“No Poverty” in Africa - Holocene Impact Capital

It’s in our name.

As our name suggests, one of our main drivers is a constant focus on impact in this world. Supporting this approach, we use the United Nations (UN) Global Goals framework breaking down the challenges in the world into 17 unique goals, with 169 separate sets of targets.

To highlight these goals in action, each month we will be covering one target supporting one Global Goal in one continent. This month’s edition focuses on eradicating extreme poverty to support Global Goal 1, “No Poverty”, in Africa.

What’s the context?

Extreme poverty is defined as living on less than US $1.9 per day. This is an impossibly small number to imagine living on, but it is the reality of more than 700 million people around the world. The costs are not only financial: around 5 million children under the age of 5 die from preventable diseases, and 50% of children leave school without basic numeracy and literacy skills, harming their future economic potential.

Africa is home to roughly two thirds of the global population enduring extreme poverty at around 433 million. This high proportion is partly due to economic gains on the continent having not kept up with population growth, a serious consideration as Africa’s population is set to double by 2050. What is important to recognise is that actions taken today could have outsized and positive outcomes in 20 years for the continent and its young population.

Of course COVID is messing things up.

To no one’s surprise, the pandemic was especially tough on the world’s poor, leading to a rise in global extreme global poverty for the first time in over 20 years, resulting in 88-115 million people falling back into extreme poverty. As the developing world begins to recover, questions remain about further divides in outcomes for the ‘haves’ and ‘have nots’ of this world: global vaccine access, economic recoveries, inflation, etc.

If there was a silver bullet, we would have used it by now.

Poverty is intractable, multi-dimensional, and relative. Most policymakers and academics appreciate that reducing poverty will never be achieved with a ‘silver bullet’ (a magical perfect solution for everything), and the best solutions achieve the best results when focused on local contexts with specific issues. In 2019, the Nobel Memorial Prize in Economic Sciences was awarded to Abhijit Banerjee, Esther Duflo, and Michael Kremer for their experimental approaches addressing global poverty. They understood that instead of viewing poverty as one large problem that is impossible to solve, it is better to focus on smaller, more precise questions and outcomes related to poverty.

The way forward.

Looking ahead, it will be important to see a combination of large economic growth that targets income generation for the poor, as well as the support of opportunities targeting specific poverty related outcomes. At Holocene Impact Capital (HIC), we believe that this combination of macro and micro will be crucial in addressing extreme poverty in Africa.

On the macro level, 60-80% of the decline in poverty rates is due to this more inclusive model of economic growth. On the micro level, a promising trend is the growth of venture capital (VC) funding reaching Africa. While VC growth slowed due to the pandemic, it hit a new record of $2.25 billion and is expected to reach $10 billion by 2025.

Exciting firms doing good work.

In our research at HIC, we identified three interesting companies based in Africa looking to address extreme poverty.

WeFarm (Kenya)

Series A funding, $32 million.
WeFarm is a peer-to-peer platform connecting 2.4 million farmers where members share knowledge, reviews, and gain better access to the market.
The potential for a solution like this is enormous as more than 60% of the population in Africa are smallholder farmers and represent 23% of the continent’s GDP.

BRCK (Kenya)

Raised $4.2 million.
BRCK, through its Moja network, provides free public WiFi across 2,700 locations in East Africa with 700,000 monthly active unique visitors.
Solutions such as BRCK serve as a multiplier effect on the wider economy with the population’s growing mobile subscriber base in Africa reaching 456 million people in 2018. As more people connect, they will in turn demand more services such as conducting mobile banking pioneered by M-Pesa, use apps such as WeFarm for their livelihoods, or even consume videos for entertainment.

Dial-a-Skill (Botswana)

Dial-a-Skill is a labour-to-market connectivity platform that provides on-demand labour services.
Similar to other platforms such as Uber or Deliveroo, the importance of these apps is allowing people to enter the formal marketplace. This job security allows for predictable working patterns, safety of payments, and the ability for governments to collect taxes for necessary investments and services.

These three companies are just a sample of the great work happening in this space and we at HIC will be keeping an eye on this in the months to come.

If you are interested in learning more about HIC’s thematic capabilities, please email our Chief Sustainability Officer at [email protected].