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Social Enterprise

Across Africa, there is a pressing and vital need for communities to move beyond mere self-sustenance and become commercially viable. However, many efforts in this direction are isolated and primarily focused on urban areas, often resulting in limited success rates and minimal impact, with a notable disconnect from NGO development activities.

ForAfrika’s Continuum of Transformation

ForAfrika Social Enterprise (FASE) represents phase two of our Theory of Change, advancing the ongoing journey towards thriving African communities. Building upon the foundation established by ForAfrika Humanitarian and Development (FAHD) division, it extends the continuum of transformation through a proven process that graduates individuals from self-sustainability in phase one to commercial viability in phase two.

This transition unfolds in three stages: Early, Growth, and Mature, each with its own set of criteria and services. In the Early Stage, individuals transition from self-sustainability to establishing micro-enterprises, which expand into well-established and profitable small businesses in the Growth Stage. Ultimately, the journey leads to the development of medium-sized businesses with strong profitability in the Mature Stage. Throughout this process, our integrated approach ensures that individuals and their communities become commercially viable and are given a platform to thrive.

ForAfrika Social Enterprise

Across Africa, there is a pressing and vital need for communities to move beyond mere self-sustenance and become commercially viable. However, many efforts in this direction are isolated and primarily focused on urban areas, often resulting in limited success rates and minimal impact, with a notable disconnect from NGO development activities.

Leveraging over four decades of experience, we are committed to implementing a fully integrated model where self-sustainability serves as the stepping stone to thriving communities. The Social Enterprise division strategically capitalises on the deep-rooted relationships and trust established within communities through our longstanding Humanitarian and Development programmes. These programmes have diligently served these communities for many years, ensuring effective targeting, risk reduction, sustainable business growth, and substantial impact.

Individuals who transition into the Social Enterprise services have already demonstrated their capabilities through grassroots economic empowerment activities provided by the Humanitarian and Development division in phase
one. They are now poised to embark on their journey towards thriving through commercial viability, significantly mitigating individual risks.

In addition, the Social Enterprise division maximises the extensive infrastructure established by ForAfrika’s long-term presence in these communities. This infrastructure serves as a solid foundation for the development of highly effective Social Enterprise Hubs that evolve in tandem with the community’s progress, from the Early to Growth and ultimately Mature stages. This approach effectively reduces organisational risk and ensures sustainable community development.

Social Enterprise Hubs

At the centre of the process is the ForAfrika Social Enterprise Hub. These hubs are physical infrastructures established within communities to serve as platforms for a wide array of services. They evolve alongside service expansion, progressing from micro to mid to macro hubs. Operated as for-profit commercial centres, they ensure sustainability and adhere to sound business practices. Profits generated by the hubs are reinvested into development activities, facilitating the continuous expansion of ForAfrika’s reach and its ability to implement its Theory of Change across numerous African communities.

With a primary focus on the agricultural value chain, each hub offers a comprehensive range of services to farmers. These services are funded through loans provided in the form of vouchers, covering extension services, inputs, mechanised services, post-harvest storage, value addition, and trade. To ensure the availability of these services in the required quantity and quality, the hubs also provide training and asset financing to local businesses that offer them.

This approach not only promotes the effective development of the local agricultural market but also mitigates risks associated with loans to farmers. By exerting control over the quality of service they receive and ensuring their access to services through the voucher-based loan system, we reduce the risk of loan default. Simultaneously, we de-risk the local-service-provision businesses by providing them with a captive market during their early stage of development.

ForAfrika Social Enterprise services are positioned at the centre, serving as both the financial service provider and collateral management entity. This enables us to secure future farmer loans against their prior harvest, ensuring that farmers achieve maximum returns by no longer being price-takers forced to sell at harvest time when market prices are typically at their lowest. Additionally, we add value to commodities through processing.

As the hub grows, these services expand to include increased food processing capacity, logistics infrastructure, and market platforms, including distribution and retail within the target community. This holistic approach enables us to build more robust agricultural economies and ensure sustainability through profitability of the ForAfrika enterprises.

The hubs extend beyond agricultural services to provide small business development support across various sectors, including direct sales and distribution, catering, tailoring, mechanical and electrical, and other relevant industries.

While there is value in the traditional adage of “giving a man a fish and teaching him to fish,” we recognise that there is even greater potential or transformation when we become true business partners. Providing immediate aid and imparting skills are crucial steps towards self-sufficiency. However, by building genuine partnerships, we not only equip individuals with the means to support themselves but also enable them to thrive and contribute to the economic growth of their communities. As business partners, we collaborate, innovate, and invest in sustainable ventures that have the power to create lasting impact and bring about systemic change. ForAfrika’s Theory of Change embodies this philosophy. With one Theory of Change, two proven processes, one promise – we’re committed to the long run, until the job is done and communities are enabled to thrive.

1. Individual Pathway

Individuals initially engage with the organisation as participants in the ForAfrika Humanitarian and Development (FAHD) programmes. They then progress towards achieving self-sustainability through the support and interventions provided by ForAfrika. Upon reaching a certain level of self-sustainability, recipients graduate into ForAfrika Social Enterprise (FASE). Within FASE, individuals continue their journey towards commercial viability and thriving through tailored support and services, ultimately contributing to sustainable development and economic growth within their communities.

This is illustrated in the first linear process and comprises the following stages:

Phase 1 - FAHD:

  1. Emergency
  2. Recovery and Transition
  3. Transformational Development

Phase 2 - FASE:

  1. Early Stage
  2. Growth Stage
  3. Mature Stage

1. Profiling the individual at each stage

METRICS 1. EARLY STAGE 2. GROWTH STAGE 3. MATURE STAGE
1. Income Level Low but above the lower-bound poverty line Above the upper-bound poverty line Good
2. Education / Skills Levels Low Basic - Intermediate Intermediate - Advanced
3. Employment Status Subsistence / Informal work Employed / Self-employed Employed / Self-employed
4. Food Security Secure but vulnerable Secure Very secure
5. Health Status Decent access but vulnerable Good Very good
6. Accessibility Poor infrastructure and many logistical constraints Decent infrastructure and logistical networks Good infrastructure and logistical networks
7. Location and Mobility Vulnerable to conflicts, natural disasters etc. Resilient and settled Highly resilient and well established
8. Livelihoods and Economic Opportunities Low Good Very good

2. Accessing the need

The unique challenges encountered by the invididual in each phase will shape the approaches that FASE will adopt to address these. This will enable the individual to progress to commercial viability and thriving. These approaches will become our Proven Process.

METRICS NAME 1. EARLY STAGE 2. GROWTH STAGE 3. MATURE STAGE
1. Access to Capital. Limited financial inclusion Access to micro loans and ‘pay what you can afford’ capital Access to mid-size loans Access to larger commercial loans and asset finance through syndication
2. Vulnerability to Climate Change High, with basic implementation of climate-smart agri-practices Medium, with intermediary implementation of climate-smart agri-practices Low, with good implementation of climate-smart agri-practices
3. Access to Natural and other resources i.e.: water, electricity Low Fair Good / Reliable
4. Lack of Skills and Capability High Intermediate Low
5. Integration into Value Chains and access to Markets Low Intermediate Good
6. Access to market information and vulnerability to market volatility Low Intermediate Good
7. Access to technology Low Intermediate Good

2. Enterprises Pathway

The pathway of the individual serves as the foundation for subsequent pathways, with the next being Enterprises. These evolve alongside individuals progressing from Early to Growth to Mature Stage. In the Early Stage, individuals transition from self-sustainability to establishing micro-enterprises, which expand into well-established profitable small businesses in the Growth Stage. Ultimately the journey leads to the development of medium-sized businesses with strong profitability in the Mature Stage.

Enterprises are illustrated in the second linear process and comprises the following stages:

Phase 1 - FAHD:

  1. None
  2. Subsistence to Smallholder Farmer

Phase 2 - FASE:

  1. Micro Commercial Farmer/Micro-Entrepreneur
  2. Small Commercial Farmer/Small Entrepreneur
  3. Medium Commercial Farmer/Entrepreneur

1. Profiling the Enterprise at each stage

METRICS 1. EARLY STAGE 2. GROWTH STAGE 3. MATURE STAGE
1. Size of Land under Production (ac) 3 - 10 acres 10 - 50 acres + 50 acres
2. Average Annual Production (mt) 5,6 - 18,7 mt 18,67 - 93,35 mt + 93,35 mt
3. Average Annual Revenue (USD) $ 4,095 - $ 13,650 $ 13,650 - $ 68,250 + $ 68,250
4. Number of Labourers 3-30 30 - 150 + 150

3. Social Enterprise Hub Tiers

The following layer consists of the ForAfrika Social Enterprise Hubs. These Hubs function as agri-centres of excellence that aggregate and distribute products and services to individuals and enterprises alike. In addition, FASE will provide ongoing support and extension services through these Hubs either directly or through partnerships.

HUBS are illustrated in the third linear process and comprises the following stages:

Phase 1 - FAHD:

  1. Micro Hub

Phase 2 - FASE:

  1. Micro Hub
  2. Hub
  3. Super Hub

1. Profiling the Hubs at each Tier

CHARACTERISTICS TIER 3: MICRO HUB TIER 2: HUB TIER 1: SUPER HUB
1. Min. number of farmers 600 farmers 2,001 5,001
2. Min. number of farming co-operations 30 (20 farmers p/co-op) 100 250
3. Min. number of VSLA’s 20 (30 individuals p/VSLA) 67 167
4. Min. number of householders 2,700 9,005 22,505
5. Min. number of loans 600 2,001 5,001
6. Min. size of land under production 600 acres (1 acre p/farmer) 2,001 acres 5,001 acres
7. Min. revenue p/annum US$ 200,000 Resilient and settled US$ 1,700,000
8. Min. production throughput p/annum 1,120 mt Good 9,337mt

2. Profiling each service offering with consideration to the nuances of the HUB Tier

SERVICE OFFERING TIER 3: MICRO HUB TIER 2: HUB TIER 1: SUPER HUB
1. Inputs Bulk sourcing Strategic Partnership Acquisition
2. Mechanisation ForAfrika and newly established local businesses Local service provision businesses Local service provision businesses and own mechanisation - Asset Financed
3. Supply Chain Management Warehousing Warehousing and Cold Storage Warehousing and Cold Storage
4. Collateral Management Micro-Agri Credit Agri-Growth Credit Agri-Enterprise Credit
5. Value Addition Processing Basic processing i.e. Milling Beneficiation High / Export Quality Production
6. Distribution (eCommerce, Direct, Indirect) Local DC / Direct and Informal Channels District DC / Formal and Informal, and Direct and Indirect Channels Provincial DC / Export markets / Formal and Informal, and Direct and Indirect Channels
7. Financial Services ‘Pay what you can afford’ / Micro Loans Micro Loans / Loans Larger Loans / Syndication
8. Training Base level extension services Intermediate Training Accredited Training

4. Farmer/Enterprise Funding

Individuals and their Enterprise receive various types of funding and capital dependent on the maturity of their businesses. This is provided in the form of loans issued to the farmers/enterprises as vouchers, which they redeem to access services covering extension services, inputs, mechanisation services, post-harvest storage, value addition, and trade from the Social Enterprise Hubs.

Type of Funding is illustrated in the fourth linear process and comprises the following:

Phase 1 - FAHD:

  1. Grant Funding

Phase 2 - FASE:

  1. Grant Funding
  2. Micro Loans / Soft Loans
  3. Debt / Equity

1. Profiling the criteria and size for each funding/loan category

CRITERIA MICRO LOANS MID LEVEL SOFT LOANS DEBT / EQUITY
1. Min. funding / loan size US$ 500 – US$ 2,000 US$ 2,000 – US$ 10,000 US$ 10,000 – US$ 50,000
2. Security / collateral Crops – expected harvest yields, and Livestock Land, machinery, livestock and expected harvest yield of crops Crop inventory, Agri land, and machinery and vehicles
3. Interest Rate Zero to Low Low Market
4. Repayment Period 6 months - 1 year 1 - 3 years 3 – 5 years
5. Purpose Extension Services, Inputs, Mechanisation and post-harvest services Micro services + Expand operations, acquire equip, land improvements, diversification Scaling production, establish agri-processing facilities and value-add activities
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© 2024 | For Afrika to Thrive (Registration Number: 2010/025117/10) is a multi-national public charity with a global reach. It has affiliate offices in:
• South Africa (ForAfrika South Africa NPC, Registration Number: 1983/011022/08, NPO Number: 052-455-NPO, PBO Number: 130000144)
• United Kingdom (ForAfrika UK, England and Wales Registered Charity Number: 1050992, Scotland: SC043643)
• USA (ForAfrika USA, EIN: 38-2726350)
• Canada (Canada ForAfrika, Charity Number: 865982573 RR 0001)
• Germany (ForAfrika Deutschland e.V., Tax Number: 99019/38930)
• Switzerland (Stiftung Schweiz ForAfrika, Registration Number: CHE-114.509.322)
• Australia (ForAfrika Ltd, Registration Number: 651 493 980)
• Norway (ForAfrika Norge, Registration Number: 828 055 232)

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