses in rural Kenya and Uganda by 2020.
Over 760 million people still live in extreme poverty, over half of whom live in sub-Saharan Africa despite decades of development work and billions of dollars expended on the continent and globally. Village Enterprise aims to improve the income levels for these new business owners with this fund.
“Eliminating poverty is a global priority, but funding is limited,” said Village Enterprise’s CEO Dianne Calvi. “Mobilizing private capital is critical if we are to achieve the United Nation’s #1 Sustainable Development Goal (SDG) of ending extreme poverty by 2030.”
Village Enterprise and Instiglio are partnering with private impact investors and the United States Agency for International Development’s Development Innovation Ventures (USAID DIV) and the U.K. Department for International Development (DFID) on the Village Enterprise Development Impact Bond.
Some of nine impact investors, include the Delta Fund, the Laidir Foundation, the Silicon Valley Social Venture Fund, the Bridges Impact Foundation and several individual investors, are providing the working capital for Village Enterprise to equip 13,800 rural Africans who currently live on less than US $1.90 a day with the resources to become successful entrepreneurs.
Outcome funders USAID and DFID will pay Village Enterprise and its investors based on results achieved rather than the traditional model of payment upon program delivery. This pay-for-success model guarantees that donor money will be linked to measurable increases in consumption and net assets (as a proxy for income). This DIB leverages a new and innovative ‘outcomes fund’ hosted by Global Development incubator (GDI), which will hold all funds in escrow and consolidate all contracting, cashflow and processing through a single efficient and scalable platform.
The Bridges Impact Foundation through its philanthropic arm Bridges Fund Management supports a range of solutions to pressing societal challenges, including 27 social impact bonds (SIBs), about half of the total commissioned in the U.K. to date.
Brian and Katie Boland are investing US $1 million in this DIB through their Delta Fund. Village Enterprise’s program includes targeting, training, mentoring, seed capital in the form of cash grants, and saving groups. Village Enterprise was selected by Innovations for Poverty Action through a randomized controlled trial (RCT) of the program that demonstrated increases in assets and consumption, as well as subjective well-being and nutrition, among program participants.