Designing policy instruments to benefit green and social enterprises in Southern Africa
A sneak peek into SEED Policy Prototyping Labs
What is the first thing that comes to mind when you hear “prototyping”? Perhaps technical design labs, computer programming, or minimum viable products. You might picture entrepreneurs that are busy designing, testing and adapting their products. What you might not associate with prototyping are policy interventions. What if we told you about “policy prototyping”: an interactive, user-centred process to co-create policy solutions to challenges faced by enterprises? What’s behind this process, how does it work, and what can it lead to?
Last month we launched our SEED Policy Prototyping Programme, a series of Policy Labs in South Africa and Malawi. In this programme, we work with policymakers and enterprise support organisations to prototype policy instruments that solve challenges facing eco-inclusive enterprises. Using hands-on SEED prototyping tools, 100 policy makers and enterprise support organisations stepped into the shoes of an eco-inclusive enterprise to identify targeted policy solutions to pain points experienced by enterprises. Participants then co-created policy prototypes to address these challenges and to advance social and climate-smart entrepreneurship.
Below are some insights into the concept of policy prototyping, how it works, and some of the exciting policy solutions that are being developed through our Labs process.
What’s behind this process?
Eco-inclusive enterprises create environmental, social, and economic benefits through their business models, and are key to driving the transition to a just and sustainable economy. Eco-inclusive enterprises in South Africa and Malawi, however, face a variety of policy challenges to building and scaling their business, ranging from rigid labour regulations and a lack of access to appropriate financing and insurance mechanisms to difficulties responding to public and private procurement opportunities.
These challenges highlight a real need for innovative policy instruments that support eco-inclusive enterprises and a key role for policymakers to drive the transition to climate-smart green economies.
How does policy prototyping work?
Prototyping is a tool usually applied in a business context to verify and test key functional aspects of a product or service with the target market. It is a lean and feedback-oriented process, where designers test, adapt and re-test their products on the market. With this in mind, the prototyping process can also be used to design policy instruments that meet the demands of their target groups while serving to achieve policy objectives relating to sustainable development and climate change mitigation and adaptation.
The exercise of prototyping policy instruments is bottom-up, involving and getting feedback from the target group on proposed policy solutions. This fosters multi-sectoral co-creation, moving from planning to experimentation, and to making immediate adjustments based on feedback from the target market, thereby reducing costs associated with changing policies in the future to better meet stakeholder needs.
SEED’s policy prototyping programme spans over a series of labs, which focus on identifying and framing the policy challenges faced by enterprises, prototyping solutions and integrating feedback from eco-inclusive enterprises, and planning for implementation and pilot phases of the solutions.
What does this look like in practice?
In SEED’s Kick-Off Labs, policy practitioners and enterprise support organisations met to discuss the challenges identified and to start to prototype relevant policy solutions. Through this process, interesting prototypes have started to form and are ready to move on to the next level: testing the idea with enterprises and integrating feedback to make the prototypes more concrete.
Some groups, for example, the prototype hosted by the Trade and Industrial Policy Strategies (TIPS) in South Africa, look to increase the coordination among public and private sector stakeholders, especially when it comes to supporting the growth of high potential eco-inclusive enterprises. The TIPS-led prototype is testing how convening public and private stakeholders could offer better coordination of technical and business support for the commercialisation of technologies and innovations along with the life of the enterprise.
Policy support to unlock markets for eco-inclusive enterprises is the basis for several prototypes that are being developed.
In South Africa, the Department of Small Business Development with the European Union are developing an inclusive strategic procurement model that can be adopted in the public sector and that is accessible to small and growing enterprises. Enterprise support organisations such as International Conservation Cleanup Management (ICCM) and MicroInsurance in Malawi are looking at the existing markets for the circular economy and climate finance products and prototyping ways to showcase best practices in waste management and encourage risk-reduction to climatic events through crop insurance. Community Energy Malawi is developing a network of distributors supporting the growth of entrepreneurship around clean, off-grid solar lighting solutions.
Other prototype groups have chosen to focus on creating awareness on challenges and developing definitions and data that will inform the policy agenda.
A lack of common definitions surrounding socially inclusive and environmentally sustainable enterprises– such as the number of jobs they create, how many are in the economy, or what kind of regulations they have to abide by is another difficulty in developing targeted and relevant policy instruments. The South Africa Renewable Energy Business Incubator (Sarebi) is tackling this challenge by prototyping definitions for jobs and job creation in the SMME sector that includes considerations of a minimum wage, and health insurance, among others. A common definition of job creation for SMMEs could then help public and private business development service programmes better target size-based support to small and medium enterprises. The Department of Environmental Affairs of South Africa is leading in the development of a prototype to help small and growing enterprises working in biomass to energy conversion overcome regulatory hurdles through knowledge dissemination, research, and convening stakeholders.
The prototypes are designed to inform the policy agenda, refine the process of developing policy, improve policy implementation, and contribute to policy evaluation and revision. They will also reinforce the case for the promotion of eco-inclusive entrepreneurship. With enterprises as an integral part of the prototyping process, we ensure their voices are heard by policymakers and that their feedback is integrated into policies for sustainable development.
Where does this lead?
In the coming months, SEED will continue to support the prototype groups to refine their policy instruments and target them to small and growing businesses.
Building on the diverse multi-stakeholder input to the Kick-Off Labs in Pretoria and Lilongwe in April, prototype groups have now set out to further refine their ideas to ensure that they have a clear value proposition to offer their target groups. The upcoming Transition Lab in July offers practitioners the opportunity to test the instruments’ relevance with eco-inclusive enterprises and ensure that they are supportive of green and inclusive economies in South Africa, Malawi and beyond. An exciting process has started – we will keep you posted about further news and outcomes in the coming months!