A private agricultural company has a robust and proven business model that, on the one hand, trains farmers in climate smart agricultural technologies, and on the other hand, generates revenue through aggregation and sale of carbon credits. The business model is a win-win for both the private company, who is addressing a clear need for inputs, finance and market opportunities, and farmers, who benefit from increased access to products and services, including agricultural extension. The agricultural company has attracted traditional development donors, both bi-laterals and foundations, given the clear fulfillment of development focused objectives. AEI was hired to develop a concept note for one of these potential donors. Just one problem: private companies and development actors do not speak the same language! Some tips on how to bridge this disconnect:
Understand private sector priorities:
Development actors need to understand that private sector actors are interested in profit, growth and scaling. Even when their company achieves development-like results (training of farmers, financial inclusion), their number one priority is funding their business model. How they present what they do and why they do it will focus on explaining – and sustaining – their business model.
Understand development priorities:
Likewise, development actors are interested in the benefit to the participant. The success of the private company is only important as a means to a goal. Implementors are interested in private partners who help them achieve their pre-defined project-based mandates. Donors are interested in maximizing the benefit to participants, who are are also pre-defined. In both cases, the private company is not the focus.
Repackage what you do:
AEI helped the private company reframe their business model in “development speak” by creating a results framework and theory of change (which was extremely strange for the private company) but most importantly, by reframing the business model to reflect the language and priorities of the donor. Instead of presenting the benefit of different activities to the private company, AEI presented the same activities as they benefit the target participant, young female farmers. The end result is the same, but the language was reframed.
Tailor funding requirements:
If implementors are dedicated to partnering with private actors, and if donors are dedicated to helping private actors achieve development focused objectives, then donors need to develop private sector specific funding mechanisms. These tailored funding mechanisms need to enable private actors to present and finance their core business model, using concepts and language they are comfortable with – no more TOCs or Results Frameworks! M&E systems should also be tailored to core business functions.
Engaging with private sector actors is critical for successful, sustainable programming. Much of the focus of current economic empowerment programming – which includes elements of financial inclusion, market-based solutions, digital literacy, and value chain approaches to service delivery – require the involvement and leadership of private sector actors. AEI believes that private sector actors and development actors need to start speaking the same language. The only way for this to happen is for the development side to take the first step towards repackaging and refocusing development initiatives to attract and include private sector actors while ensuring mutual benefit.