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Hunting for profit

Can you earn money and contribute to growth in poor countries at the same time? The finance- and industry executive Christian Thommessen spent the past 15 years to prove that it is possible.

VESLEMØY HEDVIG ØSTREM

The white Jeep has left the highway in Kenol, a small village in the Thika-area to the north- east of the Kenyan capital Nairoibi. The village is named after the local gas station, and hardly exists, if you tried to find it on the map. The red and brown dirt road is steep. Goats roam the roadside, and in the fields we see strong backs bending, hoes moving and baskets waiting for today’s harvest of tea leaves.

Christian Thommessen barely managed to squeeze his 1,98 meter tall body into the car. Now the children who have gathered to welcome the foreign guests make no attempt to hide their astonishment at the sight of the enormous Norwegian struggling to get out of the car. Thommesen is simply a huge smiling person radiating friendliness. Three years working for the U.N.’s Development Programme UNDP and nine years in the boardrooms of the Save the Children system have given him a solid experience both in driving long distances on bumpy roads and establishing contact with new people.  

Picture: “The most important thing is to make it possible for the children to do their homework at night,” says Emma Wangiko, who lives in Keno. She is one of M’kopa’s customers. The company sells solar panels to villagers in Kenya, Tanzania and Uganda. Christian Thommessen visited the Nairobi region this spring in order to consider investment opportunities.  Signe Dons


A lunch meeting

A few months ago Emma Wangiko and the other women in her street were invited to a lunch meeting with Judy Otieno from the M’kopa company. She told them about a new solar panel system which can provide each home with electricity for lamp light, a torch, radio and a charger for mobile phones – all on a subscription basis, payable via mobile phone, and at a lower monthly rate than the polluting kerosene, 50 shillings a day.


Picture: Emma Wangiko has invested in a solar cell system which provides the family with light for reading, a radio, flashlights and a charger for mobile phones. There is no need to fill the small room with gases from environmentally harmful kerosene – and the price is lower.   


“The main thing is to make sure the children have enough light to do their homework, says Emma Wangiko. Wangiko is a customer with M’kopa, one of the companies responsAbility has invested in on behalf of small savers and investors from the West and North. Signe Dons


A tripartite task

A normal investor thinks rationally:

Risk. Market. Stability.

The financial market is an organism without many emotions.

Sure, there is the fear of losing, investing money in the wrong portfolio, being taken by surprise by social changes or scandals you could not foresee, plus the rejoicing heard when things go your way. But if your aim is to make money, «everybody» knows that it is not a smart thing to allow too much room for other motives. For instance, there may be good reasons for staying away from turbulent markets.

If you want to make money, Africa does not seem to be the smartest place. Christian Thommesen has arrived in Nairobi to look for profitable projects. This does not make him much different from other investors. During the past three years the financier has put other things aside in order to help create a relatively new phenomenon, development investments. One of his tasks is to establish a new Nordic subsidiary in Oslo.   

So for this investment company, then, making money is not enough. The company is raising funds for investments in developing countries, drawn from investors and small savers in the North and West. They sell investment products to pension funds, major investors and persons with small savings. The company has what Thommessen calls a triple bottom line, the irresistible – and allegedly impossible – combination of helping people in developing nations out of poverty, contributing to a better environment, in addition to creating a good financial return.   


The lunch meeting

Thommessen listens to Jydy Otieno, who explains how she proceeds in order to sell solar systems throughout the Kenol neighborhood. The customer pays a fee for access to the system, and must sign up for one year. Then they may extend the system with cookware and television, based on the same solar energy supply.

«All the time we have to take into consideration what people can afford to pay. In addition it is our job to figure out how we can make money in this market. The solution we use here gives people chances they didn’t have before», says  Judy Otieno.  

Totally M’kopa has sold illumination to 260 000 homes in Kenya. The company is expanding business in the neighbouring countries Uganda and Tanzania. Christian Thommessen wants to know more about how the managers of M’kopa thinks. ResponsAbility has given them some credits since the beginning, and will now consider how the company can contribute more.

Thommessen cannot hide his enthusiasm. He is impressed with M’kopa’s efficiency and says this is a good example of how Western investments may create green growth in a nation where poor people hardly can get a bank account.   

«I work with bankers who think like any ordinary financial manager when it comes to making money, but they would rather use their skills to help solve global challenges than maximising their own profits», he says. 


Picture: «We invest only in the Third World, and only in buisinesses that try to include the people with low incomes», says Christian Thommesen, here seen in one of Nairobi’s busy commercial districts. Signe Dons.  

Development investors differ from other investors in that they only operate in the Third World, and solely put money into businesses which aim to include the low-income part of the population.

«Our core arenas are the finance sector in poor countries, where we create a system of savings banks, and the agricultural sector. The past few years we have also added a requirement that investments should contribute positively to the environment. And so the energy sector has become our third priority. Unlike development aid, donor gifts and other contributions, these investments are scalable,» says Thommessen. His gaze has suddenly turned so intense that you will immediately understand that this is a message of the highest importance.

«Private, profitable aid is growing so fast that it may in fact help solve the world’s challenges concerning sustainability», he says.

Women don’t get credits

Obtaining a credit in Kenya is mostly a privilege reserved for persons who own land. In many parts of the country women traditionally didn’t have the right to own property, and the interest rates are sky high.

Patrik Huber, a manager with responsAbility, explains how the system works: «The roads we used on our way out of Nairobi were financed by Chinese investors and development aid. This entire society has for many years been dependent on money contributed by others. 

We would like to take the development here to a new level, where we will not be at the mercy of donors. ResponsAbility contributes to the financing, or we go in as partners, giving companies with a potential for growth the chance to stand on their own and expand», says Huber.

He admits, however, that this is a landscape difficult to manoever. The financial system is fragile. Corruption and fraud are factors you cannot ignore. But Huber, the Swiss who started his career as a snowboard instructor in the Alps and continued in classic banking at home, has a passionate relationship to Kenya.   

«I love the perspectives in this country. Everything is moving upwards. The entrepreneurial spirit here is quite unique. I enjoy the feeling that something is growing around me – and the fact that I may contribute.

Enter the e-word

If you are an investor who doesn’t pay attention to morals or laws and regulations, the biggest money are to be made in arms trading, narcotics and other illegal trades. The more ethical you think, the less are your chances for profit. At least that was an unwritten rule up to now, according to the Canadian investments expert Matthew J. Kiernan from Inflectionpoint. He says development investments are about to create a new world order in most investors’ circles.

«It has been a long and painful journey, where we more often than not were met with a shrug as we spoke to investors. When I mentioned the e-word (ethics) to clients, they often reacted with a flickering glance and a heavy sigh: You know Matthew, my job is to make money, not distribute development aid.» Now things have changed, Kiernan said when Aftenposten met him in an investment seminar organized by Norsif, an independent association of asset owners and managers.   

Do good – or do no harm?

Kiernan has been part of the game for 30 years. Suddenly rich investors entered the field with ethical requirements. They were mainly American missionaries and Christian societies seeking guarantees that their money were not supporting tobacco production or porn industry.   

After that, the game was joined by other players, the philantropists and the social entrepreneurs. The Norwegian government’s Oil Fund is pulling investments out of coal companies and arms production. Several other «good» funds follow suit. Out of this alliance comes a new kind of investment companies, the development investors: Those who are not satisfied just to «do no harm.» Instead they want to «do good.» 


Picture; Ethics is getting trendy with the investment banks, according to the investment expert Matthew Kiernan of the company Inflectionpoint. He says the best leaders also take sustainability into consideration. Kenya has seen 5-6 per cent growth over the past 10 years, and the country is emerging as an interesting market for investors. «The best leaders are not satisfied with just avoiding damage. They actually want to help make the world better,» says Kiernan.   Signe Dons

«By 2009, 28 per cent of the world’s industry contributed to the problems on our globe, whereas 17 percent contributed to the solutions. In 2016 the relative strength is changing: 17 per cent of the companies now contribute to the problems, whereas 19 percent contribute to the solutions,» says Kiernan.  In his opinion companies that contribute to the solutions will be more attractive for investments in the future.

«Because they have the best leaders,» he notes.

From tech to aid – and so on

Christian Thommessen sees opportunities where others see poverty, bad harvests and a desolate school system where 40 percent of first graders quit before the age of 13. Annette Thommessen, his mother, taught him how to keep confidence in the individual and look for solutions, not problems. She was the founder of NOAS, the Norwegian organization for asylum seekers, and told the Norwegian public, in a high temper, that even asylum seekers have certain rights and are able to contribute in a community.  


Picture: «The U.N. needed my private sector background», says Christian Thommessen.» He led the effort to construct UNDP’s Private Sector Division from the U.N. headquarters in New York. Signe Dons 

The elder Thommessen brother sought a different role in public when he started his career. He was one of McKinsey’s youngest consultants ever, and became a much talked about player in  the infamous dot-com wave, including the stock adventure Media Vision in the 1980s. Furthermore he was a manager with IBM and chairman of the board of the new, successful company Opera Software. These investments earned him a pretty sum of money, but after a while it was not enough for him.     

«My 15 years of personal history led me to where I am today. I started as an advisor to the Red Cross, and later went to work as chairman of the board for Save the Children in Norway. Family relationships also made me think differently. The U.N. requested my experience from the private sector,» says Thommessen, who built UNDP’s Private Sector Division from the U.N. headquarters in New York.

Egocentric aid?

At the U.N. he wrote the report «Creating value for all: Strategies for doing business with the poor», which was presented in Oslo with minister of international development Erik Solheim. The report’s title attracted a lot of publicity, and made some commentators invent the concept «ego-aid».  

«We want to make sure that the world’s poor countries themselves define how they want to create economic growth. The rich Western players should not do it for them. If you mix interests, the result might be very wrong, says Gunvor Knag Fylkesnes, Save the Childrens’ director for politics and society. 

She is not willing to characterize responsAbility as ego-aid, but says ethical challenges are necessarily involved when you enter the Third world in order to make money.

«We know that the poorest people mostly don’t have their share in the economic growth in a developing country when Western operators engage in projects with a motive to gain returns,» she says.

Thommessen is well aware of the ethical issues.

«Labelling this ego-aid would be an oversimplified point of view, and this is not common belief in aid circles. We are fully open about who we are and what we are not. The money we are investing are not mine, they belong to other people. So it would be irresponsible to enter civil war regions or areas where nothing works. Development investments are characterized precisely by inclusion of the low income population. We don’t solve all problems, but we are probably the contributor with a potential to raise the most money for developing the Third World,» says Thommessen.  



Picture: After fifteen years looking for a company that could do the job in the right way, Christian Thommessen found the Swiss company responsAbility. Here he is seen with the entrepreneur Klaus Tischauser and the general manager Rochus Mommartz at the Zürich headquarters. Signe Dons

The Zürich track

Christian Thommessen is a systematic person. As he was about to finish his U.N.-career, and had tidied up his own companies after the finance crisis, time had come to shape the way ahead. The thesis that a triple bottom line is possible, that you can make money and contribute simultaneously, had yet to be proved. He ended up in a sober office building in the Swiss financial capital Zürich. 17 per cent of the world’s fortunes pass through this city every year.  Thommessen met several bankers and investment managers who had moved from the «other» side – from traditional banking where money reigns, to the new universe of softer money. «I have had several funny jobs, but this is a business where I feel I can make a real difference», he says, and suggests we talk to responsAbility’s chairman of the board, Kaspar Müller. 


Picture:  «Buy on bad news, was the mantra. Seen from a financial point of view, this was the only right thing to do after the gas explosion that almost killed myself and my whole familiy. I quit the bank. I understood that I couldn’t work within a system where this was the established truth,» says Kaspar Müller, responsAbility’s chairman of the board.  Signe Dons  

Müller is a reflected Swiss, the kind of person who immediately inspires confidence. A man you wouldn’t hesitate to entrust your money to. And that is exactly what several hundred thousand Swiss citizens have done.  Ordinary small savers in Switzerland have for years been invited to invest their money in different funds connected to the responsAbility-system. After 12 years, the company has accumulated 3 billion dollars in investment capital. That is no less than Norway’s entire development aid budget. The company is growing fast, and now they will even invite Norwegian small savers and investors.  

Gas explosion changed everything

Kapar Müller was a banker in Basel and he seldom questioned the meaning of life. On an ordinary day at the office, on 1. November 1986, everything changed. A storehouse belonging to Sandoz’ gas company exploded, and an entire city was endangered by toxic fumes.  

«None of us expected to survive. I feared I would lose my whole family», says Müller. 

The catastrophy was averted at the last moment. As Müller entered his office in the investment bank the next day, he was told to start hoarding Sandoz-shares.

« Buy on bad news,» was the mantra. «The only right thing to do, from a financial point of view. But I resigned. I understood that I could not work within a system where this was the established truth,» says Müller.  

Giving away money gives you a bad taste

A gentleman wearing an exclusive suit and a silk scarf around his neck also enters the offices in Zürich. Mulitibillionaire Stephen Brenninkmeyer, the owner of a Dutch chain of department stores, administers the fortune his family built during 125 years. For several years he and his family donated money for good projects. After a while this gave him a bitter taste in the mouth.

«Such gifts places you as a donor above the people who receive the money. I would rather do something more, says the man who looks like a character from Downton Abbey.  

"When we see a white man, we see a donor.”

The words belong to another Stephen, with the family name Nyanga. We meet him at the foot of Mount Kenya, a two hours’ rough drive to the north of Nairobi.  The population of the city Mwea recently got electric light from one of the local mini-power plants that Stephen helped build by means peoples’ financing and voluntary work. They are planning to divert parts of the Nyamindi-river into aqueducts and pipes in order to supply more villages with clean electricity. Thommesen’s co-investors in Kenya have assessed his new project as risky, but interesting. Thommessen himself has been touring coffee plantations and small villages, in order to have a closer look at the project.



Picture: A normal sight at development projects in Kenya: A list of names and companies that supported the project financially. The entrepreneur Stephen Nyanga prefers to have a partner rather than donors. “They are clots in the system”, he says. Signe Dons

Nyanga is critical to rich Western donors.

“Donors are clots in the system. Furthermore, donor money do not end up where they are supposed to go. I have bad experience with aid money, that is why I wanted an investor as a participant in this project. These people treat me like an equal partner.”  

Personality is the best credit check

Power development is a risky project for responsAbility. Joseph Nyanga’s personality is part of the credit check.   

“Development countries don’t have traditional systems for credit assessment, and this makes our work more complicated,” says Patrick Huber. “We have to establish close relations to the persons we want to cooperate with. Nobody questions Nyanga’s passion, however:   

“I first discovered the power of the river and the possibilities it gives when I was a boy of five or six. My mother told me to fetch water. I was incredibly fascinated by the small rapids moving through the landscape, and found that I could use orange peel and sticks to construct small water wheels. After several hours, I had made an entire network of small hydropower plants – and forgot about my mother and the water she had told me to get. My parents feared I had drowned, but what I had discovered, was my inner motivation. I would like to make money, but it is much more important to me to be able to be able to change the community I grew up in.    

The Nobel Prize system

The only financial system that ever won the Nobel Peace Prize is micro finance, represented by Grameen Bank and Muhammad Yunus (2006). Still 70 per cent of the Third World’s population have no possibility to have a bank account or get a credit.  For responsAbility this was the beginning. The present top manager, Rochus Mommartz, worked as an economic consultant in Bolovia in 2002. One day he was off, he called a taxi and told the driver to take him to the poorest area in the region. All he found was poverty, as far as the eye could see. The local population hardly had any chance to escape poverty. As an economist he started to systematically figure out what would happen if someone would lend money to the inhabitants.


Picture: Rochus Mommartz has helped central banks and authorities in 40 developing countries build a more robust financial system. Today he is the senior executive handling development investments in responsAbility. Signe Dons.    

“I estimated that life would change significantly for 10-15 percent of these people. 75 per cent of the borrowers would achieve more stability and predictability in their lives. 5 – 10 per cent might not be able to repay the loans. These people would probably start drinking and waste all the money. Still this was enough for me to continue my efforts,” says Mommartz.

So far he has assisted 8 central banks in developing countries in building a financial infrastructure. 

The past three years 700 million people have gained access to banking services, according to the World Bank. Via 250 different micro finance institutions partly owned by responsAbility or invested in by the company, 31,8 million borrowers have gained access to capital. These are smallholders, traders and craftsmen. Rochus Mommartz is well aware that he contributes to better lives for individuals, but he is unsentimental about his own efforts.

“ I never focus on the individual. In that case, we would lose sight of the aim. We must create good and safe systems. Only then we can make this sector grow ripe,” he says.


Picture: Nancy Munga runs the clothes shop Lusons Boutique on Taveta Road. She is about to open her third subsidiary by means of new credits from Rafiki Bank. Rafiki is partly financed by responsAbility.  Christian Thommessen visited Nairobi last March in order to find out how the company’s development investments work for the low income population.  Signe Dons

The dress queen on Taveta Road

It is easy to spot the individuals in Kenya. We meet Nancy Munga, the proud owner of the fashion shop Luson’s Boutique on Taveta Road in Nairobi. The shop measures 1,5 by 5 meters, facing the street. Each centimeter, from floor to ceiling, is covered by clothes in bright colours.  

Two years ago Munga heard about Rafiki Bank, a micro finance institution which is specifically targeting women, and partly financed by responsAbility. She applied for a loan to establish her own shop. Previously she had tried a number of ordinary banks, but without a land ownership, they could not help her. 

“The first time I borrowed 1500 dollars to rent the premises. As soon as it was paid back, I could have a bigger loan. I always repay my debts. If not, they would never give me a new chance. Now I own two shops, and this enables me to earn more by making larger purchases each time, says the business woman dressed in pink. Her ambition is crystal clear: I know a venue which is for rent in an even better part of town, and I’m going to get it.

A customer enters the shop. She is a friend of Nancy, and wonders what all the fuss is about.

“This man makes sure I will get the loan, says Nancy, pointing at Thommessen, the foreign element in the colorful shop. Rafiki’s district manager takes over the conversation.

“Many of our customers have moved from the bottom of the pyramid to a level where they can create dignified lives for themselves, says Obimbo. His boss Paul Mulinge is a director of Chase Bank and worked many years in London’s City, but he wished to go home.

“Every morning I wake up feeling joy that I can make a difference. That feeling never came to me in London”.

Has he managed to prove the thesis?

So what about Christian Thommessen’s hypothesis? Has it been proven?

In practice the system works like this: A person saving for his retirement, a fund manager or an investor injects money into one of responsAbility’s many funds, much in the same way as with other investment funds. Switzerland has a wide range of funds, some of them available through the savings banks, others are reserved for professional investors. In Norway the Norske bank, DNB, has become a partner, and since spring of this year they are offering two funds in the Nordic market.

“The funds have paid nice returns since the beginning in 2003, explains Per Haagensen, executive manager of responsAbility’s Nordic branch.  The graphs show that the funds gave  higher returns during the past 10 years than high interest accounts, and only slightly lower than the stock exchange. Moreover they show that there was no float in returns during the finance crisis. (see illustration)

“The reason is that the finance crisis was a Western phenomenon. Direct investments in developing countries are not much affected by the stock market,” he explains. 

- Ethics funds are doing well

The manager of Morningstar, Thomas Furuseth, has a good overview over the funds market, and confirms the hypothesis, at least in general terms, as he has not studied responsAbility’s funds specifically:

Socially responsible funds have a positive lopsidedness as compared with other funds, he says. Do you wonder why I find this meaningful?

Christian Thommessen has finished his daily workout before he meets some of the staff of the Nairobi-office over a local beer. He finds himself comfortably seated between four female economists and financial advisors who have a keen eye for the chairperson from the North. The conversation soon comes to focus on gender equality and leadership, two subjects that often come up in discussions with Thommessen. He is in fact listening as much as he is talking, and he gives the young ladies the following advice: Be the boss of your own lives. Only one of them is a mother.

“We won’t be able to work any longer if we have children,” says the 29 year old portfolio manager.

Everywhere we met only suit-clad men. In the board rooms, in conversations, in the offices in Switzerland. responsAbility targets women. They generate the highest growth.  Chairman of the board Thommessen gains energy during his meetings with people.


Picture: Judy Otieno (upper left), hopes to be able to study economy in Nairobi. At present she is working as a sales manager with M’kopa, and made a strong impression on the Norwegian business leader. “She’s got the gaze and the will”, says Christian Thommessen. Signe Dons.

One of the most impressive people Thommessen met was Judy Otieno, the only woman among several men in M’kopa. She had it in her. The gaze. The will. She was dreaming of completing her economic education. “I have offered to be her mentor, if she wishes”, says Thommessen. He feels confident that this would be a safe investment which would give good returns.

____________________________________________________________________________________________________________

FACTS: CHRISTIAN THOMMESSEN

A glance and a handshake are all it takes to establish contact. He leads the way across goat tracks, under fresh green foliage and coffee plants to the small farm where Emma Wangiko reigns. A corrugated iron roof, bits of wooden planks, a few pieces of linoleum and some cloth give shelter for a family of five. Now is broad daylight, but in just a few hours, when darkness falls, the only light used to come from a kerosene lamp. It pollutes, both peoples’ lungs and the atmosphere. And kerosene costs money.  

500 million homes worldwide use the hazardous kerosene for light and fuel. 70 – 80 per cent of Kenya’s population have no electricity. This is a problem not only for safety and the childrens’ homework, it also hampers productivity.

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