Financing for Inclusive Business

Innovations to meet the SDG investment gap and other financing considerations for entrepreneurs

Story highlights

The world faces a $30 trillion investment gap to achieve the Sustainable Development Goals by 2030

Many are working to innovate ways to bridge the gap, including blended finance, which strategically uses public money to unlock more private investment

In the meantime, inclusive business entrepreneurs use the approach that works the best for their companies, from utilising donor grants as “catalytic” or “patient” capital, to striving to create self-sustaining, capital-efficient businesses without donor support

Financial innovation, like FinTech, allows the customer to access customised financial services that bring products and services within reach—thereby making inclusive business models more sustainable

Debt and equity impact investors, as well as foundations, are continuing to evolve their offerings to reach SMEs—the missing middle—which must cross the “valley of death” into commercial viability


This issue of CLUED-iN takes us from the big picture—$30 trillion of additional funding that is needed to achieve the Sustainable Development Goals (SDGs) by 2030—to the details that inclusive business entrepreneurs find themselves grappling with as they build and grow their companies. For example, according to Temie Giwa-Tobusun, CEO of LifeBank, inclusive businesses should aim to run sustainably on their own revenues—seeking financing only for growth and innovation—instead of being dependent on donors. That said, getting to the point of being financially sustainable in new markets can require long-term, patient capital, which is why Olawale Adebiyi, Founder of Wecyclers, believes donor money is essential.

LifeBank employee

LifeBank aims to run sustainably on its revenues, relying on financing only for growth and innovation. Photo Credit: LifeBank

Overall, our contributors share the conviction that there is a time and place for both public capital (think: grants from development cooperations) and private capital (think: debt or equity investments that expect a return) in financing inclusive businesses. The real power may be in how the two work together. As Wiebke Bartz-Zuccala from OECD explains, in “blended finance” traditional donors can instead act as strategic investors, re-allocating risks by, for example, providing guarantees that make inclusive businesses more attractive to investors. Kusi Hornberger from Dalberg Advisors and Omer Imtiazuddin from USAID weigh in on this point, explaining that—specifically in the global health field—“…private capital isn’t being invested at nearly the level needed…[requiring] significantly more innovation” in how the public and private dollars can work together.

To do so effectively, strategy is needed. Bettina Prato shares the work that SAFIN Network has embarked on to better understand the role that blended finance can play for agricultural SMEs (small and medium enterprises). One of their findings is that a blended finance intervention “needs to be made anew in each context and against specific market failures and risks.” In other words, blended finance is not one size fits all; it is difficult and requires a lot of coordination. As Royston Braganza explains in his spirited editorial, “finance is fickle, [and] it is designed to flow like liquid.” This requires us to dive deep into the innovations that hold the most promise, while recognising their limitations and always pivoting to take advantage of the changing tides.

Man with banknote

Every agricultural business has its own financial risks and needs. Photo Credit: Chaucharanje Brand on pexels.com

It is important to remember that, in addition to ensuring that money flows to build and grow inclusive businesses themselves, financial innovations unlock opportunity for the customer at the base of the pyramid—which then, ideally, can sustain the business. For SELCO’s founder, Harish Hande, one of the most valuable finance lessons he got was from a street vendor who could pay 10 rupees a day, but because of her cash flow, she could not afford 300 rupees per month. By partnering with local banks and advocating to ensure that decentralised energy systems are part of the financial products that the banks offer, SELCO can help their customers access loans—making them bankable and pushing them “multiple rungs up the social ladder.” FinTech (think: mobile money), too, has aided in the effort to make financial services more accessible and inclusive. According to Chris Würdemann at ZOLA Electric, “FinTech is enabling the entire value chain of traditional financial institutions to establish better connections with customers and to provide new market offerings.” With the help of “Pay As You Go” and mobile money, ZOLA has been able to deliver smart power solutions to commercial and residential customers across Africa, and because their business goals are aligned with their impact goals, they can simultaneously meet the expectations of their donors and their investors.

solar panel

How solar panels and innovative financing...

Woman with sewing machine

...can help people climb the social ladder. Photo Credit: SELCO

This is not always easy to do. In fact, it is a delicate dance to balance—and weave tightly together—profit and impact. As Darren Lobo from the Aavishkaar Group reminds us, “…inclusive businesses need to consistently strive for product-market fit and ensure commercial viability of their product or service offering to meet development goals.” It is, in fact, this commercial viability, that sets an inclusive business apart from its colleagues in the development space. But managing this alongside impact is inherently challenging and depends not only on the entrepreneur. Investors, too, must expand their approaches. According to Sangeetha Yogendran of the Asian Venture Philanthropy Network, “impact investors are now leveraging a range of investment practices to both better support the needs of the organizations in which they currently invest, as well as to expand their range of potential investees.” Veerle Berbers, board member at Alphamundi’s SocialAlpha-Bastion Fund, which provides debt financing to SMEs, has also observed this sector’s continued evolution. She has seen “a major trend around gender-lens investing, incorporating gender considerations throughout the investment process.”

Woman harvesting lettuce

Gender-lens investing as an integral part of the investment process. Photo Credit: AlphaMundi Foundation

As impact investors become more accessible and supportive of the specific needs of inclusive business entrepreneurs, and as organizations like OECD and USAID work to unlock mainstream investment opportunities for the SDGs, the Tony Elumelu Foundation, which provides training and seed grants to entrepreneurs across Africa continues to do its work. In the words of their CEO, Ifeyinwa Ugochukwu, “We do grant funding because we believe that a start-up business is not complex enough to handle equity. What are you buying into? [And,] we shouldn't bog them down with debt.” Thanks to their work, over 8,500 entrepreneurs will have been trained and funded by the end of 2019, including one of the contributors in this issue, Olawale from Wecyclers.

Entrepreneurs sitting in convention hall

The Tony Elumelu Foundation combines business training and grant funding for start-ups all over Africa. Photo Credit: The Tony Elumelu Foundation

There is no single “right” way to finance your inclusive business. In fact, best practices are unfolding in real time thanks to the pioneering work of practitioners across the sector. And to use Braganza’s words, in this “VUCA world,” I don’t think we should expect the financing innovations to slow down anytime soon. The best we can do is try to understand the options and figure out what works best for us. We hope this issue helps you do just that…

Next steps for entrepreneurs
Practical tools for businesses
Dana Gulley
Dana joined iBAN as the Editor-in-Chief of its online magazine, CLUED-iN, in July 2018. She is the founder and lead consultant at Third Peak Solutions, a firm that advises businesses and nonprofits on developing innovative strategies to solve our world’s most pressing challenges. A trained mediator with a background in natural resources and business administration, Dana has spent her career building cross-sector partnerships to tackle both energy and water issues.


What is blended finance and why should inclusive business entrepreneurs care?

Bartz-Zuccala gives us the download on blended finance and shares examples of how this innovative funding mechanism has unlocked private capital towards achieving the SDGs. Continued private and public sector collaboration is needed to scale blended…
Inclusive Business Action Network
Table of contents

graphic summary


A visual summary of the key challenges entrepreneurs need to consider when it comes to financing for inclusive business. Learn more about these aspects by reading this sixth edition of the newly developed online magazine on inclusive…



As Braganza explains, finance is fickle. He offers four simple recommendations for how the inclusive business world can keep finance flowing its way—giving SMEs their time in the sun—in a volatility-uncertainty-complexity-ambiguity (VUCA) world.

Royston Braganza

feature story

Financing the SDGs: from the big picture funding gap to the little details that entrepreneurs want to know

Achieving the Sustainable Development Goals will require the mobilisation of a lot more resources than the sector currently has invested today. Learn what financial innovators and entrepreneurs are doing to bridge the investment gap and help inclusive business entrepreneurs survive and thrive.

Dana Gulley

What is blended finance and why should inclusive business entrepreneurs care?

Bartz-Zuccala gives us the download on blended finance and shares examples of how this innovative funding mechanism has unlocked private capital towards achieving the SDGs. Continued private and public sector collaboration is needed to scale blended finance, she says.

Opening the financing spigot on SDG3 — health and well-being

Hornberger and Imtiazuddin share details about the estimated gap in financing our SDG3 global health targets—$134 billion annualy and rising to $371 billion annually by 2030—as well as reasons for the gap and a suggested path forward.

Taking a critical look at the role of blended finance in agriculture — an emerging learning agenda

Prato shares the work that SAFIN has embarked on, in partnership with OECD, to understand what role blended finance can play in mobilising private finance for agri-SME investments.

Decentralised energy unlocks opportunity, the right financing unlocks decentralised energy

For SELCO, success means more people at the base of the pyramid have access to decentralised energy—an intervention that can move them several rungs up the social ladder. This requires hard-earned trust from the customer and partnerships with banks to unlock the right financing.

Finding the sweet spot in the combination of public and commercial capital

Berbers discusses AlphaMundi’s approach to impact investing and shares trends she has observed as the sector has evolved—from the growth in gender-lens investing to the gap in debt financing options for companies that are too big for microfinance but too small for banking loans.

Smart power solutions company benefits from aligned impact, donor and investor interests

Zola Electric is delivering smart power solutions to both commercial and residential customers across Africa. With business goals that are aligned to their impact goals, managing donor and investor interests is made easier.

Finance opportunity knocking: more inclusive investors and more impact-driven inclusive businesses means growth for the sector

Yogendran and Prakash share how impact investors have expanded their practices to better support inclusive businesses, while awareness is growing for businesses to better demonstrate their impact—leading to synergy and opportunity for growth in the sector.

Growing the SME ecosystem in Africa through training, seed funding, and strategic partnerships

Ugochukwu explains why grant funding is essential for start-up entrepreneurs—creating opportunity for them to turn their ideas into reality before their businesses are complex enough for equity investments and without burdening them with debt.

Getting investment-ready: considerations for early-stage entrepreneurs

Lobo reminds inclusive business entrepreneurs that they must work towards becoming sustainable—and to do so, he shares advice on getting investment-ready, considering the capital structure of the business, and navigating relationships with donors and investors.

Saving the lives of the rich and the urban poor through cross-subsidisation

Giwa-Tubosun shares her views on the importance of running a capital-efficient business that can stand on its own. She believes that through a mix of cross-subsidisation and donor money for specific purposes, like expanding services, one can build a sustainable business.

Nigerian social enterprise weighs in on benefits and drawbacks of grants and venture capital

Adebiyi has built his company without the help of loans because, in his words, his company doesn’t have the balance sheets needed to interact with banks. Instead, donor money, which serves as “patient capital,” has allowed the company to develop at the right pace.

In Your Words

Entrepreneurs and people representing the inclusive business ecosystem offer a snapshot into their personal thoughts on impact finance and other things that relate to inclusive business.