Our impact
Our goal is to generate the largest possible increase in incomes for low-income people in Africa per dollar of philanthropic capital deployed. Here is how we measure it.
Our targets
Every $1 of philanthropic funding to the Africa Jobs Fund aims to generate at least $500 in income gains for low-income people in Africa. This is our minimum target.
We aim to spend less than $10 to double one person's income for a year. That would make us roughly 4× more cost-effective than GiveWell's top charities and around 50× better than typical livelihood programmes.
Our model
We build companies that create high-productivity jobs at scale for Africa's next generation. We back world-class entrepreneurs to build in either export manufacturing or international labour mobility, and provide seed capital, network, and operating support.
We do make catalytic investments in existing businesses but most of our investments are to create new businesses completely from scratch. Often we will investigate opportunities and then go out and find the right founder to build them.
Once an organisation has successfully completed the pilot and received our scale-up investment, it needs to either reach profitability or raise commercial capital, but it does not usually receive any further philanthropic support.
Why we think that our work can be so high impact
Six reasons why we think our approach is particularly high-impact, underrated and scaleable.
Accessing big global markets
Export manufacturing and international labour mobility both bring foreign earnings into the economy in large flows. Global markets are far larger than the domestic markets in low-income countries and any new earnings are purely additive to the economy.
Both sectors are overlooked and underfunded
Despite the evidence base, philanthropic capital flowing into export manufacturing and labour mobility is tiny relative to the opportunity. We are operating where there is huge latent opportunity for high-impact companies that is not being filled.
A catalytic approach
We deploy relatively small sums of philanthropic capital to mobilise world-class entrepreneurs to work in high-impact sectors that they might not otherwise focus on. It only takes a small amount of capital to catalyse a new organisation that has a high chance of having a huge positive impact.
Investments not grants
We are making (concessional) investments, rather than grants, into our portfolio companies meaning that we can recoup our investment in the event that they are successful, thereby reducing the size of the philanthropic subsidy required.
Private-sector economics, not perpetual subsidy
Once our companies are off the ground they fund themselves through revenues and commercial capital. Unlike non-profits, they do not require perpetual philanthropic funding.
Pioneer effects multiply the impact
We focus on opportunities where if we can help one organisation to demonstrate the feasibility of a new model, product, or corridor it will inspire copycats businesses to do the same. This means we generate further impact by catalysing a whole cohort of businesses rather than just one.
How we model our impact
We translate our work into impact estimates with a cost-effectiveness analysis (CEA). A CEA tracks the chain from philanthropic dollars in to welfare gains out, making explicit every assumption about probabilities, counterfactual impact, attribution, and timing.
At its simplest, a CEA estimates how much income (or other welfare) a programme generates per dollar spent, after discounting for things that would have happened anyway, partial attribution to other actors, the probability of success, and the time value of money.
For each opportunity we back, we estimate the expected number of jobs created or workers moved, the average income lift per worker, the duration of that lift, the share of impact we credit to ourselves versus copycats and competitors, and the probability the organisation gets to scale.
Estimated across our two sectors, we get a cost per Doubled Consumption Year of less than $10.
What is a Doubled Consumption Year (DCY)?
A Doubled Consumption Year is the welfare benefit of doubling one person's consumption for one year. It is the standard cost-effectiveness unit used by GiveWell and others for interventions focused on increasing incomes. We use it as our core metric to determine our impact and to decide which projects to focus on.
DCYs use a logarithmic model of welfare: going from $1,000 to $2,000 in annual income generates roughly the same welfare gain as going from $10,000 to $20,000. The reason is that an extra dollar matters far more to someone who has very little than to someone who already has a lot.
Simplified Cost-Effectiveness Analysis
A simplified, stylised version of our analysis so readers can see where our impact comes from without having to work through our long and complex core model.
Open the sheet in Google Sheets. You can make a copy and adjust the inputs to see how they affect the expected impact.
Full Cost-Effectiveness Analysis
The full analysis we use to estimate the impact our operating model can achieve. It is the basis for our core target of less than $10 per DCY.
Open the sheet in Google Sheets. You can make a copy and adjust the inputs to see how they affect the expected impact.
We welcome constructive feedback
We welcome constructive feedback on our analysis, our assumptions, and our methodology. Get in touch at hello@africajobsfund.com.