01 The Impact Investing Working Group of the Presidential Investment Council, Senegal
The Impact Investing Working Group of the Presidential Investment Council, Senegal
Engage Market Stakeholders
Toolkit step: Engage Market Stakeholders
In Brief: Created in 2002, the Presidential Investment Council (CPI) is responsible for identifying and addressing the constraints faced by businesses in Senegal. Its goals are to increase private-sector investment and contribute to sustainable economic growth and poverty reduction. The CPI engages international and domestic investors, policy-makers and entrepreneurs to formulate and implement policy reforms.
CPI members meet annually to assess progress and discuss specific themes related to the development of Senegal’s private sector. In 2011, for the Council’s 10th annual session, over 400 guests from various industries met for a day of dialogue and exchange around the question, “What reforms will strengthen the social impact of private investment?” Following these discussions, the Impact Investing Working Group was established to propose reforms to increase opportunities for impact investment and social entrepreneurship in Senegal. The lessons learned from the process include:
- Develop a common understanding of key terms and concepts to provide a starting point of discussion between various stakeholders
- Leverage media and public relations opportunities to introduce social enterprise into the national, public conversation
- Identify the appropriate organizational structures that facilitate the exchange of ideas and incorporate diverse perspectives
Policy Goals and Development
As a result of structural adjustment programmes promoted by the World Bank and International Monetary Fund in the 1980s and 1990s, Senegal became heavily indebted, relying on development assistance and lacking the business conditions to attract private investment. To remedy the situation, with support from the World Bank and International Monetary Fund, the President of the Republic of Senegal created the Presidential Investment Council.
The government’s primary objective in establishing the CPI was to institutionalize a framework for dialogue with the private sector to encourage and drive economic growth and reduce poverty in Senegal. The CPI identified constraints and adopted a series of reforms related to access to finance, physical infrastructure, human resources and good governance. For example, the CPI succeeded in lobbying for certain “pro-business” changes in Senegal’s tax code, including lowering the corporate tax rate from 33% to 25%, eliminating a tax on the informal sector and lowering the consumption tax on tourist industries from 18% to 10%.
The President of Senegal heads the CPI and moderates its annual sessions with support from the following groups:
- Senegal’s Investment Promotion Agency, APIX, plays the role of the CPI Secretariat, taking responsibility for coordinating and organizing the Council’s activities. This role has been made permanent to ensure continuity as political appointees and private businesses transition.
- Working groups comprise 30-50 representatives from public and private institutions. Each group is tasked with an issue in the Senegalese business environment, for which they propose new approaches and reforms. All representatives are invited to participate on a volunteer basis by APIX who identifies key stakeholders and experts related to each group’s topic.
- The Inter-Ministerial Council, within the Prime Minister’s office, provides answers to questions and reflections on matters raised by the working groups. It is responsible for leading the implementation of the agreed action points.
- The Monitoring Committee, composed of government representatives, coordinates and implements the recommendations proposed by the working groups and shares feedback on progress, difficulties and concerns. It also prepares work plans for the Inter-Ministerial Council.
Policy in Action
In 2011, the CPI focused on the issue of unemployment in Senegal. The government recognized that although the volume of private investment had increased over the years, 47% of the population continues to live below the national poverty line.1 Thus the theme of the 10th annual session in December 2011 was, “What reforms will strengthen the social impact of private investment?”
The key participants in the 10th annual session, in addition to the broad base of usual attendees, were impact investors, social enterprises and international development partners. For example, representatives from Danone, a private company that has worked to expand its business to poor communities in Senegal, were invited. Emerging from the
10th session, the Impact Investing Working Group was established with representatives across sectors (including social entrepreneurs and investors, and from industry associations, government ministries and universities, among others2 to propose specific reforms to strengthen the social impact of private investment.
In 2012, in parallel to the efforts of these groups, APIX worked in partnership with Dalberg Global Development Advisors, a consultancy firm, to implement a grant from the Rockefeller Foundation to explore the role of Senegal’s government in catalysing impact investment in the country.3 The research from APIX and Dalberg directly informed the Impact Investing Working Group’s discussions and incorporated the participants’ input and feedback.
The Impact Investing Working Group met frequently throughout the second half of 2012. During these meetings, impact investment was seen as a key to addressing not only the problem of unemployment but also various social challenges faced by youth, women and other marginalized groups. During the Working Group’s meetings, social entrepreneurs made presentations to the group on their business models and growth challenges (see the “Impact Investing Working Group on the Ground” box in this section for an example of one such presentation). Dalberg also shared its research findings on impact investing and social enterprises in Senegal, along with examples of efforts by other governments to support similar activities.
As a result of the Working Group’s deliberations, specific recommendations and action points were agreed upon and presented at the CPI’s 11th annual session in December 2012. Recommendations included:
- Develop and adopt a national charter defining impact investment
- Create a national fund, leveraging existing funds focused on impact investment
- Organize a forum on impact investment
- Promote business plan competitions focused on impact/social enterprises and create and support incubators in partnership with universities and local governments to uphold these businesses
- Support the creation of a regional stock exchange for small to medium-sized businesses
- Undertake case-by-case analyses on sector-specific barriers to impact investment
- Implement a resource centre of expertise on impact investment
As in all CPI sessions, some points met disagreement, particularly regarding how to define impact investment, which was seen as the key starting point in developing a suitable policy framework to catalyse the sector.
Impact to Date
Coordinated by APIX, the creation of a national impact investment fund is already being discussed and other recommendations, such as the adoption of a national charter, are expected to be addressed in 2013. To ensure consistency with the government’s national development objectives (e.g. the Millennium Development Goals and the national poverty reduction strategy) and to allow sufficient time to undertake the necessary actions, APIX has proposed a timeline through 2015 to implement all the recommendations.
The Working Group recognizes that further research, analysis, discussion and debate are needed to effectively implement the action plan. To that end, the Impact Investing Working Group will continue to meet to engage in extensive discussions on the role of impact investment and social enterprise.
Policy Recommendations for Scaling Social Innovation
By creating a broad-based framework for dialogue at the highest level of government, the private sector has been able to effectively engage in the issues of Senegal’s development. Other countries may consider a similar approach to engaging stakeholders, taking into consideration lessons from the experience in Senegal:
Develop a common understanding of key terms and concepts to provide a starting point of discussion between various stakeholders
The Working Group members were from very diverse institutions with different priorities and approaches to the issues at hand. It was important for the stakeholders to take ownership of the concepts and tailor them to the Senegalese environment. A challenge for the Working Group was to reach consensus on the concept of social enterprise and impact investing. The research and insights from APIX and Dalberg provided a strong starting point and foundation to identify a path forward.
Leverage media and public relations opportunities to introduce social enterprise into national, public conversation
The main success of the Working Group’s activities was to increase public awareness of impact investment and social enterprise, and to engage the private sector in addressing Senegal’s social and economic challenges. Through newspaper and television coverage, impact investment and social enterprise were brought to the forefront of national conversation, firmly placing the activities of the Working Group on Senegal’s reform agenda.
Identify the appropriate organizational structures that facilitate the exchange of ideas and incorporate diverse perspectives
The Working Group involved a broad range of over 60 stakeholder groups that were engaged at varying degrees in its activities and meetings. To improve the Working Group dynamics and to better accommodate this diverse group, it might have been more effective to create smaller sub-groups with specific expertise that could then have brought their findings to the larger group for discussion and consolidation. For example, microfinance institutions were a key group missing from the Working Group as they have a deep understanding of the challenges in the communities they serve and are key players in the impact investment space.
Impact Investing Working Group on the Ground
To facilitate discussions for strengthening the social impact of private investment, APIX invited Proplast, a social enterprise, to present to the Working Group. Proplast collects, recycles and re-sells plastic waste in Senegal. At the time of its presentation to the Working Group, Proplast was already working with 600 collectors to recycle more than 150 tons of waste per year. The presentation highlighted how government currently does not recognize “social business” and therefore provides no specific incentives or benefits to such businesses entering the market.
Creating a national definition/framework for impact investment in order to incentivize entrepreneurs in the space is one of the key action items in the Working Group’s action plan.