Over the course of Shell Foundation’s work supporting innovative start-ups working in emerging markets, we have seen market-level challenges that have the potential to inhibit the development and scaling potential of new solutions that cannot be solved by single enterprises alone.
Since 2010 we’ve supported the establishment of institutions that work to address these challenges and increase awareness of entire sectors or geographies. Institutions include trade bodies covering different sectors, including African mini-grids (AMDA – SF partner since 2018), Clean cooking (Clean Cooking Alliance – SF partner since 2010), Freight transport (Smart Freight Centre – SF partner since 2013) and Off-grid solar lighting (GOGLA – SF partner since 2013).
A study of Shell Foundation’s market institutions conducted last year highlights the impact they have had addressing market-level barriers as well as the challenge of attracting sustainable funding streams.
The study, conducted by FSG outlines the case for market institutions, presents how they can be structured to suit different objectives and specific market conditions, and provides evidence of the impact they are able to accelerate by providing a non-profit, third party presence.
|GOGLA’s work providing market information, impact evidence and standards guidance has resulted in a 30% annual industry revenue growth, 180 million products being delivered, and 420m lives improved across the globe by 2021.|
|Smart Freight Centre’s GLEC framework enabled 3m/t reduction in CO2 emissions between 2016-18|
The study — involving interviews with all the SF institutions – identifies several challenges around continued operations of institutions. These include the reliance on short-term grant finance, analogous to the patient support required by pioneer enterprises in nascent markets, the feeling that funders are reluctant to support institutions as they see them as conflicting with their private sector holdings, as well as the ability to attribute impact on the market-level work.
The study then provides lessons for institutions on set-up and on-going support:
- There is no ‘one size fits all’ design for market institutions.
- ‘Anchoring’ to established partners can lend power and clout and accelerate effectiveness.
- Leadership is key, and leadership duos or teams may be the answer.
- Impact measurement and management is feasible but requires a tailored approach.
- Patient, long-term funding is needed, even as new income streams are developed.