Building Capacity in Southeast Asia—and Turning...
Yigal Kerszenbaum

Yigal Kerszenbaum Former Associate Director

April 14, 2016

Building Capacity in Southeast Asia—and Turning a Profit

Yigal Kerszenbaum

Yigal Kerszenbaum Former Associate Director

April 14, 2016

Market in Indian

India, Indonesia, and Vietnam alone are home to over 950 million impoverished individuals—a number that amounts to more than half of their cumulative population.

Such a reality stands in stark contrast to the United Nations’ Sustainable Development Goals (SDGs), an agenda of lofty objectives for our global future, among them, “decent work and economic growth” for all, “reduced inequalities,” and—succinctly stated—”no poverty.” For too many Southeast Asians and Indians, however, these goals have been a distant dream.

But by making investments in innovative ideas that target the root causes of poverty, we can work collectively help raise living standards for people everywhere, and particularly in developing countries.

That’s why The Rockefeller Foundation has invested $2 million in equity into the Livelihood Impact Fund, one of the first venture capital funds seeking to improve the livelihoods of Southeast Asia’s working poor.

This revolutionary fund targets high-growth, early-stage companies that have the ability to achieve scale and financial stability, but nonetheless find it hard to recruit mainstream capital. The Livelihood Impact Fund operates on the idea that such investments have the potential to generate both a social and competitive financial return.

“Seventy-five percent of livelihoods in the developing world depend on traditional value chains, such as agriculture and informal retail.”

Today, seventy-five percent of livelihoods in the developing world depend on traditional value chains, such as agriculture and informal retail. These local supply and distribution chains, however, are failing to link markets efficiently in our rapidly globalizing world. And these inefficiencies disproportionately affect the working poor.

Program-related investments, such as those that comprise the Livelihood Investment Fund, represent a unique opportunity for The Rockefeller Foundation and other investors to connect private capital to local companies that can improve the lives of the region’s impoverished people, by linking small producers to markets in need of their commodities, or by building innovative distribution platforms that provide low-income populations with much needed goods and services. This process empowers the working poor as suppliers and distributors, provides underserved consumers with essential products and services, reduces waste and catalyzes income levels and job creation.

This process empowers the working poor as suppliers and distributors, provides underserved consumers with essential products and services, reduces waste, and catalyzes improved income levels and job creation.

Moreover, while impact investing has already taken off in regions such as Sub-Saharan Africa—where over $11 billion in capital has been committed by Development Finance Institutions and asset owners, and where nearly 40 percent of the world’s leading impact investors plan to maintain or increase their capital allocation—the Livelihood Impact Fund is one of the first of these efforts to specifically target South Asia, where only $2.1 billion has been committed in venture capital so far. The fund has focused 70 percent of its investments in this region. Managed by

Managed by Unitus Impact Partners, the fund’s investment portfolio includes companies like iCare Benefits, which uses technology and low-cost installment financing to connect low-income Vietnamese factory workers, specifically those earning just $150 – 300 USD per month, with essential goods and services at affordable prices. Today, iCare has over 700,000 registered members who have received unprecedented access to services, from healthcare to online banking. Other companies in the portfolio include Kinara Capital, which provides loans to micro and small enterprises in India, and Ruma, the leading seller of mobile minutes in rural Indonesia (providing low-income agents, the majority of whom are women previously earning less than $2.50 USD a day, with the capacity to increase their income by 40 percent. The investors in these early-stage companies have the potential to receive a competitive market return.



Read more on the Wall Street Journal

Other companies in the portfolio include Kinara Capital, which provides loans to micro and small enterprises in India, and Ruma, the leading mobile talk-time provider in rural Indonesia that only employs low-income women, increasing these women’s income by 40 percent. The investors in these early-stage companies have the potential to receive a competitive market return.

As with the SDGs, The Rockefeller Foundation makes investments to build resilience and advance more inclusive economies across the globe. As program-related investments break into Southeast Asia, those who foster their growth have the ability to catalyze the region’s untapped potential to not only improve livelihoods, but to strengthen and build economic resilience, too.

When we build the capacity of local organizations to improve the well-being of low-income citizens in India, Indonesia, Vietnam, and other countries, we’re also bringing more knowledge and expertise to the discussion on ending poverty globally. With this collective wisdom, the lofty goal of “no poverty” can turn into more than just a distant dream.

Share on Google+Share on FacebookTweet about this on TwitterShare on LinkedInShare on StumbleUpon

Loading...