The initial euphoria of fostering positive change and transforming people’s lives in underdeveloped frontier markets is often run aground by the hard reality of building well-functioning and efficient enterprises that can sustain the work on the ground. Over the past six years, being part of the team that managed private equity and debt investments for Media Development Investment Fund (MDIF)—a mission driven fund—in frontier market countries of Latin America, Asia, and Africa, I have witnessed these challenges at close quarters. MDIF endeavors to bring positive social change through establishing mission-aligned sustainable enterprises.

In Sub-Saharan countries, drawing on many years of close cooperation on ventures in South Africa, Zimbabwe, Botswana, Ghana, and Nigeria, I have come to look for certain fundamental elements when investing in a new project. Whether you are interested in supporting an enterprise as an impact fund or a social-sector project as a mission-driven organization, it is critical that you understand the scope of challenge in three spheres: people, governance, and finances.


We have all heard the aphorism that a smart team is the most fundamental element of success for any venture. However, what many investors do not realize is the extent to which the project team will need to grow and transform, and the extent of effort and investment needed to develop that team for new challenges as they arise. We at MDIF are accustomed to financing growth-stage enterprises, and we have traditionally looked for proof of success before investing for growth. Despite that, we had to place three senior people on the board of a portfolio company in Zimbabwe, and countless other consultants and advisors in other companies to help develop systems and capacities to take on the challenges. Given our experience, I recommend that you:

  • Thoroughly evaluate the entrepreneur/project team. Being visionary is a critical success factor for an entrepreneur or a project lead in the region. However, equally important is the level-headed discipline to run an enterprise. It is quite rare to find people who embody both traits. In such cases, we look for a visionary entrepreneur with a passion to bring about positive change, but then buttress that person with a strong chief operating officer to keep the entrepreneur’s feet on the ground. Finding two people who are philosophically aligned—and can complement one another and work well together—is not always easy.
  • Understand and assess the work culture. More pointedly, know exactly what needs to be done to develop a work culture that can achieve mission/project success. In most frontier markets you are likely to be the first investor. That means you will have to guide the process of developing a well-functioning organization. As a first step, investors should ascertain whether the team has the capacity to develop into an organization that can undertake the project, and be able to work with outside partners and investors. Knowing in advance the limitations of the team and the approximate amount of time it will take for all the necessary systems to be in place will allow you to determine whether the fund has the resources—financial, technical, and human—to make it happen. Difficulties are compounded when a fund is based in either the United States or Europe, and it’s difficult to travel to the project site frequently. When evaluating an investment in an independent broadcast company in Ghana, we interacted with all tiers of management over a period of over eight months through multiple visits, and we evaluated management talent and systems and processes before developing our roadmap to success. At times, mission funds driven by the worthiness of a project tend to overlook the culture and capacity, and pay the price later on in terms of missed mission and financial goals.


Once you have taken on the project and have assembled the best team you are able to, with supports in place, the, focus shifts to governance and monitoring.

When investing over a long-term horizon, it’s not uncommon to see team dynamics, relationships and the overall operating environment change dramatically over time. Given that likelihood, I have found the following advice useful:

  • Set clear expectations and targets. We have a very hands-on approach to managing our projects. We work closely with the CEO and other senior managers and take seats on the board, and we’ve found it to be effective. However, this practice can only work well when the CEO welcomes this intense focus on accountability and performance. We make our approach quite clear to the entrepreneurs at the start of our engagement; only those who are comfortable with it (and motivated to develop world-class organizations) are taken on as portfolio companies.
  • Understand that people do what you inspect, not what you expect. I’m paraphrasing former IBM CEO Lou Gerstner there, and his message is particularly relevant in frontier markets. It is not only critical to set very clear targets and goals; you must also monitor and evaluate performance. As a board member of our portfolio company in South Africa, I help develop targets and a scorecard for the CEO and other senior managers; we review performance against those targets and scorecard every quarter. It is also quite beneficial if the team’s compensation can be tied to performance. If you don’t address problem areas quickly, they will jeopardize the entire project. Doing so requires frequent travel to the project site.


Finally, be prepared to invest more than you allocated to see the project to success. Cost over-runs, delays, government pressure tactics, denial or delays in licenses/regulatory approvals are all part and parcel of doing business. As a first outside investor, it’s important to be patient and be ready to provide emergency financing when unforeseen circumstances arise. The cost of our project in Botswana could end up being 20 percent more than we initially estimated, despite careful (and expert) budgeting. We look to minimize these costs through close monitoring of the project; without hands-on involvement, that project’s cost overruns could have exceeded 50 percent. It is critical to plan in advance for these finances—not as a contingency but as a norm. You will need it.