Oxfam seeks to provide path to profitability for “missing middle” level social enterprises
Oxfam established the Enterprise Development Program (EDP) to support the so-called “missing middle.” Social enterprises already do a reputable job funding enterprises at either end of the development spectrum: at one end, they provide seed money through such vehicles as microloans, as well as expertise to very small companies operating on the fringes of developing economies. Social enterprises also contribute to organizations in emerging markets trying to scale up and take advantage of export opportunities. However, Oxfam found that support systems aren’t in place for SMEs in between those two extremes, even though ensuring regular incomes for individuals in that category would create a necessary bridge between micro-enterprises and the market.
Oxfam explains that it was for this central niche that the EDP was developed. The program has two main thrusts. First, SMEs in emerging markets can receive direct financial support in the form of grants, loans and bank guarantees to connect those enterprises with the banking system. The organization prefers going the loan route as it not only provides necessary capital, but SMEs acquire credit which can be leveraged for additional financial inputs. Oxfam also employs local business mentors who can provide mid-tier organizations with technical advice, as well as tools for financial management, sales and marketing.
Oxfam is targeting 30 SMEs for the EDP, with a final goal of bringing at least 10 of them to a point where they show profitability for two consecutive years and can gain independent access to financial instruments, while creating some 200 full-time equivalent positions. As the program entered the second year of its current phase, it reported reaching an important milestone: the combined revenues of its 14 current enterprises surpassed $1 million pounds, an increase of 26% from the previous year. Following the principle that a rising tide floats all boats, Oxfam’s models suggest the initiative to support SMEs could increase the incomes of 50,000 farmers - half of them women.
Cover image source: Oxfam EDP Annual Report