The Block Island Wind Farm developed by Deepwater Wind

Scale is the name of the game

19/06/2017

Earlier this month in London, the FT-IFC Transformational Business Awards paid tribute to ground-breaking and innovative business solutions to today’s development challenges. This week we take a look at some of the winners and their backers.

The awards highlighted solutions that help meet key UN Sustainable Development Goals (SDGs). Alongside climate solutions (SDG 13) the main focus was on three SDG goals: health (SDG 3), education (SDG4), agriculture, land and nutrition (SDG 2). A total of 148 entries were received from 152 companies, investors, advisers and social enterprises from more than 84 countries. There was also a special category for cities. To enter, projects had to pass three hurdles: financial viability (or potentially within 5 years of implementation), progress beyond the implementation stage, and have measurable impact results.

 

Category SDG Goal Winner (s) and Special Commendee

About

Overall Award: Excellence in Disruptive Technologies 9, 8 Truck Alliance, China (Winner) Won the award for its innovative freight-truck matching platform, and its extensive truck services platform that connects numerous users with various vendors through the internet.
Overall Award: Excellence in Climate Solutions 13, 9, 7 Block Island Wind Farm, US (Joint Winner) The first commercial offshore wind farm constructed in the United States, this project paves the way for larger offshore commercial wind projects throughout the US.
13, 9, 7 CrossBoundary Energy Fund, Kenya, Rwanda and Ghana (Joint Winner)

 

Increases the efficiency of solar asset financing in Africa by aggregating investor capital.
Achievement in Transformational Infrastructure 9, 8 Truck Alliance, China (Winner) Based on the concept of a sharing economy,  Truck Alliance connects shippers and truckers, via a virtual platform to reduce China’s inefficient and antiquated road logistics industry.
13, 9 National Freight Information and Transportation Hub (NAFITH), Jordan and Iraq (Special Commendee) Designed to automate port operations to reduce corruption, the project has also introduced measures such as eGates, outdoor LED screens and electronic tagging to better manage safety and security, and address the system of informal payments.
Achievement in Transformational Finance 8 WorldRemit, Global (Winner) A low cost and instant global online money transfer business that enables migrants to send money home.
Achievement in Sustainable Development, with a focus on Food, Water and Land

 

2 Winnow, Global (Winner) The Winnow System makes it very easy to record exactly how food is being wasted through smart meter technology attached to food waste bins.
13 Ignitia, Sub-Saharan Africa (Special Commendee) The first forecasting system to send farmers in the tropics  daily, monthly and seasonal rain forecasts to help farmers avoid adverse impacts of an ever changing climate.

 

Achievement in Sustainable Development, with a focus on Health, Wellness and Disease Prevention 3, 8 CarePay M-TIBA Mobile Health Wallet, Kenya (Winner) An M-TIBA platform that is a mobile health wallet that administers health-care payments between public and private funders, patients and healthcare providers in Kenya.
Achievement in Sustainable Development, with a focus on Education, Knowledge and Skills 4 Edukasyon.ph Employment Platform, Philippines (Winner) The first education-to-employment tool in an emerging market that lists courses available, curates thousands of scholarships and brokers partnerships with private schools and government organisations..
4, 8 BRAC Star Skills Training Programmes (Special Commendee) The STAR programme tackles the skills gap in Bangladesh with an innovative apprenticeship scheme that pairs apprentices together under a Master Crafts Person, usually the owner of a small business, where they receive six months’ full-time training in financial literacy, market assessment and hands-on experience of managing a business.
Special Public Sector Award: Achievement in City-Led Transformation 13 PACCM Climate Action Programme, Mexico City (Winner) Mexico City’s Climate Action Program for 2014-2020 has delivered a framework to reduce the environmental, social and economic risks posed by climate change while promoting the welfare of the city’s population.

Disruptive technologies and disruptive finance and business models were the buzzwords of the day and the room was packed with a wide variety of organisations from around the world including the Gates Foundation, BlackRock to Legal & General Investment Management.

The overall winner for Excellence in Disruptive Technologies and the winner in Transformational Infrastructure was Truck Alliance, China which operates an ‘Uber’-style ‘Sharing Economy’ business model embracing an e-commerce platform matching drivers and their trucks with commodities in need of transport.   The company also coordinates the vacant parking lots and service centers it operates. China’s inefficient trillion-dollar trucking industry is ripe for disruption. More than 80% of goods are delivered via roads, yet haulers stand empty almost half the time.

About Truck Alliance

Founded in 2011, Truck Alliance, backed by internet giant Tencent Holdings Ltd, currently has 2.6 million registered vehicles, 300,000 corporate members and 2.3 million drivers, with 1,000 service centers around China. In 2015, it finished series A and A+ rounds from Tencent, Hillhouse Capital and DCM, raising more than US$100 million. In December 2016, All-Stars Investment Ltd, led a US$115 million series B-1 with funding from International Finance Corp., Genesis Capital and others. The company recently raised US$156 million in series B-2 funding, led by Baidu Capital, the investment arm of Baidu Inc, China’s largest search engine.

Trucks in a parking lot at a logistics park in Chengdu. Photographer: Qilai Shen/Bloomberg

You can understand why Truck Alliance was a winner of two awards. It looks to be a sure bet – a market innovator, investable, impressive growth, ground-breaking business model and has successfully overcome the challenge of getting China’s antiquated trucking industry onto a technology platform. Clearly, resource efficiency is at play, as well as potentially reducing congestion and helping haulers find more work. While it’s the only nationwide matching system between truckers and shippers right now, Truck Alliance, in true China style, is competing against 200 other start-ups in the logistics space. Backing for this phenomenal level of innovation is coming from overseas capital, local governments and traditional logistic companies. So how will Truck Alliance keep the truckers loyal to their app? As well as ease of use, platform stickiness must surely come from adding features such as helping drivers to cut costs through fuel savings, and incentivising them to upscale to cleaner vehicles.

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Even more on point for carbon reductions, and inspiring, were the ‘Excellence in Climate Solution’ joint winners – Block Island Wind Farm, US, and CrossBoundary Energy Fund, Kenya, Rwanda and Ghana.

The Block Island Wind Farm developed by Deepwater Wind

The Block Island Wind Farm developed by Deepwater Wind, is a five-turbine, 30 MW project and is the first commercial offshore wind farm constructed in the United States. Its main backers are Société Générale and KeyBank National Association of Cleveland, Ohio. To avoid shallow hazards and sediment disturbance and alteration, they used state-of-the-art technology to map the seafloor at the site and along its cable route. This wind farm paves the way for larger offshore commercial wind projects along the USA’s massive shallow water coastlines.

The CrossBoundary Energy Fund, Kenya, Rwanda and Ghana, is a platform to aggregate finance for medium scale renewable off-grid generation serving commercial customers in Africa.  The novelty of the fund is its regional mandate.  The CrossBoundary Energy Fund provides the capital to build the solar asset and is repaid by the customer through a long-term Power Purchase Agreement (PPA).  This widely used funding model is helping to make cheaper, cleaner energy a reality in many parts of the world.

Aggregating investor capital is an essential stepping stone to de-risk solar asset financing in emerging markets, as well as potentially improving project economics by distributing costs (and risks) across a portfolio of contracts.

Over the next year, the fund will deploy over US$25M to build large-scale solar facilities through the SolarAfrica platform and by pooling institutional capital to finance upfront installation costs of solar systems. Its first major investment is an 858 kWp solar installation at the newly opened Garden City Mall in Nairobi. Power Africa was an important initial supporter of CrossBoundary Energy. The Overseas Private Investment Corporation (OPIC) provided an early-stage grant to support start-up costs and the United States Agency for International Development (USAID) provided a US$1.3M first-loss contribution to the fund which helped attract private investors. The Shell Foundation, also provided grant funding and business support to help accelerate expansion into markets outside of Kenya.

The CrossBoundary Energy Fund, as well as SunFunder, which aggregates capital through its Solar Empowerment Fund – give investors an opportunity to invest in a diversified high-impact portfolio of off-grid and grid deficit solar projects. The UNDP is also developing a Climate Aggregation Platform (CAP) in collaboration with the GEF, Climate Bonds Initiative and IADB to aggregate small -scale, low carbon energy investments and attract new and diverse investors. All are addressing a gap in current funding needs.

For many businesses, a key challenge is not just about access to finance, but in finding the right people with the right skills to run projects and programmes. This is exactly what BRAC does.  As the Special Commendee award winner in Sustainable Development, BRAC is a capacity building ‘angel’ with its focus on Education, Knowledge and Skills Building and is one of the world’s largest development organisations, according to a ranking by NGO Advisor in 2016. BRAC is successfully tackling the skills gap in Bangladesh where there is a high number of underemployed, under-skilled young people and an increasing demand for skilled manpower from neighbouring countries. Their innovative apprenticeship scheme matches apprentices with a Master Crafts Persons, usually the owner of a small business. Students receive six months’ full-time training in financial literacy, market assessment and hands-on experience of managing a business.

Across all of its programmes BRAC employs 125,000 people, primarily women, in Asia and Africa. BRAC’s growth is based on Southern leadership and South to South (as opposed to North to South) exchange. For an organization of such size and impact, BRAC’s brand is not commonly known and it is funded by donor grants, social enterprises, microfinance programmes and self financing social development projects.  A primary BRAC funder is the Omidyar Network.

Stepping back and looking at the awards scheme as a whole, the theme underlying all the winners was about scalability.   All the data on NDC financing points to the need for scalability, so it’s good to see this emphasis in the awards.  At the same time one size does not fit all and financiers – banks, insurers and early stage investors especially – need to invest in their people and supporting mobile IT, to come up with the financial products which readily serve customers across the range of their localised energy, education, agriculture, health-care and mobility needs.  Here’s to seeing further innovation in development finance at next year’s awards.

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