Washington, DC — Western Union and the United States Agency for International Development (USAID) this week are launching an initiative to provide support for U.S.-based entrepreneurs from the African diaspora. In an interview, Western Union Vice President Barbara Span described the scope of the project, known as the African Diaspora Marketplace. Joining the discussion in the AllAfrica office was Mel Foote, president and CEO of the Constituency for Africa (CFA), which is an implementing partner for the project). Excerpts:
What are the first steps for the project?
Barbara Span: The Initiative will be launched in mid-December. Before that, we are doing one-day 'road shows' in seven U.S. cities with a high number of African diaspora.
Mel Foote: The cities are Houston, Atlanta, Los Angeles, Chicago, Philadelphia, New York and Washington.
Barbara Span: We will have workshops, sharing guidelines and we will be talking about sectors. Workshops include preparing a business plan, doing business across borders, how to approach an investment development board or banking institution, how to apply for a loan.
How does this second ADM differ from the first?
Barbara Span: In June 2009, we launched a business competition open to 19 countries. Western Union and USAID were partners (in the marketplace initiative). USAID missions in the 19 countries provided technical assistance. To qualify, applicants had to be part of the Diaspora based in the U.S. planning to invest in a business in their country of origin or another one of the qualifying African countries.
For-profit businesses have the potential to create jobs, to become sustainable – to grow in sync with needs and opportunities in Africa. Those were core reasons a Diaspora applicant would receive a grant. When we had 733 proposals submitted, we were overwhelmed, surprised and thrilled to pieces that there was so much interest. We had applicants from every country - and across a wide range of industries: agribusiness, ICT, alternative energy, tourism and travel, laundry businesses, transportation and logistics, engineering, biotechnology.
Our initial goal was to engage folks who were going to invest in business, that could create employment and be sustainable. It opened our eyes to the notion that these Diaspora are not just starting businesses and employing people, they're innovating processes on the ground for business licensing, for customs, for investment. They're innovating partnerships - really changing the way business is done. For example, they are sourcing, not just from the United States or Europe, but from within their own county and from neighboring countries. We saw all that in the applications and in the reality of the 14 winners. We've seen that play out in the 18 months since these businesses were awarded their grants.
How does this fit into 'social responsibility' and how is this initiative an opportunity for Western Union as a company?
Barbara Span: Through our core remittance service, which we provide in 200 countries and territories around the globe, we reach a significant base of people in countries where they are seeking economic opportunity, access to financial services and the ability to grow their own wealth and engagement as individuals, families and businesses. Our consumers in the Diaspora who have often left their country of origin because of lack of opportunity or desire to grow and have gone to another county and are remitting funds home to help their family and friends and localities get opportunities that they might not have had. It's difficult for companies to grow in places where there has been no access to financial services.
The opportunity for Western Union in this is that there's often a perception that we're reaching and serving just the poorest of the poor and that as a company, we should do so philanthropically. As part of our business, we serve individuals who have small and medium size business enterprises. We engage with our consumers and we're trying to make a difference in their lives. The African Diaspora Marketplace helps Western Union expand outreach to small business.
How did the first Marketplace come about?
Barbara Span: Our participation in the ADM came from talking to our remittance consumers and hearing about their desires to start businesses. So we started ADM as a pilot, not really knowing what the response was going to be. George Washington University did an international Diaspora study and said a lot of the Diaspora really want to invest. They don't want to just give philanthropically. They want to create a business. They want to create a situation other than the situation which they left.
We put out a request for a proposal with guidelines and received 733 applications - probably three times as many as we expected. The number of winners was limited by the award pool. We had $1.4 million $1.4 million went to 14 winners, each getting about $100,000. They were monitored - looking at things like the employees that were hired, how they innovated - over 18 months, which honestly is too short a period of time to measure. You really need to measure for three to five years, that's the time-frame we had.
With ADM I, innovation has been a major outcome. Look at SPROXIL in Nigeria addressing the issue of counterfeit pharmaceuticals prevalent throughout Africa. SPROXIL has generated deals with pharmaceutical companies where they put a code behind a scratch-off label and consumers can SMS the number to find out if it's counterfeit.
Another example is satellite tracking of goods being transported in Ethiopia. There are all kinds of issues that can be addressed with satellite technology. Coca Cola was the first contract with them. Another winner was Ghana's first commercial goat farm that imports a specially hardy goat stock from South Africa.
There is also the Lake Victoria ferry business connecting Uganda, Kenya and Tanzania. They are working with 600 local farmers to grow sunflower seeds to provide the fuel for the ferries.
One key piece we learned from the first ADM is that the small grants help to leverage more funding. Take for example Sproxil. After they got some $100,000 from Western Union, their business model was such that they were earning revenues early on. But to really expand and grow not only in Nigeria but to other countries, they needed more capital and, in the last three or four month, they raised $1.8 million from a private equity investor. For the ferry company, each ferry costs between $500,000 and $1 million to build. You might think, how does $100,000 help in that? Well it helped them attract investment.
Mel Foote: One of the things I find interesting is that the winners are getting to know each other. The guy in Ethiopia is talking to the guy in Nigeria. This bodes well for Africa in the future, they are not only looking at their country but more pan-Africa across the continent.
Barbara Span: Yes, pan African networking – they are looking at other business people who have experienced the same barriers and issues, and they are learning from that networking. The company, through the African diaspora market place, met a partner who did the paperless ticketing.
In ADM II, the goal is to get information from folks who been through the headaches, the struggle and success [of ADM I] and build a tool kit out of information and resources for the folks coming through the second time. And not just the folks winning money, but anyone who applies.
How is ADM II structured?
First of all, we've expanded our monitoring to a two-year timeframe. That's only incremental, but it's a step in the right direction. Number two, we are working to get other partners at the $150 to $300 thousand level of funding that can take the businesses to the next level. The ADM I winners can be introduced to these funders, along with ADM II winners, once they get past the two year mark. These organizations can then take them after two years to that next level, those who are in a position to need that support and are qualified to get to that phase of support. So that's a change that we've made this time. The third change is we're narrowing the eligible sectors to three - agribusiness, ICT, and alternative energy.
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You mentioned seeking more funding. Where are you looking for support?
We are reaching out to other corporations. For ADM I, the funding participants were USAID, Western Union Company, Western Union Foundation, and two Western Union agents. The Western Union Company matched agents' donations. So we are reaching out in same way for ADM II and, beyond that, looking for other companies in other sectors to participate in funding.
Mel Foote: There are a lot of companies in Africa that should support this. It's not just an American thing. It's Africans and Americans working together.
Barbara Span: That's right. Western Union agents in Africa participated last time, and we are reaching out to Western Union agents in the United States and Africa, as well as companies, foundations and private and public capital equity funds.
How is the Constituency for Africa involved?
Mel Foote: CFA is one of the associates working on the project. We are marketing the project to the Diaspora encouraging participation, including participation by women. We are focusing on the website and business plan and working with George Washington University, evaluating proposals as they come in.
Barbara Span: George Washington University will be part of the reviewing process through the first round. After that point we will have an independent entity as we did last time, comprised of folks involved in the small and medium-size enterprises sector and the equity investment sector to do the review as we get into the business side of things.
