Richenda Van Leeuwen joined the Aspen Institute as Executive Director of the Aspen Network of Development Entrepreneurs (ANDE) in September. She is an ambassador for equitable and inclusive economic development and brings a breadth of knowledge and experience to leading the work of ANDE—a global network that supports the success of small and growing businesses (SGBs) around the world. She spoke with the Institute’s President and CEO, Dan Porterfield, about the importance of ANDE’s work and the impact of investing in SGBs as a method of changemaking.
This conversation has been edited for clarity and length.
Dan: Tell us about your background and how it led you to the Aspen Institute and to ANDE.
Richenda: I’ve had a long career that’s really focused on the interaction between business and social good. Having been a former CEO of a micro-enterprise development organization that focused on helping women start and operate enterprises and small businesses, my interests are in thinking about how the private sector can support and maximize social good.
The Aspen Institute is a venerable institution with an amazing track record of high-quality programming and global reach. There are so many areas where we can see the interplay between the global and domestic crossroads. The Institute has been the home of ANDE since it was founded in 2009 and I was drawn to this opportunity.
Dan: Say a little more about how you developed your understanding that business can and must serve the social good.
Richenda: I have worked throughout my career in humanitarian programs on an international level. When you’re providing solutions to communities without sustainable models, it is difficult to give the help that is needed. By helping people with entrepreneurial ambitions and by cultivating a capacity to build small businesses, you are creating a permanent infrastructure to develop the goods and services they need. You are providing local employment and building the economic development that small businesses can provide into the infrastructure of that country. Small businesses serve as engines of economic development, both internationally and in the United States.
Dan: How do you think about sustainable economic development as a strategy for furthering gender equity?
Richenda: Twenty years ago, I remember a woman saying to me, “I’m the breadwinner in my family. I never believed that could be possible.” She had launched and operated her own business. ANDE works in the small and growing business sector with those who employ between five and 250 people seeking to grow their capital. Women are entrepreneurial just like men—they build businesses too. However, there are more barriers to women in terms of accessible capital. They may be able to get debt to grow their enterprise, but not equity, which can be the lifeblood of building a business. Through ANDE’s research, we have also found that acceleration programs intended to support women entrepreneurs put them further behind men. There are systemic barriers that must be overcome to create equal opportunity in growing businesses.
Dan: Can you give us an overview of ANDE’s mission and the reach that you have in the world today?
Richenda: ANDE is a membership program with almost 300 members which include intermediaries, capacity advisors, impact investment funds, donors, and research institutions that come together to support stronger, more mature, more inclusive entrepreneurial ecosystems in the small and growing business sector.
The International Finance Corporation has estimated that there is an unmet annual financing need of about $5.2 trillion for the small business sector; it is about one and a half times the total lending into the small and medium-sized enterprises sector in emerging economies. The opportunity cost of having left that much value on the table and not helping these companies to reach their full potential demands attention.
We do research to look at acceleration, for instance through the Global Accelerator Learning Initiative (GALI), which has produced insights into what is helpful for people who are building small businesses, developing success, and overcoming barriers. By providing this back into the larger sector, we are showcasing some of the best practices, as well as working to eliminate some of the barriers present in many countries.
Dan: You mentioned intermediaries. What are some examples?
Richenda: For example, a business capacity development organization is an intermediary specifically built to help small business providers who have started their business. They are saying, “I’ve been able to hire four employees, but I’m stuck now. I need to figure out how I can get to the next level of growth.” Through advisory support, business coaching, or mentoring, the organization can provide resources to that business. There are a range of different support types that work to assist the entrepreneur in success and growth.
Dan: I have loved seeing ANDE’s work firsthand, as it is targeted on an incredibly important sector. It has a very high return on investment (ROI) with constant economic benefits to families, communities, and societies. It is very much research-oriented and evidence-based work. What intrigues me is that it is also cross-cultural. What is it like to bring together the intermediaries trying to support SGBs in many different cultural and national contexts?
Richenda: ANDE has eight different chapters around the world, ranging from East and Southeast Asia through Brazil and the rest of Latin America. Inevitably, there are regional and cultural differences, but also commonalities. The challenges that face an entrepreneur trying to set up or build a small business in a forest economy in Brazil are, in many ways, not that different from a female Indian entrepreneur trying to grow in India.
The need for access to finance and a support network are certainly common pieces across regional differences. This upcoming year, we are focusing on India and helping catalyze circular economies there including how they plan to reduce waste across supply chains. In South Africa, where we have an amazing team and program, we are focused on the dynamics of township economies where there are a lot of informal businesses and developing an understanding of how they work and how we can help them to work better. What are some of the gaps still there? What are the financing needs? How does the local ecosystem either support them or serve as a hindrance to them? We then pull out these themes in a global context where, more rigorously, we ask how we can systemically support these businesses and intermediaries.
Dan: I was impressed to see that ANDE looked closely at the Sustainable Development Goals and tied the network to the global cause of realizing those goals. Which goals were particularly important to the network of SGBs? What could these goals mean for the broader, global good?
Richenda: The Sustainable Development Goals are critical to our work. ANDE has strategically focused on three areas: Climate and Environmental Action (SDG 6, SDG-7, and SDG-13), Gender Equality (SDG-5), and Decent Work and Economic Growth (SDG-8). In particular, the goal around energy access is directly related to development. As an educator, you cannot educate without access to electricity during this age of digital learning or provide modern healthcare services. We are also looking at small businesses to bring resilient, sustainable solutions for employment in their communities. Small businesses can be solution providers, whether it is putting up a solar farm, or providing digital solutions to electrified communities.
For ANDE, we are scoping on a larger scale to see how we can optimize the contribution of SGBs to the Sustainable Development Goals while also addressing thematic areas like talent development. How do you find and nurture employees for your business? We also want to address policy environments and track whether institutional support in different countries is evolving. Impact investment funds and other well-designed interventions will help local access to capital become achievable, and it is a priority for our sector.
Dan: You mentioned small businesses and the power they have to promote family-sustaining security for owners and employees. In the COVID-19 pandemic, we see how important small businesses are to the United States economy, and their vulnerabilities. Is this exclusive to the U.S., or are small businesses suffering on a global scale?
Richenda: It has been more of a global phenomenon. Sadly, during COVID-19, some countries have been affected more severely based on the local conditions and terms of prolonged shutdowns for communities. In the United States, according to the Small Business Administration, more than 99 percent of employer firms are small businesses. We usually think about large corporations, but the vast majority are small businesses. In South Africa, small businesses are about 60 percent of their workforce and contribute to about a third of their GDP. The challenge, in many developing economies, is that not all these businesses are formalized, which means they are not necessarily protected in cases of economic downturn, and they struggle to maximize job creation potential. If you do not have a stimulus, or a line of credit, that lack of safety net threatens the businesses people are trying to build.
Dan: Is there a theory of change that addresses the work that ANDE is doing towards the cause of shared economic opportunity and development?
Richenda: Eleven years ago, there were not a lot of mechanisms in the small business sector to bring shared expertise into the same room in pursuit of solving collective problems. There are other membership associations that work as global impact investor networks, but they focus solely on investment. ANDE is unique for not only focusing on the investment piece, but also what is needed to support those entrepreneurs. I suppose that would be one of the theories of change: intermediaries do work to help small businesses. It helps them not only to grow, but it helps obtain access to capital and understand critical data.
In sustainable economic development, and job creation, we have seen the role of these intermediaries in helping to support and capitalize on the work of small businesses. ANDE is a network all about sharing those practices, sharing what works, sharing what has not worked, and sharing what it learns to help further strengthen SGB ecosystems around the world to help maximize positive social impact.