Want Impact? Back a Lioness, not a Unicorn!

by Lionesses of Africa Operations Department

“You don't want the institutions incentivized to go big and expensive when you could maybe have more impact, smaller and less expensive”, so said Margaret Kuhlow of the US Dept of Treasury at one of the side meetings at the recent World Bank Spring Conference (see here 1:30:05).

Anna Bjerde, the World Bank Managing Director of Operations confirmed the key message of the meetings (here): “A key component…is measuring outcomes rather than inputs and focusing on results that further our aim to improve people's lives and livelihoods.”

Following a survey from the Bill & Melinda Gates Foundation asking 200,000 women in Kenya and Nigeria “[What was] their greatest economic ambition…”, their number one answer was to “own or expand a business” - but (no surprises) “They couldn’t get the startup capital and equipment they needed.”

As Melinda (surely with such a global icon, her first name is all that is needed!) herself writes (here): “When women succeed financially, they and their communities are more resilient to the kind of health, security, and climate shocks that come more frequently each year. They invest their earnings back into their families’ health and education, accelerating social progress and economic growth. They create jobs for other women, breaking down gender barriers in the workplace. And collectively, they have the potential to help lift entire countries out of poverty.”

So - how can we push impact into this sector as fast as possible, and as efficiently as possible?

Some (given the huge amounts of investment flowing in that direction) suggest the answer lies in looking at the world of Unicorns, those beautiful but mythical creatures that apparently graced the earth many moons ago, but have morphed into the investing world to mean ‘hitting a home run’, finding that one huge result - a ‘Unicorn’  that following your investment races up to a $1 billion valuation - that in turn pays for all the failed ones (phew!). This style of investing has been taken to a new level by Tech investors - cue screams of complaints to our long suffering Editor from the investing world, but sorry folks, this is a well known investing strategy, the ‘Power Law’, as explained in the FT here:

“A good investment strategy is to only buy stocks that go up. Most stocks don’t go up though, at least not consistently, so an easier strategy is to buy lots of stocks and hope some will go up by more than most go down. It’s an application of power law, where just a handful of portfolio investments will generate nearly all of the returns. A popular way to finesse this strategy is to buy venture capital funds, because they’re arguably the purest expression of moonshot investing…the power law concept has been very deeply embedded in the VC world. The perhaps obvious catch is that power law applies just as much to funds as stocks. Just a handful of VCs generate nearly all of the sector returns.”

So we end up not only with one or two highly valued Tech companies, but also only one or two highly successful VC firms. Perhaps investors into the African Tech Unicorn (promised only - sadly now sold off in a fire-sale for cents in the US$), Konga, were Power Law devotees. With huge cash backing him, the founder (and ex-CEO) Sim Shagaya now admits to a mistaken belief that acquiring customers at all costs was the only way, saying (here): “I think it’s entirely possible to build…a slower-growing business that has its eye on gross margins and provides a great customer experience.” Indeed - entirely possible. Warren Buffet (also a huge supporter of the Gates Foundation) would call a founder following those simple but effective rules - ‘someone worth looking at’, we would simply call that type of founder…a Lioness.

Perhaps instead this is what the World Bank had in mind - “to drive impact and to create jobs”, and an insistence “…to measure Outcomes, not Inputs”. Margaret Kuhlow was more direct: “Dollars are an Input not an Outcome or an Impact”.

So where is the greatest Impact to be found? There is no doubt the informal sector is huge, so why not look there? Of course VC Investors can’t be investing in thousands of micro businesses, but luckily enough, some of our membership are able to do this on their behalf, and have done so. Indeed, ask them nicely they might just let you join in the fun!

Seriously though, is “…impact, smaller and less expensive….”, even possible? The great Tony O. Elumelu, Chairman of Heirs Holdings who does so much across Africa often through his foundation thinks so. He invested US$5,000 seed capital in one of our Lionesses Nkem Okocha (Nigeria), see here, seven years ago.

Her incredible company Mamamoni has since grown into a Fintech Social Enterprise providing micro-loans to low-income female entrepreneurs in rural and urban-slum communities in Nigeria, in addition to which, she trains them in Finance, Digital Skills, and Business Development specifically designed for female entrepreneurs. If that was not enough, provides essential healthcare services to economically disadvantaged women who lack access to basic medical care. Her business is now getting a licence from the Central Bank no less, to take her impact to the next level. As she says: “No woman chooses to be poor, but we can choose to help poor women by investing in them”. Now with great backing from the Dutch Govt through their Challenge Fund for Youth Employment, her impact will just grow exponentially further. That’s Impact!

Nkem’s following in the footsteps of the incredible Lioness Essma Ben Hamida (Tunisia) who through her Microfinance NGO and company Enda inter-arabe and Enda tamweel has transformed hundred of thousands of lives. Also starting with a small seed capital ($10,000) she now has over 400,000 active borrowers who have launched and grown their small businesses. Showing the potential for Nkem, over the past 25 years, Essma has disbursed over US$2.5 billion to a total of 900,000 borrowers! That’s Impact!

They are both creating employment, generating income and improving the living conditions and those of family members, uplifting children’s education and health care. That’s Impact!

We have written about Sarah Collins (RSA) many times, so we won’t dwell too long (sorry Sarah!) on the incredible impact she has brought to Africa through her company Wonderbag (just look at her massive Carbon Credit program). But from the very beginning she knew she wanted to create opportunities for thousands of women to create their own businesses in selling and manufacturing her products. No Chinese manufacturer for her, she now has over 20,000 women across Africa with their own businesses on the back of her company. That’s Impact!

Training? Dr Noeline Kirabo (Uganda) through her company Kyusa empowers and enriches the lives of marginalized youth and women through serious enterprise development, providing business training, coaching, and incubation services to micro and small businesses in underprivileged communities, including urban slums, rural areas, and refugee camps. That’s Impact!

There were far too many Lionesses we could have mentioned here as routes into serious Impact and so many delivering major league Outcomes that would be very happy, we are sure, to discuss funding opportunities. Indeed many have found a home with some of our inspirational Lioness investors, such as Dr. Ola Brown (her Impact), Adesuwa Okunbo Rhodes (her Impact) and Sarah Dusak (her Impact), who all invested in great businesses with serious solutions to global problems, first and foremost, that just happened to be run by women.

Of course if your mandate is to use the Power Law and search for Unicorns, then it is what it is, but we only hope that like Marco Polo, the 13th century Italian explorer, you are not disappointed when you finally sight one, as he said - “Their hair is like that of a buffalo, and their feet like those of an elephant.”

We might be biased, but why not stick to Lionesses? As a global icon once wrote: “They invest their earnings back into their families’ health and education, accelerating social progress and economic growth. They create jobs for other women, breaking down gender barriers in the workplace.

And collectively, they have the potential to help lift entire countries out of poverty.”

- That’s Impact!

Stay safe.