What else and what more, in the name of impact?

What else and what more, in the name of impact?

Letter from our Managing Partner:

Dear Friends, 

I did not intend to write a letter at the start of 2019. Years that end in 9 (with the notable exception of 1999) aren’t typically the big “let’s take stock” or “let’s tell our story” years. However the events in the first few weeks of this year rapidly changed my mind. So far 2019 has been a year of tremendous highs and extreme lows, and I find myself certain of one thing only: those of us working to create a better world need to double down, accelerate our efforts, and amplify our voices. Hence this letter.
 
January started on a high note at Dalberg, with staff worldwide gathering for our biennial Global Retreat. We met in Kigali, home to one of our 8 Dalberg Advisors offices in Africa. Over the course of three days we discussed and debated diversity—the theme of this year’s retreat. We challenged ourselves and each other with questions like: Are we bringing enough diversity of thought to the problems we are trying to solve? Are we doing enough to build a culture of radical inclusion at Dalberg, living up to our own Dalberg Manifesto as the place to “bring your whole self to work”? And what else can we be doing to foster greater diversity and tolerance in the communities in which we live and work?
 
A few days after we left Kigali, terrorists attacked the Dusit complex in Nairobi. Terrorist violence can be motivated by many factors, among them gross disparities in economic opportunity, a sense of social exclusion and despair, or a belief that difference is a threat and thus a justification for atrocity. I don’t know what the motivations were on that day—I just know that we at Dalberg, like some of you, lost friends and partners. And this was not the first time. After the shock and sadness sank in, I found myself starting to feel anger. Anger that arbitrary and awful terrorist attacks continue to happen with sickening frequency, all over the world. Anger that we continue to live in a world of imbalance and injustice that feed further violence. Anger at myself for not having done more to change the world, or maybe for believing that I even can.
 
I am starting to suspect that the anger and sadness many of us feel may never fully subside. And maybe that can be acceptable, if we can turn it into fuel for collective action. In 2015, world leaders committed to 17 Sustainable Development Goals (SDGs) to create a better world by 2030. By this time next year, a third of the time set to achieve these goals will have elapsed and a new decade will begin the ten-year countdown to the SDG deadline. So unlike the start of 2019, I expect 2020 will be when many of us start taking stock of progress to date and telling the story of what will be needed next if the SDGs are to be reached by the end of the decade.
 
But if 2020 is a milestone, so too is 2019. Where we find ourselves next year depends on how fast and how far we push this year. The world is making progress towards the SDGs but it is both patchy and slow. UN Secretary General Guterres and others have repeatedly noted that the world is not currently on-track to achieve the SDGs by 2030 - a step change is urgently needed. So what else—and what more—can we be doing to have transformational impact at scale and as soon as possible?
 
Innovation is part of our DNA at Dalberg and we explore the “what else” by continually designing, piloting, and testing new ideas, investments, products, services, and solutions. All of these are informed by the detailed data and nuanced insights we develop through our capabilities in human-centered design, big data analytics, and household-level research. Yet while we explore the answer to “what else,” we already know the answer to “what more.” We need more pooling of knowledge, tools, and assets in our sector. We need more sharing of what each of us is doing and learning. And we need to regularly look each other in the eye and ask, with encouragement but also urgency, the question I posed above: What else—and what more—can we be doing to have transformational positive at scale and as soon as possible?
 
I hope to receive hundreds, if not thousands, of replies to this question!
 
As we pose this question, we at Dalberg want to share a handful of insights and tools that emerged from our work in 2018, in case any or all are helpful to your own.
 
The first is a new database that uses psychometric segmentation to help clarify the unmet needs and gaps in the communities we serve. The next is a new framework for quantifying what it will take to scale the world’s small and growing businesses. The third and fourth are new approaches to project/product design that focus on unlocking the potential of two key segments: entrepreneurs and women. The last is a tool to help those of us investing for impact select the right investment instrument for the circumstances.  
 
1. New Insight: Delving far deeper to deliver financial services that fit
Today, nearly 3 billion people lack access to affordable, high-quality financial services, whether credit to start a business or insurance to cover a health emergency. Such an enormous group of people inevitably has diverse financial needs and preferences. If you’re a financial service provider or development practitioner thinking about how best to design, refine, and deliver programs, products, and services to serve the financially excluded, have a look at The Human Account — a resource that can help bring much-needed nuance to the picture of this varied population. We believe this unique set of behavioral and psychometric data on 35 segments representing 1.98 billion people in six emerging economies can help all of us better understand, invest in, design for, and engage the underserved.
 
2. New Research: Revisiting how we segment SGBs to really understand how to scale them   
Small and growing businesses (SGBs) contribute to significant positive impact in emerging economies, but they struggle to access the capital they need to reach their full potential. Many are stuck squarely in the "missing middle": they are too big for microfinance, too small or risky for traditional bank lending, and lack the growth, return, and exit potential sought by venture capitalists. We developed a new archetype of SGBs based on analysis of a unique blend of variables: growth and scale potential, product/service innovation profile, and entrepreneur behavioral profile. The 'Four Families of SGBs' archetype and analysis provides new data on what financing each need based on specific market gaps and promising solutions for scale.
 
3. New Approach: Driving inclusive employment through “mass entrepreneurship”
Much is said about the power of entrepreneurship to generate jobs in emerging economies, yet we tend to focus on the extremes, such as the lone entrepreneur or the tech start-up unicorn. Often overlooked is the “mass entrepreneur,” who helps create the businesses we see in every village, town, and city, from restaurants to health clinics to auto garages and hotels. With our partners, we have developed three promising pathways for how to stimulate and support mass entrepreneurship, offering a new approach to generating economic opportunity for those without, turning job seekers into job creators.   
 
4. New Focus: Tackling time poverty—the tenacious disparity that affects women worldwide
Gender equity is central to strategies for unlocking inclusive growth. However, we haven’t paid enough attention to pervasive inequality in one finite resource: time. Women do 3x the amount of work in the home as men globally, and in some countries, the time disparity is as much as a factor of 10x. Over a woman’s lifetime, this adds as much as 7 years more unpaid work than men. Our research reveals the profound affects this has on women’s ability to engage in paid work, their participation in society, their ability to lead outside the home, and their health. For policymakers, businesses, or development practitioners working towards women's equity and economic empowerment, look here to better understand women's time poverty and what to do about it.
 
5. New Tool: Getting smart at selecting the right innovative financing instrument
Development impact bonds (DIBs) are gaining traction as a potentially powerful tool for financing activities that are innovative. At Dalberg, we have designed, managed, and evaluated DIBs across sectors and geographies, including the world’s first DIB in education, the Educate Girls DIB. Yet while we see the DIB model playing a powerful role in catalyzing private capital to complement traditional development efforts and funding sources, we know it is not the best fit for every context. Here is a simple checklist that we created to help ourselves and our partners—investors, donors, and non-profits alike—determine whether and when to do a DIB.     
 
We at Dalberg sincerely hope that one or more of the five nuggets above prove useful to you and your efforts to create impact. We share them not because we believe that any of them on its own is the answer, but because they have promise and utility. Furthermore, we are convinced that the pooling of knowledge, resources, and assets can only accelerate our collective progress in creating a better world, and there is no time to waste.

Take care and talk soon,

Yana

 

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Yana Kakar

Global Managing Partner, Dalberg Advisors
yana.kakar@dalberg.com | @YanaKakar
www.dalberg.com | @DalbergTweet