The World Economic Forum is travelling to Ethiopia this week to bring together the voices of Africa and help transform the region. This blog post is part of the One Year One Change campaign, which shares visions for a better Africa with world leaders attending this week’s meeting in Addis Ababa. What change do you want to see in Africa by 2013? #1y1c

Andrew Mitchell, Secretary of State for International Development of the United Kingdom, recently made the remark that that aid is a means to an end, not an end in itself, explaining that “ it is the private sector that creates the jobs, goods and services that the world’s poorest people so desperately need to lift themselves out of poverty.”

Often, however, when we think about businesses in the developing world we focus on the issue of the “missing middle” – namely that there are not enough companies that require more than microcredit.

In our research, the problem is larger than that – there are also not enough locally-owned large companies either, which hinders sustainable economic and social development. The reasons for this include the inability of locally-owned businesses to access capital, communities often cannot reap the rewards of natural resources, there is a lack of support to build the capacity of communities to run large-scale businesses and, if I dare say, corruption.

At AchieveGood, we are attempting to develop a new financial product that can help tackle these problems. We call this mutual capitalism.

Mutual capitalism seeks to build on the excellent work done by organizations such as Divine Chocolate – using a shared ownership model – and scale it up. It also seeks to build on the work done in the impact investing space, with innovations such as the International Finance Facility for Immunisation. Our vision is to create financial products that enable global capital markets to support sustainable development.

Mutual capitalism seeks to achieve this by operating a unique model that shares ownership and control among all contributors and the wider community. This encompasses the work of those who deliver services, the entrepreneurs’ drive and the community at large with the resources of financial institutions. Mutual capitalism is an opportunity for multinationals to utilize their skills in a way that both benefits them financially, but also benefits the communities they work in. A mutual capitalism entity should consist of:

  1. A partnership that is beneficially owned by the employees and community stakeholders; Some of the profits will be reinvested in building the capacity of local people to take on increasing levels of responsibility within the business
  2. An investment vehicle that is owned by individual, corporate and institutional investors that capitalizes the mutual capitalism entity. This investment vehicle would raise the capital required and lend it to the mutual capitalism enterprise at a preferable and responsible rate; this interest rate would allow investors to make a (small) return on their investment from the beginning as well as enabling long-term sustainable growth.

For too long, we have allowed multinationals and governments to own a significant majority of the large businesses in the developing world. My hope is that through mutual capitalism, communities can benefit financially from sharing ownership in a range of companies – from farming businesses and large-scale safaris to mining operations and infrastructure projects.

Dominic Llewellyn is the Managing Director and Founder of AchieveGood, an organization that designs financial products that tackle social challenges. He is a Global Shaper in the London Hub (He tweets @dom4good).