The first in a new series focused entirely on sustainable wealth creation interventions in projects and how to overcome some of the common challenges with Rick Magill, an expert in this field. In this episode, we introduce some of the basic concepts of sustainable wealth creation and some of the common challenges that arise.
Ben Anderson (00:09):
Welcome to the Learning Post, a podcast dedicated to sharing insights from the UK Aid Match and UK Aid Direct Funds. My name is Ben Anderson, and I'm the Communication Specialist for UK Aid Match and your host for this episode.
Ben Anderson (00:23):
This episode represents the first in a series of podcasts focused on sustainable wealth creation in projects. I was joined by Rick Magill who has previously established and developed a renowned social enterprise in Nepal, worked for UK Aid Match as a Senior Performance Manager, and is now an independent consultant who specialises in sustainable wealth creation and private sector development.
Ben Anderson (00:45):
By delving into the UK Aid Match portfolio, Rick has identified some of the challenges that may occur when trying to incorporate sustainable wealth creation into a project. In this initial podcast, he defines sustainable wealth creation, provides some practical examples and highlights some of the key challenges.
Ben Anderson (01:05):
Rick, my first question is what was the reason for looking into this subject in the first place?
Rick Magill (01:11):
Well, at the time, there were 129 projects in the UK Aid Match portfolio. They spanned a really wide range of sectors, health, education, disability, climate change, a very long list. But what we saw was that many of them contained business-related elements or had some kind of wealth creation objectives.
Rick Magill (01:36):
And it was becoming clear that many grant holders were struggling with those elements of the project. They often had much wider objectives, but when it came to the wealth creation part of things, there were clearly some challenges.
Rick Magill (01:50):
So we tried to do a review to look into the evidence, to see just how many projects there were, what shapes and forms they took, and what they were struggling with, so that we could provide some learning and guidance on how to do things better in the future.
Ben Anderson (02:07):
What are some of the defining features of a sustainable wealth creation project?
Rick Magill (02:13):
None of these projects were about making people rich. They had much more modest ambitions. It was about enabling families and communities to earn enough income to lift themselves out of poverty. To meet their basic needs for food, water, education, health, and so on. And ideally have a bit of money left over to save or invest for the future.
Rick Magill (02:34):
In the same way, sustainability is really important in this definition because we want to make sure that the benefits continue long after the project has ended. And there's three main aspects to sustainability.
Rick Magill (02:46):
One is the financial viability of this thing, that the business models can work or that long term employment will be assured.
Rick Magill (02:56):
There's environmental sustainability, and there were many projects that involved what we're now calling the circular economy of recycling and so on.
Rick Magill (03:06):
And there's social sustainability that projects are welcomed by the local communities, do no harm in those communities, and are going to be viable for the long term.
Ben Anderson (03:17):
Would it be possible for you to provide a few practical examples from the portfolio?
Rick Magill (03:21):
Yes. Well, of the 54 projects that had sustainable wealth creation objectives, we found that there were six main themes and it didn't really matter what sector the project was in, what primary or secondary sector, we were seeing these six things coming through in different shapes and forms.
Rick Magill (03:42):
The first one was about boosting incomes. An example of that, there was an education project that wanted to quadruple the amount of money that households earned every month, so they could afford to send their kids to school. So it was all about income generation.
Rick Magill (03:56):
The second trend we saw was about the diversification of production. So an example is a livelihoods project that wanted to help rural women branch out from what they'd been doing before, which was selling timber products from the forest into other products like honey and shea butter. So it was about doing something different.
Rick Magill (04:16):
The third theme that we saw was about setting up small businesses or not-for-profit social enterprises. So an example was an environment and climate change project that wanted to collect household waste from slums for recycling purposes.
Rick Magill (04:31):
The fourth theme that we saw was establishing farming as a business. So this was going beyond subsistence farming for smallholders and moving into something that was much more business focused. An example is an agricultural project that tried to help them produce climate resilient crops to sell at market so that they would have an income, in addition to a diversified food source.
Rick Magill (04:56):
The fifth theme was about securing paid employment. So this was helping people to find paid jobs in the local area. An example of that would be a women's empowerment project that wanted to help those women in the community get jobs in the textile industry so that they had greater financial independence.
Rick Magill (05:16):
And the last one we saw, number six was about providing financial services. An example is an access to markets project that helped young women get loans to start up a micro business, such as maybe a restaurant or a beauty salon, so they would have an income of their own.
Rick Magill (05:33):
So those are just a few examples, but those were six themes that came up time and again, which gave us a good definition of what we meant by sustainable wealth creation.
Ben Anderson (05:43):
What are some of the key challenges you have identified in setting up a sustainable wealth creation project?
Rick Magill (05:49):
Important to say that there were some real positives to take away from this, the principles behind all of the projects that we studied were sound. There were some great, innovative, creative ideas about how sustainable wealth creation could help lift families out of poverty and improve their lives. And you couldn't really argue with the logic behind many of them. They were great.
Rick Magill (06:11):
But what we saw was unfortunately in many cases, organisations struggled with those elements of their project. And we were able to find a series of common issues that we felt we would be able to provide some help and guidance with, so the projects could improve or future projects would be in a better place to make those improvements.
Rick Magill (06:32):
So I'll run through those quickly. The first one was that there was not enough entrepreneurs on the team. These were business-related projects, and we're thinking it would've been helpful to have more people from that background.
Rick Magill (06:44):
It was also unclear in many cases how much more money people needed in order to meet their needs, so the scale of the financial gap. There was a bit of a lack of market research to show the customers and opportunities were well understood. And the business cases were either weak or missing, and there was some opportunity for improvement there.
Rick Magill (07:12):
Some of the targets were overly ambitious, and many grant holders struggled to find practical examples of jobs that people might be able to do in those local areas. And while training was well-intentioned, it was often the case that it was unclear how the training would lead to jobs and incomes.
Rick Magill (07:33):
And also, there was a need to have a clearer plan about how new money could be brought into villages and communities, rather than just recirculating the money that was already there.
Ben Anderson (07:52):
In our next Sustainable Wealth Creation podcast, we will focus on the importance of the composition of teams and market research. Here is a sneak preview of the discussion.
Rick Magill (08:02):
Market research is so much easier and so much better if you've got...
Ben Anderson (08:07):
To find out Rick's top tip for making market research so much easier, make sure you subscribe to the podcast and check out our next episode. Thanks for listening.