Francisco Acuña
CEO and Founer
InTrust Global Investments
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View from the Top

Linking Human Capital and Community Development

Wed, 02/24/2016 - 10:08

Q: What are the basic elements of the Applied Leadership Program in Renewable Energies and Energy Efficiency in Mexico?

A: This program’s core characteristic is that it enables sponsors to partner with individuals within indigenous or rural communities, who have commonly mistrusted traditional developers. At InTrust, we realized that energy could be the best vehicle for building community engagement, while also lowering the credit and political risks within projects, making them much more attractive for all stakeholders. The first step was to acknowledge and study the growing tension within these communities in Mexico, leading to the discovery of an inherently economic issue that directly correlates with communities’ lack of active participation in projects. As a result, while projects are creating a cluster of wealth around the country, the communities surrounding them still live in impoverished conditions.

We found that three main actors in rural Mexico have the ability to act as a bridge between communities and developers: priests, physicians, and teachers. While political actors change every three years, these actors are consistently present, so providing them with the skills to connect the two demographics is vital to the program’s success. The main stakeholders we are able to train are engineering professors, so we mapped out their locations and established who had raised either public or private funds to develop projects, representing the first building blocks of the program. We also partnered with Harvard University’s Center for Health and the Global Environment, as well as with international and local investors and developers, before inviting the professors to a graduate program supported by the Ministry of Energy. The program, which took place in Sonora in the north, Morelia in the central region, and Yucatan in the south, was attended by participants from all Mexican states. The experience has been rewarding and a lot of universities are requesting more chances to participate, fulfilling our desire for universities to see themselves as allies to development.

Q: How is the program changing the teachers’ attitudes towards project development?

A: The program is focused on leadership, business development, and energy. We chose to concentrate on leadership because this concept entails developing skills such as self-confidence and creating alliances, and some of these professors are confined by the Mexican education system to the point that they feel trapped. The education system has created an inertia in which professors are involved in many activities that are not at all linked to the development of the country. However, the majority of professors in Mexico possess the skills and passion to lead change in their classrooms and beyond, representing one of Mexico’s great potential successes.

We thought it would be unique to train these professors and engineers to think differently about their role as developers while staying in school. A similar approach is used by many universities around the world, where professors are sponsors, consultants, promoters, or developers of strategic projects that bring more wealth and development to their communities. The main eye-opener for Mexican teachers was learning that professors in other universities were encountering the same issues, which included dealing with bureaucratic procedures and facing obstacles to the development of projects, such as teaching long hours and writing several papers. This mirror with Harvard’s professors created an empathic link, which was a key motivator for Mexican teachers.

The program did not train the professors to become financiers, developers, or social activists; it trained them to be able to engage with communities and foster community development around green energy initiatives, as well as to understand the banks’ lending requirements and what developers look for. The program trained them to create incentives within their universities so they could become hubs of energy and social innovation within rural Mexico. According to one of our studies, Mexico is capable of achieving a significant GDP increase in rural productivity if 5% of its professors can support strategic projects without leaving academia. The country has one of the largest numbers of engineering professors in the world, so we need to harness that 5% and seize the opportunity.

Linking Mexican professors to their counterparts has allowed them to see the necessary process during negotiations with stakeholders, helping them to understand that there is a critical path to take if they are to increase their chance of success. This was transformational for the professors, as they were not aware of what they could do under the new rules that emerged from the Energy Reform. The ninemonth project has helped them to upscale their ideas and potentially turn them into real projects. We also introduced them to investors willing to work with cooperative systems, which have expanded their perspective. Since InTrust takes care of training them to play a more prominent role in organizing their communities, these professors should focus their innovation on energy developments that have a significant social and financial impact.

Q: What kind of communities is InTrust Global targeting in its program?

A: We are focusing on communities are ready to move forward with projects, or are still hesitant about the idea of a project but are organized and willing to listen. Communities that are not well-organized or are in extremely impoverished conditions require more dedication. These communities do not want to lease their land because they want to leave something to their children. Those are the key targets for an intervention for community development projects because sometimes they can pledge land and capital, and clean energy and agriculture initiatives can be their way out. The biggest opportunities are with communities that are able to make a project more competitive by either working for the project, being on the board, or training the next generation to eventually scale it. This is just starting to happen in Mexico, with Oaxaca presenting the most extreme example since there is already a large installed wind power capacity in the state, but most of the human capital working on these projects comes from abroad. Our challenge as Mexicans is to invert that reality.

Right now there is an opportunity for sponsors and developers to look for partnership opportunities in Mexico, in which professors and universities can help make energy projects more competitive while fostering community development, lowering credit risk, and getting the locals to do some of the work. They will not immediately operate the wind farms, but maybe they could do so in the second or third project if trained properly, making them part of the real value chain. InTrust is now negotiating a second phase of the project, as a lot of institutions want to replicate the model and take it to the next level. Ultimately, the Applied Leadership Program in Renewable Energies and Energy Efficiency in Mexico is a win-win situation for investors, communities, and universities in the country.