2. Introduction
Vodacom
Samsung
Medscheme Group
Alexander Forbes
Hewlett Packard
Edgars
Diners Club International
FirstRand
Old Mutual Group
LoveLife
Guide Dogs Association
SANParks
Peace Parks Foundation
GivenGain
City of Cape Town
University of Stellenbosch
Medicins sans Frontiers
WWF SA
UNICEF
Greenpeace
Nelson Mandela Foundation
PayProp Capital
6. Definitions
Finance:
1. The management of large amounts of money.
2. Monetary support for an enterprise.
3. The monetary resources of a state,
organisation or person.
Money:
A medium/object/record that can be exchanged
for goods and services and is used as a
measure of their value in a market.
7. Some Questions…
Can
society and nature be seen as stakeholders? If so, what
legitimate claims do they have?
Are there business owners who are primarily concerned with
stakeholder wealth maximisation?
Does it have to be shareholder versus stakeholder wealth
maximisation (i.e. are these goals mutually exclusive?)
8. Some Further, Uneasy Questions…
What
role can finance play in the context of poverty and/or
environmental sustainability?
Do you think massive salaries are morally justifiable in the
world of finance today? Why?
In what way do you think relationships have a role to play in
financial innovation?
What role does governance play in a business and its
stakeholder relationships?
9. Left Turn…
Social Enterprise - Why 'Social'?
The Missing Middle - The Gap in Capital Markets
Investing for Impact - The Rise of Investor Activism
Relational Economics - The Power in People
The Source of Innovation - The Periodic Table of Elements
10. Wicked Problem: Poverty
Nearly 50% of world’s population live on less than US$ 2 a day
3 Billion people, 3 000 000 000, 3 thousand millions
Less than R20 a day…R20!
10 million children die every year from preventable diseases
AIDS kills 3 million per year
1 billion people lack access to sanitation
1 000 000 000 people are illiterate
25% of children in poor countries do not finish primary school
20% of the population own 80% of the world’s wealth
That’s you and me
Poorest 20% own 1.4%
And these people are right outside, all around us…
11. Solution: Aid?
Aid and Income Growth in Africa
20
2.5
18
2.0
16
14
1.5
12
1.0
10
8
0.5
6
0.0
4
-0.5
2
0
-1.0
Aid/GNI
Growth GDP/Capita
Growth GDP/Capita (%)
(10-year moving average)
19
70
19
73
19
76
19
79
19
82
19
85
19
88
19
91
19
94
19
97
20
00
US$2.3 trillion in global aid since 1950 (William Easterley, World Bank)
US$1 trillion in Aid to Africa, 6 Marshall Plans equivalent to
US$5,000/person (Richard Dowden, Royal Africa Society)
Aid/GNI (%)
12. Solution: ‘Social’ Enterprise?
Economic growth is the fastest way to reduce poverty – China, Asian Tigers
FDI is critical to economic growth but requires political and economic
stability, good governance – factors missing in poor countries
‘Social’ entrepreneurs needed to fill this gap
Triple Bottom line – financial, social & environmental
Sustainable profitable businesses
Maximising financial and social returns
Employment
Empowerment
Entrepreneurship training
ESG (Environmental, Social, Governance)
13. Topic # 1: Social Enterprise
What
is a social enterprise?
How do these differ from conventional enterprises?
Case Studies
14. Topic # 2: The Missing Middle
How
are social enterprises financed?
Which sources of funding are available in South Africa?
What are the challenges that social entrepreneurs face when seeking funding?
15. The Missing Middle
Public Capital
$ Trillions
Global
Enterprises
Low Cost Capital
Listed
Companies
Medium Cost Capital
Private
Capital*
$10 B
SMEs
“The M
issing M
iddle”
Microfinance
$25 B**
Grant Aid
$325 B***
*Cumulative investment in frontier market SMEs.
**Estimated loans outstanding.
***Foreign development assistance, private
philanthropy & remittances, per annum.
MicroEntrepreneurs
Limited Access to Capital
Poverty
No Access to Capital
Abject Poverty
Prosperity Drivers
High Cost Capital
Rule of law
Property rights
Physical security
Economic freedom
Health & education
Prosperity Ladder Concept: Legatum Global Development
16. Funding Sources
Commercial Banks
Development Banks
Small Business
Development
Organisations
Angel Investors
Private Investors
Corporate Investors
Institutional
Investors
Public Investors
International
Investors
Network
Friends
Family
16
22. Silulo Ulutho Technologies
Founded in Khayelitsha, Cape Town
in 2004 by 4 local partners
Computer training, internet access and
business support services
1000’s of people introduced to ICT
and trained per year
Affordable, accessible services
meeting critical needs at a local level
18 Employees by 2009, 100+ in 2014
R1,8 million in turnover in 2009 up to
over R 10 million to date
From a car boot to over 20 training
and internet centres in W & E Cape
23. Financial Innovation: Social Impact Bonds
Source: From potential to action: Bringing social impact bonds to the US, McKinsey Company 2012
25. Relational Economics
Commitment is the basis of lasting, loyal relationships
The bond that is formed through building a relationship with your stakeholders
Should ultimately lead to advocacy
Seven steps to loyalty
7. Advocacy
6. Commitment
5. Emotional loyalty
4. Relationship forms
Find values in the brand and willing to
take action on behalf of it
“Loyalty
Hurdle”
Mutual problem solving
Bond becomes stable.
Positive interaction on both sides
“Loyalty Hurdle”
3. Behavioural loyalty
No emotional tie
2. Satisfaction after first purchase
1. Expectation
Customer is satisfied unless
something better comes along
27. The Purpose of Loyalty
The ‘Right’ Contributions from the ‘Right’ Relationships
How do you find the ‘Right’ Stakeholders and keep them?
Source: Reichheld, 1996, 2001
28. Relational Economics:
A Virtuous Value Chain
Investor
returns/reinvestment
Business
&
Co
st
E
In ffic
n o ie
va nc
tio ie
n s
Co
m
Op p e
po ns
rtu ati
ni on
t ie &
s
Superior
Products
Market & Industry
Conditions
Value Added
Benefits
er
m nce
to e
u s l lig
C e
t
In
Fu
lfil
me
nt
Tu
Environmental
Concerns
rno
Spend &
Profile
Partner
Quality
Assurance
Loyalty &
Referral
Training
& Incentives
ver
Legal & Ethical
Regulations
Pr Sup
od er
uc ior
tiv
it y
Employee
or
eri
up ice
S
v
Ser
k
bac
eed
F
Customer
Community
Responsibilities
marketing/mindshare
Competitor
Source: Habberton, 2005
29. Relational Economics:
Creating Shared Value
CSR to CSV (Porter, 2011)
Value Creation not just Value Add
Intrapreneurship
Economic & social returns
Stakeholder relationship management
Linked to normative structures in SA including:
King III Report on company reporting:
“…how a company has, both positively or negatively, impacted
on the economic life of the community in which it operated …”
Principles for Responsible Investing & CRISA
30. Topic # 5: The Source of Innovation
The
Periodic Table of Elements (as per Prof. J. Kinghorn…)