In summer 2021, Father Bossou Constant SJ, Miller Center Jesuit-in-Residence, spent time working with social enterprises in West Africa. These enterprises are all alumni of a 3-day Boost workshop that Miller Center delivered in partnership with West African Jesuits in 2017 and 2018. In conversation with Keith Warner, Miller Center’s Chief Learning Officer, Bossou shares his research and reflections. This is the third and final in a series of 3 articles. (Read the first 2 articles: Social Entrepreneurs Distinguish Themselves in West Africa and Navigating Social Entrepreneurship and the Pandemic in West Africa)
What is the state of impact investment in West Africa?
There are nearly no local impact investors in West Africa. The culture of impact investment is not even present in the understanding of social entrepreneurship in the region. Many social entrepreneurs don’t even see themselves as social entrepreneurs until someone explains to them that what they are doing is social entrepreneurship. Thus, they don’t seek impact investment for their social ventures.
They mostly, like any other entrepreneur in the region, turn to banks for loans. Unfortunately, those loans usually carry high interest rates (up to 15%). Most of the entrepreneurs I spoke to this summer have all tried to get bank loans. The bank requirements for getting loans do not allow some to get loans. Those that do get these bank loans get them with an interest rate that ranges from 10% to 15%. The best enterprises as rated by banks in West Africa can get as low as 7%, but rarely less than that. As an example, Africa Global Recycling, the Togolese social enterprise that specializes in collecting and selling plastic waste with average annual revenue of $260K, is in the process of securing an Ecobank loan with an interest rate as low as 7%.
Social entrepreneurs are rarely able to secure grants for their projects within their regions. Those who manage to get grants do so through international grant-making companies. Of all the alumni in West Africa, none of them have been able to secure a grant for the social impact they are making.
The concept of shareholding and equity investment is still at a baby stage in West Africa, probably because many social entrepreneurs in the region do not like the idea of sharing their companies with others. Only Foufoumix, our multi-million dollar company alumnus in West Africa was contemplating the idea, but later got an important loan instead.
What role might Miller Center play in this context?
Given the current focus on working with more advanced social enterprises, I recommend identifying those social entrepreneurs in West Africa who also speak English and working with them. Many social enterprises in West Africa are naturally women-led and/or organic agriculture/production related. They can benefit from the training offered by Miller Center and mentorship to connect with impact investors.
Training social entrepreneurs in West Africa is not the only solution to social entrepreneurship capacity development in West Africa. Impact capital culture is an even bigger challenge to take on. Most of our alumni in that part of the world have said they were not able to find any local impact capital fundraising opportunities. And usually, they are not big enough to attract international impact capitalists. Moreover, many Francophone social enterprises in West Africa lack adequate English language skills to engage accelerator centers and impact capitalists in America.
In these reflections, I showed evidence of the many social entrepreneurship-related opportunities in West Africa. However, accelerators and investments available for social entrepreneurs are scarce. The most successful social entrepreneurs can only get bank loans with high interest rates. To bridge the gap between the abundance of business opportunities and the available investment opportunities, there must first be training such as accelerator programs to help social entrepreneurs hone their business skills and formalize their knowledge of the social impact they are making. This will help social entrepreneurs in West Africa prepare to talk to impact investors abroad as well since there are very few locally. In the long run, many more capable Africans should embrace the idea of impact investing and become impact investors to help startups take off and scale their social impact.
Photo: Founder of VEGA (Vision Eco Green Afrique) Recycling with bags of sorted and cleaned plastic waste