In this blog we highlight the three main takeaways from the discussion:
First, we heard that at the enterprise level, progressing toward commercial capital is not necessarily a linear journey, and engaging local financial ecosystems can help mobilize commercial capital in the long term. We saw an example of this with the case study of DeHaat, an agritech company which offers input sales, advisory and output purchase to 300,000 smallholder farmers in Eastern India.DeHaat has received venture capital from investors but is also mobilizing grant finance to explore the potential to provide financial services to farmers at a lower cost that are tailored to farmers’ needs by being linked to the harvest cycle. CASA TAF is helping the company to pilot this new offering, in partnership with a local financial institution, iterating the model as they learn what works best for all stakeholders – the bank, the company and the farmer. DeHaat is a clear example of FSG’s “Disrupt and Grow” paradigm – DeHaat is a highly disruptive business building new pathways along smallholder inclusive supply chains.
Second we learnt that grant or sub-commercial capital can be used to entrench inclusion into models and markets. The CASA TAF provided clear examples of this by highlighting their work to provide inclusive technical assistance alongside commercial investments. For example, working with CDC’s investee company HR Food whose dairy brand, Osam, is available in the Indian market, the CASA TAF is working on a bundled procurement model to introduce Stellapps technology to measure quality and democratize pricing in the dairy industry, and to provide commercially viable extension services to smallholder farmers. The CASA TAF estimates that this investment will increase commercial value for the business while at the same time raising smallholder incomes by £123 per year for 2,400 farmers by the end of the project. Dairy in India could be an example of what FSG term the “Guide and Shift” pathway: with the encouragement of external actors, like the CASA TAF, companies, like HR Food, adopt inclusive practices and eventually the whole sector moves to become more inclusive.
And finally we discussed that market-level approaches have longer timelines, but also potential for impact at greater scale. The panel discussion moved on to consider the different approaches of development actors: those focused on sector change via the Market Systems Development approach and those using targeted technical assistance alongside specific company investments. Rather than being at odds, the panel agreed these two approaches are complementary. Interventions – both at sector and enterprise level can target multiple levers – and can help an economy advance. The CASA TAF seeks to demonstrate that enterprise-level interventions can have systemic impacts if designed from the outset to scale, sustainably. This is why the CASA TAF’s upfront “Inclusive Business Plan” analysis phase is important to forecast the investment required, as well as right-size the TA and the associated cost-share with the business.
This provides a short summary of our lively discussion, watch the full webinar recording below. We welcome your feedback and comments.