How impact investing is making a difference

MICROFRANCHISING IN CAMBODIA

In the Takeo Province of Cambodia, World Vision’s ‘Microfranchised Agricultural Services Project’ aims to scale a network of franchised farm business advisors to provide advice and agricultural inputs to 2,000 new farmers.

Access to agricultural inputs and technical advice is crucial to increasing agricultural productivity and the incomes of farming households.

Evidence shows poor farmers can greatly increase their incomes by using drip irrigation and appropriate inputs (like seed and fertiliser), technical advice, credit and market access.

Lors Thmey, a Cambodian social enterprise established by iDE, uses a network of 235 franchised farm business advisors to provide advisory services and agricultural inputs (such as seeds and irrigation equipment) targeted at smallholder farmers.

This pilot will further develop the Lors Thmey business model and expand its customer base in existing World Vision project areas, linking farm business advisors to World Vision communities.

It will develop and refine appropriate agriculture kits for sale and address industry barriers for women, the disabled and the very poor – groups at risk of exclusion from input markets.

Agriculture kits will be offered on credit and target identified market constraints in value chains.

HEALTH BENEFITS IN MYANMAR

In Myanmar, World Vision is piloting the market-based distribution of clean and efficient cooking stoves to 1,000 households and developing a business case to finance scale-up through impact investment and outcome-based payments.

Household air pollution caused by traditional biomass cookstoves is one of the leading causes of death in the developing world, contributing to 4.3 million deaths every year.

The vast majority of Myanmar’s rural population rely on traditional biomass (firewood and charcoal) for their daily cooking needs.

In addition to negative health impacts, inefficient traditional cookstoves require large amounts of fuel, depleting non-renewable wood stocks and increasing carbon dioxide (CO2) emissions.

World Vision will work with community members to identify and test appropriate clean and efficient cookstove models and engage independent auditors to measure improvements in health.

The pilot will also compare different market-based models for distributing stoves in order to overcome supply-side and demand-side challenges that normally exclude the very poor.

The pilot’s findings will be used to develop a business case to secure further investment for scale-up: likely a combination of private impact investment capital and public or private outcome-based payments (for example, carbon credits and payments for achieving health outcomes).

SUPPORTING BUSINESSES IN SRI LANKA

World Vision is creating opportunities for private investors to support promising small and growing businesses, in turn creating new economic opportunities for poor communities.

In Sri Lanka, World Vision will support the growth of 96 small and growing businesses to benefit 1,400 smallholder farmer households in the North Western Province by 2018.

Accessing finance is a significant challenge for small and growing businesses (SGBs) in Sri Lanka. Research conducted by VisionFund Lanka (World Vision’s microfinance subsidiary) in April 2015 identified that Sri Lankan SGBs require credit amounts beyond the limits of microfinance loans to achieve scale.

However, these businesses struggle to access loans from commercial banks given their lack of credit history, little collateral and geographical remoteness.

This pilot will provide increased loans (up to $US20,000) and business training, coaching and mentoring tailored to meet the needs of suitable businesses.

Participating businesses will be selected from existing clients and those working alongside producer groups that World Vision is already supporting through other programs. A due diligence process will be used to determine the social and environmental outcomes that can be achieved through scaling each business.

The project will specifically target women-led businesses and those that interact with smallholder farmers (for example, as employees, customers or suppliers) to improve the livelihoods of people who are poor.

World Vision has a long history of improving the productivity and market access of smallholder farmers. This project builds on that foundation by working with the small and growing businesses that smallholder farmer livelihoods often depend upon , while developing a pipeline of SGBs suitable for impact investment and venture philanthropy capital.

REGENERATING FARMLAND IN INDONESIA

In Indonesia, World Vision is expanding the use of Farmer Managed Natural Regeneration (FMNR) to help farmers regenerate degraded land and access new economic opportunities.

FMNR is a low-cost land restoration technique used to combat poverty and hunger amongst poor farmers by increasing food and timber production and resilience to climate extremes.

In practice, FMNR involves the systematic regrowth and management of trees and shrubs from felled tree stumps, sprouting root systems or seeds. The regrown trees and shrubs help restore soil structure and fertility, inhibit erosion and soil moisture evaporation, rehabilitate the water table and increase biodiversity.

This project aims to expand the use of FMNR in East Sumba in Indonesia to help farmers regenerate degraded farmlands, increase the quality and quantity of crop yields, enhance market access and boost incomes.

Community members will first be supported to expand forest regeneration and plant high value timber species. World Vision Market facilitators will then assist farmer groups to identify and grow high value crops in land regenerated through FMNR, helping increase 3,000 farmers’ incomes by the end of 2016.

The project will engage with large Australian and international agricultural and finance companies to develop models for private investment in FMNR and seek finance for the expansion of this pilot.

World Vision is working with large agricultural and finance companies to attract private investment for land regeneration, in recognition of its capacity to generate positive economic, social and environmental outcomes.

The views and opinions expressed in this communication are those of the author and may not necessarily state or reflect those of ANZ.