WE’VE IMPACTED MORE THAN 500,000 LIVES THROUGH
Jaksally’s Patient Capital Model is a New Approach to Solving Poverty
PATIENT CAPITAL SOLVES TOUGH PROBLEMS BY BRIDGING MARKETS AND PHILANTHROPY
The markets alone cannot solve the problems of poverty; nor are charity and aid enough. Two-thirds of the nation’s population still lives in poverty, and we need new approaches in order to find new solutions. We also need to recognize how challenging it is to build large-scale, lasting solutions in some of the toughest environments in the country. There are no easy answers.
A THIRD WAY TO THINK ABOUT AID
Patient capital investing bridges the gap between the efficiency and scale of market-based approaches and the social impact of pure philanthropy. Patient capital has a high tolerance for risk, has long time horizons, is flexible to meet the needs of entrepreneurs, and is unwilling to sacrifice the needs of end customers for the sake of shareholders. At the same time, patient capital ultimately demands accountability in the form of a return of capital: proof that the underlying enterprise can grow sustainably in the long run. We are seeing exciting new business models capable of bringing affordable, life-changing products and services to the poor. These businesses are transforming the lives of their beneficiaries, and are creating jobs that lead directly to economic growth. Starting a new group/business is always tough and starting a group/business in the developing nation can be much tougher. Launching a business that focuses on the needs of the nation’s poorest often seems impossible. Patient Capital is the scarce resource that allows new, sometimes crazy, potentially world-changing ideas see the light of day.
INVESTMENTS NOT CHARITY
For Jaksally, patient capital is understood as a VSLA mobilisation investment in an early-stage group/enterprise providing low-income beneficiaries with access to financial education & literacy, healthcare, water, housing, alternative energy, or agricultural inputs. Our typical commitments of patient capital for a/an group/enterprise range from $50 to $18, 000(1US$= 5.5GHS) in savings mobilisation, equity or debt with payback or exit in roughly 1 to three years. The patient capital Jaksally facilitates or provides is accompanied by a wide range of management support services nurturing the groups to scale. In the long-run we aim to see a return of our capital. We do not expect high financial returns to come from investing in businesses that serve the poor.
DEFINING PATIENT CAPITAL
Our aim in mobilizing to investing patient capital is not to seek high returns, but rather to jump-start the creation of enterprises that improve the ability of the poor to live with dignity. We define patient capital as having these characteristics: Long time horizons for the investment Risk-tolerance A goal of maximizing social, rather than financial, returns Providing management support to help news/group/business models thrive The flexibility to seek partnerships with governments and corporations through subsidy and co-investment when doing so may be beneficial to low-income customers.