Lessons learned & informed decisions
Lessons learned during 2009-2023 made us take the informed decision to only deal with under-served communities we can partner with a local team or local institution, as Programme Management Partners (PMP).
Programme Management Partner (PMP) are a team / an institution from the community who knows the community members (Target partners, TP) very well, personally. The PMPs must also accept the HR&S approach and be passionate about become a RISEmember.
It is obvious that for HR&S to be successful we have to have a sustainable economy for all partners, including HR&S country branches. Only if Country Branches have a solid economy can we scale and be powerful. Up front Country Branches sell two products, business loans and training. It has potential to be simple enough, with a good capital the interest of 10 % and enough number of RISE members who pays a fee for the coordination and training. If the capital is not consumed, but increases every year this is a solid platform to get visible, build brand and get involved also with other opportunities as a consultant. The opportunities are many. Key here is that our RISE members (and also Country Branch team members) deliver as agreed. When we have a solid Country Branch with positive financial balance, then we are stable enough to reach the very under-served community. Our RISE members shall have; i) strong market positions, good cash flows, financial strength, and a clear ability to develop.
The social impact/risk ratio
We aim to support companies with as much social impact as possible. At the same time lessons learned have shown that high social impact often comes with high risks.
We measure i) social impact with Progress Marker scoring, average (times 10) and we measure ii) risk with % , how much (money) have we lost per amount invested. We multiply the ration with 10. We do the calculations at the end of the year and it thus reflects the strategies we have been using during that year. That years strategy will then be adjusted through lessons learned and informed decisions.
20 % of the funds were lost, and the scoring was average 3, that gives a ratio of 15
Loss 50% score high 5 – ratio 10
Loss 20% score 5 – ratio 25
Loss 10% score 5 – ratio 50
Loss 50% score 1 – ratio 2
It is clear that the transition from aid donations to private sector investments is necessary in order to achieve sustainable development impact. Development finance institutions, institutional investors, and entrepreneurs in partnership with states for the creation of effective capital markets, has potential to be the future development driving force. It must be acknowledged that this is a huge transition and involves a number of challenges. We must thus be prepared to experiment regarding business collaboration, and to innovate while working together transparently.
Loans to micro-businesses
Lessons learned & informed decisions
Lessons learned during 2009-2023 made us take the informed decision to not accept loans to micro-scale businesses unless we can partner with a local team or local institution as Programme Management Partners (PMP).
Programme Management Partner (PMP) are a team / an institution from the community who knows the micro-business loan-takers (Target partners, TP) very well, personally.
Business idea based on interest
PMP: Takes a loan from ActionInvest with 10% annual interest. Gives out micro-loans to TPs.
- Monthly loans to TP with 3% interest per month and thus 36% annual interest. The PMP benefits from the difference in interest.
- The PMP gives loan per half year with 7% per half year and thus 14% per year. The PMP benefits from the difference in interest. The PMP can also benefit from lending out the same money more than once if the paying back is weekly or monthly.
Business idea based on fees
PMP: Pays an annual fee to HR&S Country branch to attend quarterly RISEtalks and receive extra support when needed.
- Fee from TP to (develop a loan giving programme,) identify loan-takers, give out loans and collect pay-back as well as provide training and address challenges when needed. The TPs may pay small, but they can be many, maybe 200 per PMP.
200 micro-business loans to farmers in ten villages. Since 2009.
Mincro-business loans to vendors of sanitary pads to the villages. Previously.
Micro-business loans in the WASH sector. Since 2023
Micro-business loans in the urban sector. Since 2023.
Products and services
Mills in Togo
Solar-panels in Togo
Health-care services in Togo
Production & sales of sanitary pads in Uganda
Back2School in Nigeria
HaIr-dresser training in Uganda
Background & Context
HR&S acknowledges that we have four levels of key stakeholders, all of which must be respected fully; the target partners in lower income countries and the investors, as well as the international and the national implementing partners.
The development plan must acknowledge and respect:
i) what are the four key stakeholders willing to contribute with,
ii) what do they expect in return and the accepted time until return, and
iii) what are the risks and how much risk are the stakeholders willing to take.
From the point of view of the Target Partners, HR&S builds the collaboration programme on the ambition of our partner, on their their outcome challenges, on their network and on their understanding of the local situation. HR&S aims to be a trust-worthy and capable partner.
From the point of view of the Investors, we acknowledge that investors must be certain that the funds, work effort, tools, network, experience and skills they contribute with is well managed and that sustainable impact is reached. Thus, HR&S works cautiously with risk mitigation and has in addition developed evidence based tools for both impact and risk measurement. We always seek contact with new potential investors partners.
HR&S itself offers the service of both the international and national implementing partners. HR&S Sweden operates as the international implementing partner and HR&S Country branches operates as the national implementing partners. We have extensive experience from acting as the platform for partnership, between stakeholders that otherwise may experience a gap in the cross-cultural understanding.
Partners with ability to develop.
- The PMP shall eventually be registered in the Target Country as a tax paying private company.
- The loan-taker must have local community ties
- Contact information: Phone, email.
- Social media account(s), including a a LinkedIn profile with work experience, education, business interests, etc.
- Have local community ties verifiable with active social media account(s).
- Government issued ID card. Other documents and items may be requested.
- Minimum age: 18 years old.
- Must have a sponsor. A sponsor is not a guarantor or a co-signer, rather they are a person who can vouch for your moral character and hold the PMP accountable for their actions.
- Sponsor requirements:
- Have a phone number, email, and an active social media account; including a a LinkedIn profile with work experience, education, business interests, etc. Have local community ties verifiable with active social media account(s).
- Be notified when loan applicants have applied for a loan, but are not privy to the loan application.
- Be notified if a borrower is 30 days late for a loan payment.
- Must be employed with an established career.
- Be 21+ years old. Can’t be immediate family members of borrower or someone who lives with borrower. Can’t sponsor more than one borrower. Sponsors can’t borrow him/herself if their sponsored party is delinquent or a new borrower (less than 3 months).
- Sponsor requirements:
- The PMP / Business must have a good social purpose
- Sustainable development is an important and integral part of the business and we also include research, education and sustainability in our portfolio.
- Adopting ESG principles means that corporate strategy focuses on the three pillars of the environment, social, and governance. Thus, our partnering philosophy is to empower profit making companies with strong structural growth exposure and management of ESG risks and opportunities. We demand constructive engagement including sustainability accounting standards. We also use the Sustainable Development Goals (SDGs) to identify structural growth themes.
- Excluded Businesses: Porn, gambling, weapons.
- RISE member with commitment
The loan-taker must agree to become a RISE member with commitment. We aim to create a long-term attractive return at balanced risk. Both returns and long-term sustainability benefit from active commitment. The nature of the target companies reduces the risk. The RISEmember show readiness for continuous communication. HR&S exercises active coaching and demand significant interaction with our partner companies and have a number of scheduled on-line meetings every month.
- RISEmembers pays an annual membership fee, and pays back the loan with interest in time.
The RISEmember shall attend quaterly / bi-annual RISEtalks and share knowledge.
- Terms & requirements subject to change.
New RISE Members To Understand HR&S
HR&S is not aid but a social enterprise that establishes country representation. The RISE provides coaching to members, as well as, manages the centre and generates income. It is slow but firm process to establish a new RISE Centre, where the team members with time understands the concept and the meaning of the different assignments. It is a trial and error. All information is available on the website. The transitions from theory to actual practice can only be made organically.
Attend RISEtalks of other branches to share knowledge.
Offer webinars, within the country or region or internationally, to share expertise knowledge.
Intrinsic motivation & Agency for change
The HR&S RISE members are very, very special people. They are the fore-front of HR&S in each country; respected, appreciated and trusted by HR&S Sweden to represent HR&S in our target countries.
- Must make an effort to understand the core values of HR&S and then make a well-informed decision on if they want to become RISE members.
- Must be active and take own initiatives.
- Cross-cultural understanding. In every country can it be difficult for the formally educated community and the illiterate community to understand each other. Thereby we may lack trust and respect and efficient communication may become a problem. In HR&S we depend on the coordination between groups with different capacity and experience, all being equally important, when improving livelihood for the under-served community; may it be the capacity to perform according to university education or to manage a programme within an under-served community. HR&S therefore depends on establishing teams of members with cross-cultural skills.
- As a result of the Aid industry, the expectation of persons seeking to become a RISE membermany be the donor-driven structure. Persons may expect that their salaries and other programme running costs shall be paid for by foreign donors, that foreign donors shall provide administrations services, pieces of training as well as equipment, consumables, service and maintenance, free of charge. But RISE team members must agree with that salaries are not paid for by HR&S, training is not given for free by HR&S, programmes are not funded by HR&S. Instead the RISE members represent social enterprises that generate the income required to do local social good, in deep, close and caring collaboration with HR&S Sweden. HR&S benefits from the Lean startup model, the Lean business model and the Agile strategy.
Potential new members must be able to answer a few questions about HR&S proving they have studies carefully and understood HR&S very well. They have to prove that they will take initiatives, be active and attend meetings, show cross-cultural respect with other communities and not be judgmental, and accept that the HR&S Branches are social enterprises that pay costs and reimburses team members from income generated by the Branch itself.
The selection process
- Pitches for the other RISE members (team-building) and for the Branch operations team. The potentially new RISE member is made aware that the capital is shared among all RISE members, and that paying back is key to the development also for the other RISE member businesses.
- Pitches for Action10.
- The HR&S Country team makes a light market review. HR&S assesses the businesses.There are many factors that affect business, the business skills of the owner, customer care, quality of products, etc. Therefore we do market research prior to giving out loans, we interview previous, new and potential RISEmembers and maybe a few sampled clients.
- The potential RISEmember attends minimum one RISEtalk with accounting training.
- Attends minimum one ROPE training.
1st loan, EUR 500 and above
A contract is signed before transferring the first loan. Decisions are made by the Country Branch and the HR&S Sweden together and are based on:
- The potential RISEmember pitch.
- The business plan of the RISE member and statement of account.
- The business plan of the HR&S Country Branch and statement of account.
- The size of the requested investment capital.
- A risk assessment, and procedures to mitigate the risk.
- And assessment of the social impact versus the HR&S effort.
- Draft RISEmember agreements developed by the country branch and RISEmember together.
- Assigned persons to manage the ROPE and the TestE, and a written RISEmember ROPE presentations.
- A second loan will also require a TestE report.
Assess the business plan & benefit from the lean-business model to ensure income
What are the problems that our product or service should solve for the customer?
What is our solution to this problem?
- The customer’s options.
How do customers solve their problem today?
- Key figures.
What measurement values do we want to use to check that we are on the right path?
- Unique value proposition.
What exactly makes our solution worth buying?
- Our competitive advantage.
Which one is it?
- Customer segment.
What does the ideal customer look like?
In what ways can we reach our ideal customer?
- “Early adopters”.
What does the ideal customer who buys first look like?
- By being a long-term, active partner, HR&S contributes to sustainable development in the partner companies.
- We aim to create a long-term attractive return at balanced risk.
- Both returns and long-term sustainability benefit from our active commitment and local presence.
- The nature of the target companies combined with HR&S risk mitigation strategies reduces the risk.
- We offer business loans and collaborate long-term to develop and create value in our partner companies. We exercise active coaching through significant interaction with our partner companies and we have twelve scheduled meetings every month.
- Sustainable development is an important and integral part of the business and we include research, education and sustainability in our portfolio. We collaborate with scientific institutions and support both research and knowledge for the long-term development.
- Adopting ESG principles means that corporate strategy focuses on the three pillars of the environment, social, and governance. Our partnering philosophy is to empower profit making companies with strong structural growth exposure and management of ESG risks and opportunities. Our internal research leverages our local knowledge, understanding, network and track record of constructive engagement
including sustainability accounting standards. We also use the Sustainable Development Goals (SDGs) to identify structural growth themes. Through our bottom-up research we find many examples of attractive companies whose activities do drive genuine and measurable SDG outcomes. We also look at whether the company’s activities are significantly misaligned with any of the SDGs. We have developed a unique and innovative tool to quantitatively measure ESG and SDG performances, ROPE, and use financial and progress marker settings to assess evidence-based sustainable impact.
During the pilot phase, we aim for the team leader to have good computer and internet access.
We also aim for a zoom account.
Efficient communication will take place if, and only if, both sides see the value in investing time and effort in the communication. If one side “goes silent” the reason can be lack of time, lack of internet access, or that the partner perceive that they do not benefit from the communication. No-one can be forced to communicate.
Win-win equal partnership
In a business relation both parties must benefit, or the relation will not last long. For both parties to benefit, both parties must try to find opportunities for the other party and therefore also have a deep interest in understanding the other party’s situation, ambitions, and challenges.
The HR&S approach is a win-win situation and both sides learn equally much from each other. One may be educated and the other may be learned about the realities on the ground.
There is a challenge related to the tradition of seeing mzungus as givers; money, training, travels, mentoring, coordination, administration, equipment, repair. But as we know from 60 years of aid, aid has proven to increase poverty. Moving away from looking for donation and a “Help-me” attitude to a proper equal partnership will empower all stakeholders, and create independent, self-sustained and powerful institutions. All members of the Branch operations team must have this understanding, which will result in that everyone will work hard to achieve results; attend all meetings, propose ways of doing things, take on assignments, and deliver results in time. The question changes from “how can you help?” me to “how can we help each other”. The HR&S management strategy is built on i) real-time outcome evaluation planning, ii) measuring impact using scientific methods, iii) managing transparency and accountability, and iv) needs and user-driven programmes.
Manage a joint WhatsApp chat with all Country RISE-members together
The purpose with the joint chat group is knowledge sharing, on all aspects of business scaling. We do accounting, road-maps, team-building and more. It is also for the RISE members to have an opportunity to share between your-self and give each other advice as being social entrepreneurs in Kenya. The RISE members share the same capital that is used for loans, and we depend on each other. We have to make the RISE-members to fee comfortable sharing successes and challenges with each other. We are all together, supporting each other. We need transparency and accountability to thrive. Each RISE-member to stay strong and know they belong to a strong, kind supporting team.
Social media – Progress markers
Each RISE member manages a FB page in order to reach and discuss with individual Target partners. HR&S and Action10 postings are shared and the PMone of followers are 500 per country.
Each RISEmember manages a LinkedIn page in order to reach institutions and sell coaching services. PMone of followers are 1000 per country.
The ultimate development equation by HR&S
- To design initiatives with sustainable development impact:
- All partners understand and respect each other.
- The finances balance.
- The progress markers score above the accepted level.
- The risk is below the accepted level.
- The risks.
- The competing Aid industry, which fails to measure evidence-based impact, but give donations instead of loans.
From the point of view of the Target Partner we build the collaboration programme on the ambition of our partner, on their their challenges and
on their network and understanding of the local situation. We aim to be a trust-worthy and capable partner.
From the point of view of the investors we work with risk/return&impact ratios. Investors need to know that the funds and effort they contributed with is well managed so that money is not lost and sustainable impact is ensured. Thus, HR&S is developing tools for risk assessment and risk mitigation. We always seek contact with new potential investors to work with.
HR&S offers the service of both the international and national implementing partners; HR&S HQ together with Action10 operates as the international implementing partners and HR&S Country branches operates as the national implementing partners. We empower every key stakeholder; through our development programmes, our target partners in lower income countries and our investors, as well as the international and the national implementing partners.
Each RISEmember deliver their annual report due 31 January.
The annual report shall contain the following chapters.
- Message from the Company Director.
- Financial report.
- Management report.
- Compilation of the leaders, members and the business.
- Compilation of services and products delivered, including those delivered to under-served groups.
- Compilation of Management Strategy for Change, training and coaching.
- The year ahead,
financially and concerning the programme.