The Aspen Network of Development Entrepreneurs (ANDE) just released its 2012 Impact Report titled Engines of Prosperity, and it’s awesome. We recommend you read the full report on the ANDE website (we also embedded it below for your convenience).
According to ANDE
The Impact Report is a one-of-a-kind annual publication offering data on the current size and state of the SGB sector, the impact of ANDE’s members, and a review of our work this past year… Our research in 2012 spanned a range of topics, including funding impact evaluations, mapping the landscape of accelerator programs, and collecting IRIS-aligned social and environmental performance indicators…
This report is a massive undertaking and it shares amazing insight from the rapidly changing field of Impact Investing. While the entire report is well worth a read, here are our 4 top takeaways from it:
The report covers 170 of ANDE’s members, including the world’s leading impact investing funds empowering tens of thousands of social impact organizations. According to the report, ANDE’s network “Provides critical financial, educational, and business support services to small and growing businesses (SGBs) based on the conviction that SGBs will create jobs, stimulate long-term economic growth, and produce environmental and social benefits. Ultimately, we believe that SGBs can help lift developing countries out of poverty.”
However, even with this amazing support from ANDE, the challenges facing SGB’s are vast.
SGBs often contend with a lack of three key elements—human capital, financial capital, and market access—that constrain their growth
This report carries incredible significance because of its reach and focus on SGBs, and its comprehensive findings which can be used to help accelerate progress.
2. The Power of Small and Growing Businesses
Like many others, ANDE believes that “SGBs can help lift developing countries out of poverty” by procuring capital, creating jobs, and instilling ownership and dignity. Here is a fantastic infographic from the report showing the power of SGB’s
3. SGBs Are Creating Jobs for the Poor
On page 9 of the report, ANDE shares the importance of SGBs creating quality jobs for people in poverty:
The relationship between economic growth and poverty reduction is complex. Not all economic growth creates jobs, and not all employment moves people out of poverty. The phenomenon of “jobless growth” has been characteristic of many countries in Africa, South Asia, and Latin America.
Additionally, the International Labour Organisation (ILO) estimates that around 40 percent of workers who do have a job are still poor, with low-paid, insecure jobs that offer little upward mobility. Because of this complexity, the creation of stable, quality jobs for the poor remains a huge challenge for policy-makers and practitioners. The ILO estimates current unemployment at about 200 million worldwide, and it projects the need for 600 million new jobs over the next decade.
Small and growing businesses represent one of the most promising ways to create these jobs... As the number of employees increases, so do wages: Companies with more than 50 workers typically offer a wage premium of 20 percent to 50 percent more than microenterprises. In developing countries, most people with formal jobs work at a small or medium enterprise. Those jobs represent 66 percent of full-time, permanent employment on average. This is not surprising, as there are fewer opportunities to work at large firms in low- and middle income economies as there are in high-income economies. For example, the United States houses 104 large firms per million people compared with 27 large firms per million people in Brazil. This gap represents a potential avenue for new employment generation: a small business that becomes large creates 200 jobs on average. ANDE believes that those small firms with the potential to grow are critical to long-term job creation in developing economies.
4. Access to Human Capital (i.e. Expertise) is a Leading Barrier to Progress
ANDE is not the first to highlight this issue. In fact, the World Economic Forum wrote about a “Talent Gap” years before. But this report does elaborate on it, sharing that in Brazil and South Africa, the lack of “human capital” is now the biggest barrier to progress.
According to the International Finance Corporation as quoted in this report,
The small size of these firms implies that managers (or owners) of [SGBs] often need to perform a wider range of tasks than do those in larger firms, since there is less room for specialization. This requires diverse skills that [SGB] managers may not have, particularly in developing countries where the quality of management education tends to be lower than that found in developed countries.
In order to help supply this expertise, there are a few exciting initiatives that are mentioned in the report including AMSCO, Edge, and The Global Business School Network. We also think that our Experteering network is a key part of the equation to increase access to expertise and help build capacity.
As with all impact reports, this year’s report from ANDE further confirms the need for holistic approaches to development, and the power of partnerships in doing just that.
See below for the full report, and also an infographic with more information about ANDE.
For more information about ANDE, check out this infographic from the report: