Supporting pioneering social companies in access to energy, sanitation and clean water (Pioneer facility)

Confronting poverty remains the biggest challenge facing the world today, and is a focus point for millennium development objectives moving beyond 2015. Given their high dependence on natural resources and their limited ability to cope with natural disasters, the poorest people are those most strongly affected by climate change.

People in developing countries therefore have a part to play in the transformation of current development models to make them more resilient, inclusive and lasting. The currently unmet needs in terms of energy and sanitation constitute a significant market opportunity for the private sector in these countries. But there are social enterprises working in this sector seeking to fulfil the threefold objective of financial, social and environmental returns. However, these social enterprises are facing significant challenges which considerably restrict their ability to develop. They are often too small or too young and are unable to generate enough in the way of revenue. We call this the “Pioneer Gap”.

With the Pioneer Facility, the project beneficiary, Nexus, have to demonstrate the viability of an innovative financial model based on successive loans and on the promotion of the social and environmental benefits of social enterprises. The Pioneer Facility therefore gives priority to social enterprises in a growth phase, seeking to lower the time and complexity of financing projects and aims to maximise impacts in terms of poverty reduction.

The scheme activities are as follows:

• Identify suitable companies in the sustainable energy and sanitation sector, and carry out a process of due diligence;
• Define the terms of loans, define the post-investment monitoring, make and monitor the resulting investments;
• Create specific indicators and milestones for the impact made by the selected enterprises;
• Design suitable monitoring systems and transfer them to the social enterprises;
• Identify suitable sources of financing to reward the performance of companies in terms of development;
• Implement the Programme;
• Manage relationships between investors and structure participation in the Facility;
• Monitor, Assess and Report on the financial performance of the Programme.

The project contribute to reducing greenhouse gas emissions and combating climate change. Social enterprises receiving loans from the Pioneer Facility have to generate environmental benefits by providing essential goods and services in the energy and sanitation sectors, as well as jobs in the communities in which they operate.