Growing Small Businesses in Africa
Problem
Traditional financial institutions are reluctant to lend to small businesses because these businesses have higher perceived risks and are under collateralized. Yet, many small businesses have high potential for growth with appropriate financing products and business support. Small businesses are the start of locally-grown medium and large businesses and are the engine of economic growth and job creation in Africa.
Approach
KSI is an impact-first company that seeks to incubate new products, services and companies that serve aspiring small businesses to scale and to create jobs. KSI may invest in: innovative technology to improve loan processing and risk management; loan products that better match needs of growing small businesses; and non-bank financial institutions that are committed to borrowers’ success.
Currency Risk Reduction
Problem
Many African enterprises rely on investment capital from developed countries to build their businesses. To avoid losses caused by currency volatility, most international investors require enterprises to bear currency risk, through FX hedging or other means. These entrepreneurs not only have to successfully run their core business but also incur currency risks that are outside their control.
Approach
KSI seeks to reduce negative effects of currency risk by endorsing:
International lenders to invest in local currency
Expansion of local capital investing
Availability of catalytic capital to mitigate losses
Systemic solution to reduce FX risk premium for developing country currencies
Advancing Evidence in Job Creation in Africa
Problem
Job creation and access to decent work pose immense challenges in Africa. Research shows that grow-oriented small and medium-sized businesses contribute substantially to job creation. Yet there is little consensus on how best to support these businesses to become more productive and succeed.
Approach
KSI seeks to support evidence-based research on job creation and entrepreneurship in Africa. Guided by previous research, KSI intends to fund pilot programs for job creation that are scalable and actionable now.