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Business Resilience

Practitioners’ lessons learned from Covid-19 and recommendations for the future of doing business

From rescuing to reshaping

From rescuing to reshaping

The evolving Covid-19 response in Africa

In March, the prospect of Covid-19 spreading in Africa became a concern, and so the African development community came together, joined by international organizations in virtual meetings, to prepare the African continent for the spread of the virus. At iBAN, we participated in this dialogue by gathering the latest knowledge and expertise through monitoring webinars, which mainly focused on SME support, and uploading summaries on our Covid-19 response page in order to share our insights.

Now, three months into the Covid-19 pandemic, we have seen how the conversation around the crisis has already gone through three phases: a period of applying first aid measures, followed by a focus on detecting underlying problems that became even more apparent through Covid-19, and finally a shift towards solutions that could lead to a more resilient and inclusive economy in the future.

First aid

In late March and early April, business survival was at the top of everyone’s mind, and most webinars for SMEs put this theme centre stage. Speakers shared a sense of urgency and a hands-on mentality to provide support. In the SUN Business Network’s Webinar on April 8th, Nigerian SMEs shared their first response measures. Besides training workers to comply with hygiene protocols, the upmost priority consisted in staying liquid and staying operational – staying in business.

The obstacles to doing so were manifold. For many businesses, sales plummeted because products were kept off markets by mobility restrictions and bottlenecks. This resulted in a squeeze on the cash resources of many firms. An often-coined phrase was “cash is king,” so speakers discussed ways to decrease expenses and adapt their business models to the new situation. In that context, Emiliano Mroue, of the West African Rice Company (WARC), shared his experiences from the Ebola epidemic, which his business survived by closely guarding cash until a recovery brought in new revenue streams. Emiliano had a positive message to share; WARC eventually emerged from the crisis even stronger and more resilient. Nevertheless, he stated: “But before we thrive, we need to survive.”

To survive, many SMEs were forced to cut salaries for a limited time or even furlough their workers. Ndidi Nwuneli from Sahel Capital set out a call to action for SMEs: they should approach their banks or lending institutions and renegotiate terms for liquidity, access credit lines where possible, ask suppliers and landlords to postpone payments and – get investment ready!

Lawrence Haddad, executive director at the Global Alliance for Improved Nutrition (GAIN), supported her and cited the following key criteria for investment readiness: good governance, control of finances, compliance with legal requirements, a clear company identity and a above all, a plan. Companies should have a plan to come out of the crisis and to come out stronger and more resilient. The view that capital would become available for those that have a plan echoed throughout all webinars with participants active in the impact investment sector. And indeed, over $1 trillion in grants, loans and cash equivalents have been made available for SMEs worldwide so far.

The underlying challenges

As time advanced, SMEs were still struggling to obtain liquidity, and underlying challenges became apparent. The mood in webinars shifted from excited urgency to sober reflections on the extent of the crisis. As Denis Medvedev from the World Bank stated in an IFC webinar in the beginning of May,“We will not solve the problems of the last 30 years within the next three months.”

He referred to the lack of access to finance for many SMEs in developing countries, the Missing Middle. Many of the traditional finance instruments used by Development Finance Institutions (DFIs) simply would not reach those most in need. Nancy Lee, Senior Policy Fellow at the Centre for Global Development, concluded that the current system of support from multiple DFIs was insufficient. The DFIs would not be allowed to take big risks, which is exactly what they would have to do at times like these to reach those hit hardest by the crisis – struggling SMEs in developing countries and the people at the Base of the Pyramid (BoP) that are closely linked to these SMEs as distributors, suppliers, customers or employees. It requires new approaches, and more inclusive approaches.

Reshaping for more resilience

Looking into the future, and examining what we must change, The Aspen Network of Development Entrepreneurs (ANDE) focused their webinar at the end of May on blended finance as a solution to reach SMEs more efficiently. The Overseas Development Institute (ODI) made a case for provid legal frameworks for mobile payment solutions and crowdfunding services. Above all, private sector involvement through impact investment echoed as a solution in recent webinars. It succeeded in positioning itself as a possible way to go forward in the future. Yet it remains to be seen if impact investors will really step up and provide the funding that inclusive businesses need to emerge strong from this crisis, realising financial returns while also generating social value and reaching the BoP through SMEs. As a target for impact investment, IB models are especially well positioned. “Investments in IB models are expected to generate commercial returns through sustainable business cases with clearly articulated social goods for the poor and direct impact chains,” states Markus Dietrich, Director Asia and Policy at iBAN.

To support these investments, we need higher visibility for IBs, and we must support them in acquiring the relevant skills and networks to convince impact investors and allow them to scale their business. Along with our Covid-19 response page on our platform, iBAN is supporting immediate Covid response activities, as well as developing programs for Covid recovery, targeting policymakers and investment seeking inclusive businesses.

“This crisis provides a real moment for leaping forward. Impact Investors and DFIs have an opportunity to make progress on what’s been holding back lending to growing inclusive businesses, such as desiging the right risk reducing blended finance vehicles or finding cheaper ways to lend by assessing firms remotely. The question is if they will seize the moment.”

Andrew Kaiser – Tedesco, Director for Company and Investor Engagement at iBAN

Felix Beideck
Felix Beideck studied Management and Economics at the Ruhr University Bochum and has a keen interest in international development and social entrepreneurship. His academic work was centred around business development, microfinance and solutions to tackle income inequality. During his studies, he gained valuable insights into the reality of developing countries through exchange semesters and internships in Latin America. Furthermore, he contributed to the success of several social start-ups in Germany. After his master’s degree, he joined iBAN in the field of Company and Investor Engagement.

Entretien

Staying resilient during and post Covid-19 – Research findings and resources for entrepreneurs and governments

“Businesses rely on people,” asserts Professor Jane Nelson, Founding Director of the Corporate Responsibility Initiative at Harvard’s Kennedy School. In this interview, Nelson explains that she sees four key lessons learned for businesses from the…
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Table of contents

graphic summary

GRAPHIC SUMMARY

A visual summary of the most important learnings when it comes to building resilience for crises in the realm of inclusive business. Learn more about these aspects by reading this eleventh edition of the online magazine on inclusive business! The…

editorial

Inclusive Businesses are Inherently Resilient

Nwuneli observed through her work that the companies least affected by Covid-19 have inclusive business models. She suggests two reasons for their resilience. First, inclusive businesses have invested in local sourcing and strong ecosystems. Second, these businesses had developed products and services that meet the needs of the customers at the bottom of the pyramid (BoP) – even in crisis.

Ndidi O. Nwuneli

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Telling a story of resilience: Hands-on insights and resources from practitioners

In this CLUED-iN edition we gathered the inspiring stories and insights of practitioners, who shared the lessons learned from Covid-19 that they found to be particularly relevant for companies to stay resilient and shape the future of doing business. The resulting recommendations range from personal advice to practical toolkits, insightful webinar findings, and concrete advice for entrepreneurs and other stakeholders that shape the private sector in countries around the globe, including government.

Susann Tischendorf

Staying resilient during and post Covid-19 – Research findings and resources for entrepreneurs and governments

“Businesses rely on people,” asserts Professor Jane Nelson, Founding Director of the Corporate Responsibility Initiative at Harvard’s Kennedy School. In this interview, Nelson explains that she sees four key lessons learned for businesses from the current crisis, highlighting a need to focus on technology, leadership, diversity and relationships.

Nathalie's Trade - Perceiving the global need for clearer inclusive businesses models

Nathalie’s Free Trade is a “feel-good-do-good” food brand based in Sweden. In this interview, founder Nathalie Aldana explains how inclusive businesses can help the most vulnerable in times of crisis. She contends that the relationship between the Global North and South needs to be synergetic better than dependent to become resilient.

MIT D-Lab - supporting early stage entrepreneurs in emerging markets to reach Focus, Agility and (then) Resilience

MIT D-Lab is a multidisciplinary programme at the Massachusetts Institute of Technology (MIT) that fosters the development of appropriate technologies and sustainable solutions to global poverty through education, research and the practice of inclusive innovation. In this interview, Jona Repishti, Social Entrepreneurship Manager at D-Lab MIT, explains why entrepreneurs should use the current crisis for business housekeeping and why Focus and Agility come before Resilience.

From rescuing to reshaping

With the looming thread of Covid-19 spreading to Africa, African development organizations, joined by the international community, came together to discuss plans and actions in virtual meetings. We at iBAN monitored the ongoing debate and provided summaries of insightful webinars on our Covid-19 response page. Now, three months into the crisis, we want to share our impressions of how the crisis evolved from first aid measures to detection of underlying problems and recently to an outlook on future solutions.

Prepare your inclusive business for the next crisis

As a business leader, you could spend countless hours reading through all of the current toolkits and theoretical frameworks on how your business could improve its performance during times of crisis. To help you invest your time effectively, we at iBAN will highlight what we consider the three most important steps out of ygap’s toolkit for your path to increased resilience. The following lessons learned focus on risk preparation, finance tracking and crisis communications.

ygap - guiding social impact ventures to push business resilience

ygap is an international development organization that supports early-stage social impact ventures with locally-led solutions to local problems across Africa, South Asia, the Pacific Islands and Australia. In this interview, Kaitlin Tait, Co-Founder of ygap and Program Director for yher, explains how ygap is focussing on supporting female entrepreneurs during the current crisis and stresses that business resilience soon will be a competitive advantage.