Giving Compass' Take:
- Ndidi Nwuneli discuss the importance of funding organizations local to the African continent to help them scale up their operations.
- Why do NGOs and corporations based in Africa not receive as much funding as those based elsewhere? What are the root causes of this inequity?
- Read more about funding African-led organizations.
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By 2050, Africa’s population is expected to double to 2.4 billion, meaning that 1 in 4 people in the world will live on the continent. And Nigeria will become the third most populous country after China and India. This dramatic demographic shift will have ramifications for the global social innovation landscape—and funders both in Africa and globally need to adjust.
While millions of social enterprises are emerging in Africa—concentrated in Kenya, Egypt, South Africa, and Nigeria—the majority are struggling to scale up. Their biggest challenge is the persistent barriers to obtaining funding from local and international organizations, particularly when compared to the funding that international NGOs and foreign-owned or -based social enterprises receive. Only 9 percent of large gifts by African donors and 14 percent of large gifts by non-African donors go to local NGOs. Most large gifts go to international NGOs based outside of Africa, operating foundations, and the public sector.
Over the next 20 years, this disparity must change so that local social enterprises can obtain the funding and support required to meet the education, health, climate, food security, and energy needs of Africa’s growing population. This shift will require a reset in the way that local and international funders, and international NGOs, engage with local organizations in Africa. For this to occur, African and global philanthropists, corporate foundations, and impact investors who are committed to supporting social innovation in Africa must embrace three critical actions.
When funders are challenged about their poor track record of supporting local African organizations, their principal arguments are that they cannot find credible and capable local companies or that they need to move quickly and prefer to work with trusted partners who are already in their “system.” On the other hand, African entrepreneurs argue that they are largely closed off from the funding landscape because of their limited networks and the implicit bias of many funders. Some also say that funders hold them to a different and often higher set of standards, and that funders tend to support individuals who share similar experiences to their own. They point to the example of some recent African entrepreneurs graduating with MBAs from leading universities in Europe and the United States who appear to have established support networks abroad before returning home to start their ventures, enabling them easier access to funding.
Read the full article about funding African-led organizations by Ndidi Nwuneli at Stanford Social Innovation Review.