domestic resources channelled towards development by African countries. A direct ... 7 Standard Bank (2014). http://www.
The Rise and Rise of African Philanthropy: Harnessing Africa’s Wealth for Development (Concept Note for ‘I Will Give’ –Africa) Samuel Dare, Programme Manager and Financial Analyst, CHESTRAD International The 21st century has ushered in a new era of economic and demographic growth in Africa, with increasing levels of domestic resources channelled towards development by African countries. A direct consequence of this, is increase in levels of wealth and an expanding middle class1. This is not without its challenges as inequities continue to increase within and between countries, and it would appear that Africa’s economic growth is yet to meaningfully impact on its social development2. Another notable development is not only in the way firms view their Corporate Social Responsibility (CSR) requirements, but also public sentiment of firms that are fulfilling their social responsibilities. Corporations no longer see CSR as a box ticking exercise, but rather, more of a central part of their core business, as the world calls for capitalism that puts the people, environment and society at the top of the agenda, and adopt the principles of human centred development . Over this same period, economic recession in developed countries has meant a re-channelling and oftentimes reduction in Overseas Development Assistance (ODA)3. For well over many decades, ODA has been a traditional source of financial support for the social sector (health, education, poverty reduction, wealth creation and accountable governance) especially led by civil society organizations to support equitable growth and social development in many lower and middle income countries. The requirement for sustaining the achievements and scale of investments in key social sector activities including immunizations, control of leading health burdens (HIVAIDS, Malaria and tuberculosis) as well as the wellbeing of women and children expresses itself within this context. The paradox of Africa’s success means an increasing number of countries are no longer eligible for many forms of developmental assistance as they approach middle income status and are ‘graduated’ to self-sustaining achievements which accelerate progress from domestic resources. This ‘transition’ from aid to reliance on domestic financing has to be adequately supported so that the tremendous gains made are not only sustained, but amplified and indeed, expanded. This challenge presents a unique opportunity as Africa looks within its borders not only extend existing platform for financing for public/state resources, but also develop innovative mechanisms for domestic financing, not in the least, via grant making/philanthropy and allied fora to encompass the entire development continuum4. Philanthropy is a term coined by the global north, which generally involves cash transfers from donor to recipient. The case for African philanthropy plays strongly on the notion of giving, which is often more than a voluntary actit is a moral imperative. This was most times done informally through private donations and contribution of time. There is a dearth of information on the amount of funds that flows through philanthropy in Africa because of the nature of the giving, and the ethical issues with how wealth of High Net worth Individuals (HNWI) was acquired. However, a decade of economic growth has resulted in a pool of individuals with legitimate wealth.
1
www.southernafricatrust.org/changemakers/february2014/page5.html World Bank(2013): http://www.worldbank.org/en/news/press-release/2013/10/07/africa-continues-grow-strongly-poverty-inequalitypersistently-high 3Organization for Economic Co-operation and Development: http://www.oecd.org/newsroom/developmentaidtodevelopingcountriesfallsbecauseofglobalrecession.htm 4 European Center for Development Policy Management (ECPM): http://ecdpm.org/great-insights/financing-development/maximisingbeyond-aid-approach/ Page 1 of 8 2
Chart 1: Growth in the population of High Networth Individuals in Africa Africa’s prosperity has given rise to an emerging middle class5 and an increasing number of HNWI. The number of HNWIs and their wealth has grown at an average rate of 7.1% and 7.6% respectively6 , with the middles class in its major economies forecasted to grow from today’s 16M to over 40M by 20307. These factors will both play important parts in deepening Africa’s platforms for organized philanthropy including private donations and voluntary giving; ultimately contributing significantly to the innovative expansion in the levels of domestic financing for health and social development.
8
1500 Population of HNWIs ('00)
1400 1300
HNWI Wealth ('000 000)
1200 1100 1000 900 800 2009 2010 2011 2012 2013 2014
Box 1: Growth of Private Giving and Grant Making in Africa
‘Based on an estimated 37 million adults in Africa making charitable donations combined with a 2% average of disposable income directed to charity and other forms of private giving, the African Grantmakers Network (AGN) estimates the annual pool of charitable donations through mobilized philanthropy to be US$2.61 Billion. The African Grantmakers network (AGN) notes that with a population growth rate of 2.3% across Africa, together with an annual average rate of urban migration at about 3%, the annual pool of givers would increase by more than 5% annually’
5
Middle class is defined here as households earning between US$8,500 and US$42,000 a year Cap Gemini & RBC Management (2014). World Wealth Report 2014. 7 Standard Bank (2014). http://www.blog.standardbank.com/node/61428 8 www.southernafricatrust.org/changemakers/february2014/page5.html 6
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Table 1: Foundations by Africa’s Richest Country
Foundation
Sector
US$ ('000,000)
1 Aliko Dangote
Nigeria
Dangote Foundation
Various
172.3
2 Francois Van Niekerk
South Africa
Mergon Foundation
Health & Entrepeneurship
170.0
3 Allan Gray
South Africa
Allan Gray Orbis Foundation
150.0
4 Tony Elumelu
Nigeria
The Tony Elumelu Foundation
5 Theophillus Danjuma
Nigeria
TY Danjuma Foundation
Education Disaster Relief & Entrepeneurship Education, Health , Policy and Poverty
6 Donald Gordon
South Africa
Donald Gordon Foundation
Education & Arts
50.0
7 Mark Shuttleworth
South Africa
Shuttleworth Foundation
IT
40.0
8 Arthur Eze
Nigeria
N/A
18.3
9 Jim Ovia
Nigeria
Youth Empowerment & ICT Foundation
Various Disaster Relief & Entrepeneurship
10 Strive Masiyiwa
Mozambique Higher Life Foundation
Education & Orphanages
6.4
S/N Name
106.3 100.0
6.6
The past decade has given rise different philanthropic fora within Africa. These include (but are not limited to): The African Philanthropy Forum, The African Grantmakers Network, The African Union Foundation, The East African Association of Grantmakers, Nexus Africa and the Nigerian Philanthropy Forum. They serve to further the practice of organized philanthropy in general on the continent, as well as among wealthy individuals. These platforms offer opportunities for philanthropists to collaborate and share ideas and experience9.
819.9 Many of Africa’s richest have responded with the endowment of large Foundations, targeting specific causes and regions (Table 1) with an estimated $819.9 million provided to diverse sectors including health, education, entrepreneurship, poverty reduction, arts and disaster relief. At the same time, large multinationals have expanded and significantly invested in Corporate Social Responsibility targeting similar sectors with varying degree of scale and impact. In spite of these growing platforms, much still exists to be done to also harness giving from private individuals and corporations who feel the urge to fulfil their moral obligation to give and seek credible and accountable platforms to give. The urge to give back to society, that which society has given unto them, is one of the reasons underlying the moral obligation.
The philanthropic, private and voluntary giving environment in Africa is set to expand, proving a hitherto ineffectively tapped opportunity, to innovatively expand domestic resources to support scale and sustainability within the development continuum where aid increasingly becomes trade. It also provides the unique opportunity to sustain the work of non-state organizations, especially those of non-governmental and community based organizations as a part of a strategic approach to sustain and consolidate institutional capacities of these organizations in an evolving democratic environment, where state support for nonstate action is still embryonic.
I Will Give Africa I Will Give (IWG) is an innovative platform, developed by CHESTRAD International. It presents a unique and hitherto inadequately tapped platform to expand domestic financing for health and development through private and voluntary giving, including corporate social responsibility in Africa. IWG adapts the concepts of crowd funding with the objective of creating a platform that seeks to scale existing mechanism for philanthropy, channelling resources generated therefrom, into pro-poor programmes of high social impact and economic benefit identified as having 9
UBS & Trust Africa (2014). Africa’s Wealthy Giving Back Page 3 of 8
the highest return on investment. Beneficiary populations target women, children, adolescents, young people, the socially excluded and the vulnerable.
Approach IWG partners with Financial Institutions (FI) that will grant access to its client base. With the institution’s endorsement, customers are invited to voluntarily subscribe to IWG and donate an agreed monthly amount. These funds are pooled across several FI’s and disbursed to High Impact Social Impact Programs in the following sectors/areas; i. ii. iii. iv. v.
Economic empowerment including financing inclusion; Universal access to health inputs and coverage by services with emphasis on reproductive, maternal, neonatal, child and adolescent health; Girls and Women Education; Early learning and child development; and Enabling the organizational capacities and effectiveness of non-state organizations;
IWG aims to grow into a Pan-African domestic financing platform, commencing its programmes in Nigeria and Kenya in 2015. The experiences and lessons from these initial countries are vital for expansion into other African countries. IWG – Nigeria CHESTRAD International is in the final stages of partnership negotiations to implement IWG with Nigeria’s one of the leading and most reputable banks, the United Bank for Africa (UBA)10. At the end of 2014 UBA, estimated that there were 10.5 million client accounts in its database. To project revenue streams from client accounts, the following assumptions were made;
The Central Bank of Nigeria (CBN) estimates that the number of bank accounts increased by an average of 16% from 2011-2013. We projected an annual growth rate of clientele base of UBA to be 10%. This growth projections takes into account o Novel innovations currently coming to play as the Banking institutions in Africa progressively reached the “unbanked” o Multiple accounts in one Bank by a potential IWG subscriber o Multiple accounts by one IWG subscriber in participating Banks o Giving by a subscriber at higher than the projected minimum From UBA clientele base, we have projected that in the first 2 years (2015-2016) the total percentage of subscribers to IWG will progressive reach 10%. This estimate is informed by similar growths in donations to developed platforms such as this including Oxfam America11, Save the Children12 and World Vision13. It is
10
https://www.ubagroup.com/ Oxfam America: http://www.oxfamamerica.org/explore/inside-oxfam-america/financial-information/ 12 Save the Children: http://www.savethechildren.org.uk/ 13 World Vision International: http://www.wvi.org/ 11
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further informed by estimates of growth in philanthropy and the emerging middle class projected by the African Grantmakers Network and the African Philanthropy Forum14 The IWG estimates project that growth will peak and thereafter taper to 5% in 2019, and ultimately wind down to a stabilized long term growth rate of 1.5% annually. Working with the UBA figures and a monthly donation of NGN 500.00 ($US 2.50) , an annual sum of NGN 6000.00 ( $US 30.00) per IWG subscriber Growth is spread evenly within each year.
Annual Revenue from Bank Subscribers (NGN) 90,000,000,000
79,678,175,886
80,000,000,000 70,000,000,000
61,389,062,467
60,000,000,000 50,000,000,000
Based on the assumptions above it is estimated that the revenue of IWB will amount to $US 4.7M by the end of 2015, and the annual sum of $US 94.4 M in 2019. This will leverage a cumulative total of $US 246 M over the first 5 years of implementation of IWG in Nigeria alone.
41,703,325,842
40,000,000,000 30,000,000,000
21,026,047,200
20,000,000,000 10,000,000,000 3,997,347,376
Figure 1:- IWG Revenue Projections for First 5 years of implementation
2015
2016
2017
2018
2019
1. This projection does not include contribution from other subscribers who are in the clientele base of other Banks with whom IWG is currently in discussions. 2. It also does not take on board higher level private giving and subscriptions from enterprises and multinational corporations. 3. The potential for matching funds from foundations, bilaterals , development partners and public sector. Discussions are underway for the engagement of 4 other Banks in Nigeria15. Projections of revenue significantly increase with the final engagement of these Banks by the middle of 2015. The resultant combined volume of clientele across all 5 Banks i.e. UBA and the four others is 31.8M account holders. Similar assumptions for UBA apply with the projected cumulative funds mobilized across all financial institutions with whom IWG is in current discussion is presented below
14
www.southernafricatrust.org/changemakers/february2014/page5.html
15
We are unable to firmly disclose this Banks as we await final confirmation of the engagement of these Banks Page 5 of 8
Annual Revenue from Bank Subscribers; All Banks (NGN) 90,000,000,000
79,678,175,886
80,000,000,000 70,000,000,000
61,389,062,467
60,000,000,000 50,000,000,000 41,703,325,842
40,000,000,000 30,000,000,000 21,026,047,200
20,000,000,000 10,000,000,000 3,997,347,376
2015
2016
2017
2018
2019
Subject to finalization of a 16draft agreement, UBA will act as the banking sector lead to custodize and manage pooled funds across financial institutions and other stakeholders participating in IWG in Nigeria.
Fund Allocation to High Impact Social Programmes and Initiatives IWG targets sectors identifying that public sector and trade investments in the social sectors have a potential to lag behind those required for infrastructure development and economic expansion. This will impact on the work of many non-state actors, limiting their engagement and sustainability at the country level. Public sector efforts at expanding domestic financing might also not readily engaged the important work of these critical stakeholders. Finally, funds allocation draws from, and learns from nearly 20 years of CHESTRAD’s engagement at global, regional, national and local levels, bringing in this to identify and scale focal interventions that are known to be of benefit and are cost effective.
16
Copy of contract available on request under standard rules of confidentiality and non-disclosure Page 6 of 8
IWG has identified key sectors for investment of the pooled resources mobilized from subscriptions. These sectors identify with global directions for health and development in the Sustainable Development Goals (SDG) and Post 2015 global health agenda. It recognizes that maximal impact will be made when investment is cross-sectoral17. It also draws its sectoral targets from understanding that the development architecture18 will significantly change and aid will increasingly be expressed as trade and technical cooperation19. Investments seek to protect and scale the gains of the MDGs, while taking on board the progressive need to accommodate new priorities and emerging burdens20 The pooled contributions from subscribers to IWG will be proportionally applied as presented in the Chart 3 below, providing for the greatest investment in health sector (focus on the community health workforce) health commodities and vaccine access programme (40%) and youth enterprise initiatives (22.5%). It provides a further 20% for early learning and child development, 10% to support women and girls education and 5% to support the strengthening the organizational capacities of civil society organizations who are implementers of the key programmes of IWG.
Based on revenue projections from UBA, it is estimated that these programs will have leveraged the following over the next 5 years:
17
World Bank; Global Financing Facility : http://www.worldbank.org/content/dam/Worldbank/document/HDN/Health/GFFExecutiveSummaryFINAL.pdf 18 CHESTRAD: RMNCAH Country Engagement, Financing and Accountability Consultation Report (Forthcoming) 19 Reference the work of the Financial Sustainability Working Group as well as the final report of the Global Fund Working Group on the Development Continuum 20 CHESTRAD: CS Consultation on the Global Health Theme of the Post 2015 UN Agenda (2013) Page 7 of 8
Allocation to Programs of High Social Impact (NGN) 65,000.00 59,161
55,000.00 45,581
Millions
45,000.00 35,000.00 30,965 25,000.00 15,000.00
15,612
2,968.03
5,000.00 (5,000.00)
2015
2016
2017
2018
2019
1,187,212,170.82
6,244,736,018.51
12,385,887,775.12
18,232,551,552.76
23,664,418,238.07
Youth Enterprise and Entrepenurship
667,806,846.09
3,512,664,010.41
6,967,061,873.51
10,255,810,248.43
13,311,235,258.91
Early Learning Centers (Child Development)
593,606,085.41
3,122,368,009.26
6,192,943,887.56
9,116,275,776.38
11,832,209,119.03
Education Women
296,803,042.71
1,561,184,004.63
3,096,471,943.78
4,558,137,888.19
5,916,104,559.52
Civil Society Enabling
148,401,521.35
780,592,002.31
1,548,235,971.89
2,279,068,944.10
2,958,052,279.76
Special Project
74,200,760.68
390,296,001.16
774,117,985.95
1,139,534,472.05
1,479,026,139.88
2,968,030,427.05
15,611,840,046
30,964,719,438
45,581,378,882
59,161,045,595
Universal Access to Health, Vaccines and Live Save Commodities
Total Allocaton to PHSI
Proposed Monitoring and Accountability Matrices21 Monitoring and accountability for IWG has been identified both at resource mobilization and programmatic levels. These are based on projections of revenue from FNBL, and will be scaled for greater impact as the negotiations with other participating Banks evolve. Programme level impact matrices are also being developed for each of the sectors which IWG will invest. Expected outcome and impact will be driven by the level of resources available and incremental as more FIs and other partners participate in IWG. Final impact and accountability matrices will be developed by a Programme Monitoring and Accountability Team.
21
Please note that the assumptions and justifications for the impact matrices are still been refined in light of the above revenue assumptions. What are presented are initial thoughts and subject to change Page 8 of 8
