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From grants to investments in social entities: the impact investing projects

From 2015 onwards, and to further boost our social investments, we set up a partnership with the Opes Foundation, a qualified investment fund for high social impact entrepreneurship projects. We therefore engaged in investing philanthropic capital, through Opes, into financially sustainable companies capable of promoting social progress and lifting people out of poverty. Opes is the leading Italian Social Venture Capital operating in critical development sectors: health, access to water, basic sanitation, energy, education and food. Its mission is to support social ventures and enlightened entrepreneurs proposing innovative, sustainable and long-term solutions in response to the most relenting demands of the people at the bottom of the social stratum. Opes' targets are pre-existing start-up social ventures seeking to validate their business model and are located in East Africa (Kenya, Uganda, Tanzania) and in India. Opes channels philanthropic capital in the form of investments to achieve social impact and financial returns.

All the funds returned to Opes are reinvested in new social ventures.

Measuring the impact

When drafting its impact reports, foundations such as Opes try to determine which key indicators are measurable, important and transferable through their impact portfolio.

When it updated its scale of impacts, Opes decided to adopt the sustainable development targets of the United Nations as a reference. These targets were approved by all the Member States in January 2016 and provide a very useful analytical and inter-sector framework model (development, corporate, impact).

Below we show an analysis of the progress and impacts of the businesses, referencing the United Nations Sustainable Development targets (SDGs).

KADAFRICA Project 

Opes investment date: June 2016
Investments amount: 100,000 $
SEA disbursement: Euro 40,000

KadAfrica, headquartered in Fort Portal (Uganda), is a social venture Company founded in 2011, which produces and sells passion fruit. The entrepreneurs who launched the business in 2011, set up a partnership with the local Caritas, which was planning a three-year programme to encourage young destitute young women who had left school to become involved in agriculture and micro-entrepreneurship. Thanks to this partnership, over 1,000 young women on an intermittent basis, and over 200 women in a more structured fashion, started working in the KadAfrica production subsidiary.

KadAfrica - No. of vulnerable girls in the program

KADAFRICA - NO. OF VULNERABLE GIRLS IN THE PROGRAM

Source: Opes Foundation

In the initial phases, product supply was only guaranteed by a network of approximately hundred local female growers, (marginalized girls with backgrounds of abuse and deprivation) whom KadAfrica supported and continues to support through an agricultural training programme.

In 2016, KadAfrica redesigned its business model incorporating local farmers (OGs), - in addition to the local female growers (OSGs) - in the production and the sale of seeds as well as the direct management of an agricultural investment fund.

KadAfrica essentially operates in three business areas:

  • to support girls who had left school in securing an income;
  • to help small farmers to access markets by grouping and selling their products;
  • to process passion fruit (delivering added-value to the agricultural yield) and to expand revenue opportunities.

The social impact indicators used to assess the project reference the three SDG parameters: SDG1 (eradication of poverty), SDG5 (gender parity), SDG8 (dignified work and economic growth).

KadAfrica - Key social impact indicators

IndicatorMetric
Increase of monthly income for the girls participating in the programme $3 to $20
Number of girls to date earning income from farming 471
Percentage of KAD's employees who are women 62%

Kadafrica – Turnover development ($)

KADAFRICA – TURNOVER DEVELOPMENT ($)

Source: Opes Foundation

To date, KadAfrica is only involved in fresh products, but in the future, when fully operational, there are plans to expand its business by building a fruit pulp processing plant; fruit pulp is in demand by the drinks industry.

The direct management of the girls’ training programmes (previously managed in partnership with the local Caritas) resulted in various delays in terms of targets. This greatly impacted the implementation timeframes for other planned activities (local farmers’ programme, the production and sale of seeds, the launch of a production process on proprietary land), which should have been launched at the same time to diversify revenue streams.

“The Water Shop Naivasha” Project 

Opes Investment dates: 2015-2016
Investments amount: 110,000 $
SEA disbursement: Euro 40,000

The Water Shop Naivasha is a social venture Company which operates through the "PureFresh" brand and is based in Naivasha, Kenya (80,000 inhabitants, 90 km north west of Nairobi).

Launched in 2010, PureFresh is involved in the extraction, purification and sale of drinking water (both loose and bottled water).

Water quality and scarcity are critical elements for the country: in Kenya almost 17 million people (43% of the population) do not have access to safe drinking water.

Most families are low income families with access only to contaminated water with serious health consequences. The Water Shop Company extracts water from a well, purifies it in a system using reverse osmosis and distributes it through a network of four shops in various locations throughout the city.

THE WATER SHOP NAIVASHA - Key social Impact Indicators

IndicatorMetric
Number of clients with access to affordable, filtered water 7,500/weekettimana
Volumes of water sold in the last quarter (Q3 2017) 1,810,000 liters
Agents' Income Growth since Opes Investment +63%

Indicator20142017
Affordability of water as measured by average price per liter 7.7 KES 3.3 KES
Number of direct Employees and agents employed by Purefresh 12 56
Numbers of Outlets 8 28

Source: Opes Foundation

The social impact indicators used to assess the project reference the three SDG parameters: SDG3 (health and wellbeing), SDG6 (clean water and sanitation), SDG8 (dignified work and economic growth).

The Water Shop Naivasha - Growth in number of families served per week

THE WATER SHOP NAIVASHA - GROWTH IN NUMBER OF FAMILIES SERVED PER WEEK

Source: Opes Foundation

PureFresh launched its business with the opening of two shops in Naivasha (expanded to 4 over the years). In 2015, the Company started to test a new expansion model installing 5 drinking water vending machines in existing shops to increase sales volumes, reduce operational costs and deliver price points that ensure its products are more accessible for low-income customers. In 2016, further investments by Opes, SEA and 2 other American investors helped scale up of one of the pilots: growing from 5 to 20 vending machines in Naivasha and Nakuru. The business model was modified to promote a franchising structure which is proving to be more efficient in reaching a greater number of people and is especially effective in lowering the price of water.

The Water Shop Naivasha - Turnover development ($)

THE WATER SHOP NAIVASHA - TURNOVER DEVELOPMENT ($)

Source: Opes Foundation

PureFresh plans on expanding firstly to Naivasha, where, when fully operational it will have 25 vending machines (the target is to reach 15,000 families a week) and then it plans on expanding to the neighboring Nakuru, with a population of over 200,000, where it will set up another 40 vending machines. When fully operational, PureFresh plans to provide clean and cheap water to over 160,000 people per week.