Situation
Development cooperation is in crisis worldwide. Purely donation-financed projects do not have the desired sustainability effects. Thematically focused aid measures, e.g. for drinking water or energy, often fall short. Non-profit organisations find it difficult to place successful projects in the hands of private sector partners in order to take the next evolutionary step. Much more capitalthan today has to be invested in development in order to achieve the sustainability goals by 2030. But there is also an enormous market potentialbehind all these challenges: we are talking about around 4 billion people and a market potential of USD 12,000 billion per year.
Value Proposition
WECONNEX from St.Gallen has set itself the goal of making an active and countable contributionto achieving the UN's sustainability goals. To this end, the company has developed the NEXUS Concept, which is already in operation in Nepal and Madagascar and will soon be launched in other countries.
Solution
WECONNEX makes development cooperation fairer and more efficient.As a specialist for sustainable business models with a focus on rural areas, we have developed the NEXUS Concept, which is already being used successfully in Nepal, Madagascar and shortly also in Indonesia and Tanzania. The NEXUS Concept is a modern approach for developing countries that aims to address Zero Hunger and Rural Transformationfor farming and fishing communities from a holistic perspective and thereby improve their quality of life in the long term.
In our projects we equip rural villages with so-called NEXUS Centers. These are local infrastructure centres that offer basic services such as safe drinking water, clean energy, sanitation and internet access at fair prices. The NEXUS Centers act as a public utility and make sure, that the communities stay healthy.
In addition, we establish a local company,NEXUS Farmers Company (NEFACO), which uses the NEXUS Centers commercially. Smallholders (farmers and fishermen) are trained at the NEXUS Center how to work more sustainably and efficiently. This includes know-how transfers of smart farming, sustainable fishing and the use of modern technologies. NEFACO buys the harvest from the smallholders at a fair price, stores them or processes them and then sells them to end customers. The Centres support agriculture and fisheries by acting as training centers, collection points, machinery shops, storage facilities and distribution channels. The NEXUS Conceptenables higher product prices by integrating the value chain, resulting in improved food safety and a stable livelihood.NEXUS is therefore targeting Zero Hunger and Rural Transformation.
USP
NEFACO is the central element in the NEXUS concept. The company owns the NEXUS Centers and manages the project with local staff. NEFACO develops local, national and even international sales channelsand coordinates purchasing. This company is jointly owned by local smallholders and investors. Thus, the NEXUS Concept goes one step further than traditional approaches in developing countries: instead of just selling technologies, NEFACO ensures their operation and maintenance. Instead of helping the communities to build cooperative structures, NEFACO takes risks, is part of the structure itself and has an interest in its long-term success. Rather than simply offering advice and education, NEFACO's success depends on the implementationof the latest knowledge, e.g. in sustainable agriculture. Instead of selling expensive microcredits to small farmers, NEFACO provides producers with the necessary equipment, seeds, fertiliser or know-how free of charge and in return benefits from better products and a higher quantity. Instead of only working with donations or microcredits, the NEXUS concept is structured in such a way that all responsible investment opportunities(loans, equity, donations and others) are possible and even mutually supportive (blended finance).
Impact
The impact of the approach is aimed at financial profitabilityon fair terms for all stakeholders, social improvementsfor local communities and positive environmental impacts. With the potential to become a new model for development aid policy, it could even change the political commitment to the so-called Base-of-Pyramid Markets.
Beneficiaries
Our primary customer is the small farmer or fisherman from the village. On the one hand, his income stabilises and increases as NEFACO buys his products from him at fair prices. The integration of the value chain (local processing), better quality and higher quantity help NEFACO to achieve higher margins, which in turn benefits the smallholder through a dividend distribution. In addition, other family members have the chance to get a jobat NEFACO or can use the infrastructure of the NEXUS Center for their own entrepreneurial activities. Last but not least, the family benefits from better and cheaper basic services.
But the other stakeholders also benefit. This means an interesting financial returnfor the investor. The combination of commercial capital with donations reduces the risk on the one hand and increases the donation effect on the other. The returns are sizeable enough to allow organic scaling of the concept.
Last but not least, with the NEXUS Concept, we can offer our technology suppliers an innovative platform with which they can test and open up new markets very directly.
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