Innovation

Lots of people when they reach a certain age or when they don't want to keep working have a hard time finding someone to sell their business to, and sometimes the resolution is to just shut the business down. The Awethu Project saw an opportunity here. Instead of letting businesses close which would result in people losing their jobs and also would be a waste since these businesses had already explored the market (if they shut down the person that comes next needs to start from zero), they buy those businesses. After this the company searches for a talented black individual to run the business, giving them the opportunity that they didn't have before. By doing this the company helps small businesses grow, gives opportunities to black individuals and at the same time creates revenue for the company itself.

Besides this, The Awethu Project, also provides funding to black entrepreneurs that cannot acquire a bank loan or funding from other private equity firms.

With all of these, it’s clear that the company promotes Decent Work and Economic Growth by buying businesses that would otherwise shut down. Promote Gender Equality since they try to have a good percentage of female workers and also because they look for woman also to run the businesses. And finally Reduced Inequalities since they give opportunities to people that usually do not get one.

Inspiration

The Awethu project was founded in 2010 by Yusuf Randera-Rees. There are two factors that served as inspiration for Yusuf. Yusuf grew up in a mixed raced family, and because of that his parents weren't allowed to be legally married and he felt like the way the state treated his family was unfair and that was when he started a vision where every South African would be treated fairly. The second factor came later. When he was older he made the observation that one of the biggest challenges South Africa and a lot of other poor communities faced was a lack of opportunities. During his "student life" Yusuf had the chance of meeting people from various places and by studying in places like Harvard University and Oxford University he came to the realization that the people that he seated with during class weren't necessarily more clever or bright than the people in South Africa, they just had more opportunities. He went further and realized that his classmates would become future CEO's or future president while his friends back home would be no more than just taxi drivers or small business owners.

The combination of these factors inspired Yusuf and led him to start The Awethu Project with the goal where "every South African is treated fairly".

Overall impact

In terms of evidence that the innovation is having an impact, the biggest is that the company has already done more than twenty transactions which means that the business owners like what The Awethu Project offers and shows that they are willing to sell parts of the business to the company. On the entrepreneurs side, from the transactions already made by the company, they were already able to place fifteen new black entrepreneurs which shows that they also like what is offered by The Awethu Project. So, with the basis of the work being complete transaction between business owners an after place young black individuals, completing these same transactions is the biggest evidence of the impact that the innovation is having and also means that they are having the desired effect that they want which is the transfer of productive assets from the older generation white business owners to the hand of young black professionals. All of this is a process that takes time to have a meaningful impact but the most important step which is actually getting the deals done and doing those show a strong basis of evidence.

Another evidence that the innovation is having an impact is, after they raised their first fund from AB InBev, which is the first largest company in the world, they also signed two additional blue chip corporations, both listed on the Johannesburg stock exchange, one is a company called Impala Platinum, which is one of the biggest Platinum mining firms in the world and the second is a company called Imperial Logistics which is one of the largest logistics providers in Africa. Both are signed as partners and the company is running two small funds for them.

This elements prove that The Awethu Project is having the desired effect and shows that the market in general likes the work and the effect that this work is having in the society.

Business benefit

First of all it's important to have the notion that this is not something that the company is doing on the side, it's their core business, they are a Social Impact fund manager.

In terms of employee retention, the people that come to work for the company come because it's what they want to do, because they want to be involved in the initiative and because they are passionate about it. The employees are people that are willing to receive less wage, for example, in order to work in a place who has a social purpose. There is also new high talented people that is joining the company because they share the same vision as the company does. So we can see here that the Business clearly gains by having a social impact as the center of their activities.

In terms of revenue raised the business makes money in 3 ways. First is by charging management fees which represents a small amount of the total revenue raised. The second source of revenue is what they call post investment management fees which means, for every investment the company installs new management control, accounting systems, they track jobs, wages, number of employees, the diversity of those employees etc. And finally, the third way to raise revenue is in the growth of the investments that they make. When they invest in a business normally this business will show growth in the future and that growth represents revenue for the company.

Social and environmental benefit

At this point it's clear how does this business benefits the society.

As previously explained, the Awethu Project does business in two ways. They buy small businesses from old generations business owners and then identify the ideal young black individual to run that same business or, the other way, is by financing young black individuals that have business ideas but don't have a way to finance these same ideas.

In the first option there's a benefit for the society in two ways: First, when they buy existing businesses, they guarantee that the business owners don't close their businesses which would result in people losing their jobs, and the market losing a product that maybe is not offered by anyone else. This way, everybody has a chance to keep their job and there is no need for in the future someone start a similar business from scratch. This option also helps reduce inequalities since the company looks for young bright black individuals to run this same businesses. This way, these individuals receive the opportunity that they did't got before.

In the second situation, once again the company helps reduce inequalities since they finance ideas from individuals that did't got this same financing from banks or other equity firms.

We can conclude that what The Awethu Project brings to the table in terms of benefiting the society is a lot and also promotes several SDG goals.

Interview

Niel Wyma, Principal