Musopelo Mwanda: Driving MSMEs development in Africa
This week, the TTI Interview Series covers our network member Musopelo Mwanda. Musopelo is the Founder of Opelo Capital and a partner at Route Three Solar Systems in Zambia. Musopelo’s investment experience spans across private equity, pension funds and research. She holds an Honors Degree in Commerce from the University of Adelaide and the Financial Modeling and Valuation Analyst (FMVA) certification from the Corporate Finance Institute. She is very passionate about developing Africa and strives supporting the growth of its impact investment ecosystem.
In this interview, Musopelo talks about the importance of empowering small- to medium-sized enterprises across Africa and the most needed improvements within that ecosystem.
A viable business model and social impact
Musopelo, tell us about how your work intersects with the impact space.
Opelo Capital is a Zambia-based advisory firm that provides business development services. We focus on supporting the early-stage development of micro-, small- and medium-sized enterprises (MSMEs) in Africa that have a viable business model and social impact. MSMEs account for over 70% of business activity in Zambia, contributing to employment and economic growth. The entrepreneurs managing MSMEs often have innovative solutions that can drive development and positively impact the wellbeing of society. Our objectives are to improve the survival rate of impactful early-stage MSMEs and to develop an investable pipeline for impact investors.
To achieve our objectives, we recognize the importance of quality information for decision-making in impact investment. Because of that, Opelo Capital has created a database of impact investment related research in Southern Africa, building capacity, and educating local analysts on the impact space.
We also utilize an interdisciplinary approach with advisers available from renewable energy, agriculture, finance, medicine and engineering. Overall, we are an enabler in the African impact investment ecosystem providing advisory and research to facilitate successful transactions.
Impact providing an improved state of being
What is your own definition of impact?
I visualize impact as a “before and after” picture that shows a transformation from one state of being to a better state. Impact ideally should be a positive change in our way of living that considers all stakeholders and the future. It is important that a positive outcome for one stakeholder does not result in a negative situation for others and that today’s impact does not have a negative effect tomorrow. Accordingly, impact is a positive transformation grounded in our stewardship to society and to future generations.
Striving for economic diversification, increased agriculture productivity and infrastructure connectivity
Musopelo, what do you see as the most important issue to address in the next 10 years?
Access to affordable clean energy is one of the most important issues that needs to be solved over the next ten years. Africa's demand for energy is expected to continue increasing due to the rise in industrial activity, population growth, urbanization, and technological developments. Various regional and national plans in developed and emerging economies recognizes the significant demand for energy, for example the African Union’s Agenda 2063 which strives for economic diversification, increased agriculture productivity, and infrastructure connectivity.
The high energy demand presents a significant risk of increased pollution and detriment to the environment from the use of fossil fuels. Significant research and investment are required in the promotion and deployment of the clean energy technologies and services; not only for large corporations but also for MSMEs with innovative product offerings that lack access to low-cost financing.
A challenge to propose solutions when the problem is not clearly understood
What is the greatest challenge you face to scale your impact?
Some of our biggest challenges include the access to market information and early-stage funding. Information challenges arise due to the nature of business, the storage of information and the cost of data collection. For example, in various African countries, data may be stored in physical records as opposed to digital format increasing the time needed to collect and analyze data. The type of economic activity may affect data availability. Another example in Africa is that a significant proportion of economic activity is conducted by private enterprises, who are not required to publish information.
Furthermore, most of the private enterprises are MSMEs and are in the informal sector with limited information on the operations. It is therefore a challenge to propose solutions when the problem is not clearly understood. Another challenging is early-stage funding. During the period between starting a venture in the impact space and getting it right, survival can be difficult as the venture operates on limited resources.
To be a leading advisory firm on sustainability in Africa
Musopelo, what is your long-term vision and how do you measure & quantify your impact?
Our long-term vision is to be a leading advisory firm on sustainability in Africa with a proven track record in supporting the growth and impact of early-stage MSMEs. We also intend to build a team of local financial and impact analysts that support the information needs of MSMEs and impact investors. We measure our impact directly through the number of MSMEs clients we support and indirectly through the impact that the MSMEs go on to have in society and for the environment.
For example, in the energy sector, we would measure our impact as supporting national policies aimed at increased access to modern energy for both productive use and consumption in remote/rural areas through the growth of mini-grid providers that have been supported by Opelo Capital.
Impact investing does not sacrifice financial returns
What are some misconception you’ve noticed regarding what “impact” is all about?
I have noted that the measurability of impact in purely quantitative terms can create misconceptions and may miss the qualitative results. For example, job creation is more than just the number of people employed and may also consider the quality of employment. Another misconception is that impact investing sacrifices financial returns, consequently an investor needs to accept lower returns for impact. While this may be true in some transactions, through my work, I have observed that impact considerations are helpful in identifying businesses that can provide the highest return. As an example, an impactful MSME solving a problem faced by a lot of people in Africa often has a marketable product for an untapped market which can result in financial gains.
Similarly, there is a misconception of impact investing being affiliated mostly with start-ups and small businesses possibly carrying a higher perceived risk. Impact is not only for start-ups and small businesses but includes opportunities with various types of businesses.
Lastly, I think there are misconceptions by businesses regarding access to impact investment where impact may be viewed as an exercise to “tick the box” during due diligence. A business may only consider their impact story for fund-raising purposes and neglect impact considerations after funding is received. I think it is important that businesses and impact investors are aligned in their philosophies regarding the importance of impact.
