business and the 2 most likely models of the end poverty generation

[chris macrae]

Business's 2 most likely models to end poverty and make the net generation wholly productive

Back in 1984, Norman Proposed the 30000 microfranchise model. This depends on public media not just being freely on replicating a best for the world inter-community franchise solution but helping stage reality tv competitions connecting ongoing internet search networks that find them.

http://businesssolutiontopoverty.com/sustainable-economic-developme.../ Polak and Warwick propose an opposite way massive corporations designed to serve at least 100 million of a billion poorest who are currently unserved. They advance 8 principles for designing such corporations. Oddly or not at least 6 of these principles are common to microfranchising.

1 Listening - don't look at the poor as almseekers or passive bystanders to their own lives. They're your customers. Understand the specific contexts of their lives- their need, wants, fears aspirations

2 Ruthless affordability- design and implement technologies and supremely efficient business processes- this may require an order of magnitude (ie 90%) lower costs than first world processes (but it also requires better sustainability of those who work for you and of natural resources) -note we had to add the parenthesis! - see value exchange mapping models

3 Transform the market. Think like a Steve Jobs or an Akio Morita- I don't serve markets I create them. Your goals is to put a dent in the universe. You will judge success by whether you change economic behavior - create huge numbers of jobs and transform the character of villages around the globe

4 Scale , Anticaipate from the outset designing - as a central focus of the enterprise - not just for thousands or millions of poor people but for hundreds of millions (note Polak envisions at least 25 frontier corporations -ie 25 cases of billions of unserved people - and it is being the leader of this service that ultimately makes this corporation profitable aggregating a cent profit per customer transaction if you will)

5 last mile distribution. Design radical decentralization that incorporates last mile (even last 500 feet) distribution, employing local people at fair local wages in a marketing, sales, distribution and service network that can reach even the most isolated rural people.

6 Jugaad Innovation. The Hindi term Jugaad denotes improvisation, working with what you have., and paying unflinching attention to continuous testing and development.  Some simply call this ingenuity

7 here's one of the two controversial ones - aspirational branding - we agree but aspirational branding for the por in our opinion seldom pays for advertisning. Its needed both to differentiate safety -eg what makes clean water identifiable from dirty water; and because to the poor  there is ever greater need for emotional empathy of their most trusted solution. -see eg the triple special issue pn brand real I edited in journal market management in 1999 on everything that was valueless of false branding in 20th century that needs to be designed in wherever a company commits to multiplying goodwill through purposeful win-win relationships of productivity and demand

8 And this is probably where the Polak Model departs from the Norman Macrae 30000 Franchise model. Design for a generous profit margin to attract private capital drawing from a pool of trillions not just millions typically available in philanthropy and government sponsored programs. Ultimately this depends on whether media and education are freely and socially on your side (and why wouldn't they be in Muhammad Yunus 1000% social business model) or costs you are going tp have to battle against

[chris macrae]

Dear Friends, In the last three months, Spring Health, our water company, has reached the tipping point, and as usual, all kinds of other things are happening. But I have sad news as well.
My close friend and soul brother Jack Keller died suddenly in the middle of an animated political discussion at a social gathering before an iDE board meeting. Jack was a deeply spiritual person. He was a world class engineer who was not afraid of getting his shoes dirty. Our collaboration on SunWater to create a radically affordable solar pump system represents the way he lived all his life: dream big, make it happen, and die trying. Here is Jack's last paper : Sun-Powered Irrigation by Jack Keller (see page 20 of the ASAB Resource Journal). In typical Jack Keller style, he included me, Bob Yoder, and Paul Storaci as co-authors although he wrote every word of it! I hope you enjoy it, and capture some of Jack's spirit for your own dreams.

 

Here is another article about SunWater that appeared recently in BusinessWeek: Cheap Solar Irrigation.  SunWater will provide affordable electricity to villages without it, much like the way Spring Health is delivering safe drinking water. We are starting with a design for a radically affordable P-V solar irrigation pumping system. Our design team, led by volunteer engineers at Ball Aerospace, has used a systems approach that cuts the cost of conventional P-V pumping by 80%, making them competitive with diesel pumps. We are now building the first prototypes which should be ready to field test in the spring.  Mal Warwick's and my new book,The Business Solution to Poverty, launched in September and is already making a significant impact. The book has received extensive media coverage. I'm delighted with the progress we are making in the field with Spring Health, our safe drinking water company.We've been learning very rapidly over the last year and a half how to optimize our  village blitz marketing strategy. We now  are consistently reaching our sales target of more than 1000 liters a day within ten days of opening each new kiosk. This will have profound positive effects on our bottom line profitability which is essential to our ability to scale. Our current blitz marketing strategy includes a professional theater group that puts on 2 performances within a week of the opening of each new village kiosk. The play is entertaining and funny and conveys the critical information villagers need about safe drinking water. We do door-to-door marketing for every household in the village, test the safety of the water people are actually drinking in their homes, and we open each kiosk with a lively and entertaining opening ceremony.  Play performed by a professional theater group in Khordha, Orissa, one of the villages in eastern India in which Spring Health operates.

 

My partner in India, Jacob Mathew was recentlyinterviewed in a  video on Spring Health.  This 12minute video gives a clear picture of our work.

 

We are also making progress on two other frontier multinationals. 

 

Creating a runway for the scalable frontier multinationals described in our book, The Business Solution to Poverty: Five years ago, Steve Bachar and I could not find companies to invest in that met the following criteria: 1. transform the livelihoods of at least 100 million customers living on $2 a day or less; 2. generate at least 10 billion annual revenues; and 3. earn sufficient profits to attract commercial investors. So my partners and I decided to start them ourselves. Now that that process is meeting some initial success, we are laying the groundwork for  a $130 million fund to incubate  and pilot test  and provide commercial investment support for the ones that succeed. Click here to read more.  Happy holidays and all the best in the new year! 

Warmly,

Paul Polak

[chris macrae]

#mitsdv14 trilliondollaraudit 2013 business model winner http://paulpolak.com  zero based design scaling criteria bottom up multinational

4 bottom-up multinationals being piloted

25 concepts looking for massive open partnering -references MIT dlab conference 2014 - polak book 2013

microfranchisepedigree treadle pumps

notes taken mit 8 feb 2014

bottom-up multinationals -mixes extreme local service; no waste onlv advertising (most bottom billion customers dont even have electricity; greatest sustainability purposes ever marketed!

sunwater 

to build a radically affordable solar water pump for $2-a-day farmers that will transform small plot agriculture, create new water markets, and significantly increase incomes that will raise bottom-of-the-pyramid families out of poverty. Our target customers are small-plot farmers in India and Africa.

These farmers need a reliable, low-cost water pumping system so that they can grow cash crops to increase their incomes. They also need electric power to add value to their crops (grinding, processing, etc.) and for household use. Current pumping systems cost too much or are unreliable.

Solar pumping systems have been available for years, and they show great promise. But they haven’t been adopted at scale for a very simple reason. They cost too much!

The purchase price of solar PV systems is much too high to be competitive with diesel pumps, even though the fuel and repair costs of diesel pumps are astronomical.

If we could cut the cost of solar pumping systems by 80%, we could transform small farmer incomes, create tens of thousands of new jobs, and significantly lower carbon emissions.

 

GREENCOAL non-carbon fuels from rural waste recycling

 

SUCCESS INTERNATIONAL quality private education rural

 

SPRING HEALTH drinking water

model 4 rupees from village stall; 8 rupees delivered last mile 

stall water tank treated with chlorine filter

[chris macrae]

By KC Koch Global Wash http://community.businessfightspoverty.org/profiles/blogs/kc-koch-i... This is the story of a successful partnership between two organizations that share a passion for toilets: an NGO with 30+ years of making markets work for the poor and the largest toilet manufacturer in North America. Eventually, they made more impact together than either organization could make alone. Combining diverse expertise The idea of a partnership started back in 2011 at a water and sanitation conference in Delhi. Cordell Jacks, the co-director of iDE’s Global WASH Initiative, and Jim McHale, VP, Research, Development, & Engineering for American Standard, met for coffee. It didn’t take long before Cordell and Jim realized that they had the makings of a perfect partnership. iDE would bring local expertise of rural supply chains and last-mile distribution in Bangladesh, as well as a host of sanitation market development experience gained from projects in other countries. American Standard would bring 140 years of state-of-the-art product design, computerized fluid dynamic engineering & modeling, as well as global sourcing, manufacturing and state-of-the-art product testing. Together they had the right combination of skills and knowledge to make a difference for the 2.5 billion people who live without improved sanitation in developing countries. Cordell remembers the potential of the partnership: “American Standard and iDE are two organizations with complimentary skill sets. Both are dedicated to increasing and improving sanitation globally. Together, we demonstrated that there is a sustainable and profitable business model in the heart of one of the most challenging market conditions in the world. It is an amazing example of impact that can be had with innovative public private partnerships.” Accepting the challenge American Standard saw a whole new market in the 2.5 billion people who are typically overlooked by big business. Too many corporations assume the poor have no purchasing power. But the most forward-thinking brands, like American Standard, are starting to take notice of the enormous potential in the bottom of the pyramid (BoP) customers. With a grant from the Bill & Melinda Gates Foundation, American Standard accepted the challenge to create a new latrine product for poor people in Bangladesh. A local understanding from iDE As far back as 1982, Paul Polak, iDE’s founder, walked and talked with small farmers in their one-acre fields. He spoke with them about their challenges and their dreams. iDE is still inspired by Paul’s approach of asking questions first. Today, iDE practices human-centered design (HCD), a methodology that identifies solutions to various challenges by placing users at the center of the design process. In 2012, iDE led American Standard through the human-centered design process in Bangladesh. iDE was working under a grant from the Swiss Agency for Development and Cooperation (SDC) and the Water and Sanitation Program of the World Bank (WSP) to implement the "SanMark Pilot project in Bangladesh." Tamara Baker, co-director of iDE’s Global WASH Initiative, recalled, “We opened new doors and ways of thinking for each other.” Together they spoke with small producers, salespeople, customers, and merchants. They field-tested prototypes, gathered customer feedback and ideated on product design. They also understood the potential market dynamics that could be strengthened to form a sustainable business model. Product expertise from American Standard American Standard joined iDE in Bangladesh for a deep dive to ensure their solutions would be feasible, desirable and affordable. The designer from American Standard, Daigo Ishiyama, provided the big “a-ha.” He noticed something only a fluid-dynamic engineer would notice. Previous latrine products use too much water. Meanwhile, Bangladeshi are accustomed to carrying a very small amount of water into the latrine. When you have less water, you need a smaller trap. The confined space creates a whirlpool effect and provides the needed flush power. Then, American Standard created an ingenious counterweight trapdoor solution that effectively sealed off the feces from the open air. And, of equal importance, the trap hid the feces from view of the user. Customer feedback revealed that people didn’t know it was possible to not have to see feces when inside a latrine. They were thrilled! The resulting product was named the SaTo pan (pronounced SAH-toh, derived from “Safe Toilet”). The American Standard team also provided plastics knowledge, the ability to rapidly prototype in plastic, as well as the financial resources and influence to support iDE's longer-term engagement with domestic plastics manufacturer RFL Plastics Ltd. “Thanks to our partnership, we suddenly saw plastic as a very interesting material for scalable, sustainable products for improved sanitation,” said Conor Riggs, Technical Director – Programs at iDE Bangladesh. “It was the spark that led to other innovations in our program, particularly the development of a fully upgradeable, mass-producible latrine system that includes the SaTo Pan that will go to market in the fall of 2014.” The case for the BoP BoP business models can and do work. iDE staff see it daily. iDE operates programs in 11 countries across Africa, Asia, and Central America, that are laying the groundwork for corporations to enter this new frontier. iDE asks private enterprises to think beyond charity. A sustainable business model benefits both the private corporation and the people they serve. Armed with the right insights, private corporations can make an impact and make a profit. These are some of the foundational principles of iDE, which emanate from its founder, Paul Polak. Paul recently expressed his approval of the collaboration that led to the SaTo pan: "Since poor sanitation is a key source of illness in developing countries, I am delighted to hear that iDE has collaborated with American Standard, the biggest toilet manufacturer in North America, to produce and start to distribute a radically affordable product to prevent the spread of diarrheal disease. I am particularly impressed with the price of $1.50, which could make it accessible to millions of people. It is simple, affordable devices like this that make the biggest impact." There is still a lot of convincing to do out there. American Standard is a pioneer. Their next horizon? Zambia—where they know it’s not a question of “if” the markets will be profitable, it’s only a question of “who” and “when.” iDEorg.org AmericanStandard-US.com

[chris macrae]

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By Nicki Goh, Private Sector Innovation Adviser, UK Department for International Development

http://community.businessfightspoverty.org/profiles/blogs/amplify?x...

DFID’s Innovation Hub team were faced with a challenge.  How could they bring in new partners to gain fresh perspectives and improved outcomes on tackling poverty whilst enabling true collaboration, end-user involvement and iteration in the innovation process?  To answer this, the team worked with their partners IDEO.org to develop a flagship programme called Amplify.

Amplify is a five-year project, set to tackle 10 poverty-related challenges. It does this by setting a poverty-related question to a 50,000-strong online community already collaborating on the openIDEO.com platform.  IDEO.org use a human-centred approach to design development programmes in collaboration with poor communities, building projects which are built around the behaviour and needs of the user. Their recent work with low-income urban communities in Ghana, supported by Unilever, Water and Sanitation for the Urban Poor (WSUP) and DFID, to improve sanitation options, won a Civil Service Award. A key deciding factor in working with IDEO.org was not just that they brought access to acreative online community, but because they also had a good record of reaching people who rarely access online platforms at all.

The ultimate vision for Amplify is a design process that will be at every stage informed, shaped and challenged by end users who can test and prototype the strongest emerging ideas. The team work through a  four-stage design process, to tackle questions such as ‘how might we make low-income urban areas safer and more empowering for women and girls’, the subject of the programme’s first challenge.

Finding out what users think is a challenge, but there are a number of options the team is trialling to complement the use of the online platform. These options might include using community radio, working directly with local implementing organisations, operating free telephone hotlines and voice recording systems and SMS surveys for users with simple phones. Through these channels, the team is hoping to enable discussion and interaction between innovators the world over and those best placed to determine whether their ideas show potential. However, for each challenge those channels are likely to be determined by the audience the team is trying to reach and the specific communications channels which are technologically appropriate for user communities. For our next challenge - which we recently decided to focus on early childhood development - we will be looking for ways to reach parents and caregivers living in poor countries and are interested to hear from partners who have ideas for products and services that could be tested with those communities.

Our first challenge has just reached stage 3 – a shortlist of the 53 strongest proposals from the 580 ideas submitted is live on openIDEO.com now. One of the proposals was a promising idea focusing on women in Nepal but it lacked detail. So, using the online platform, the group behind it were able to team up with design students from New York University, who helped support it with more research, ideas and focus. One of the ideas is from an Indian NGO with over 15 years’ experience working with young people who live in slums. Another is from a 14 year old boy. Some of the proposals come from people who are talking about problems they want to solve in their own neighbourhoods, who have plans for pilot projects involving just a few streets and families. When the Amplify team went on our initial research trip to gather contacts and insights for the project, a member of a small Indian NGO told us ‘DFID is not interested unless you already work with thousands of people’. That NGO, a women’s only taxi company which trains marginalised women to drive, is now on the shortlist for funding, with their proposal for using innovative ways to franchise and build on their model in more cities.

In the final stage of the process DFID award the strongest ideas not only with funding but also with 14 weeks of design support from IDEO.org. The use of milestone funding and the provision of design support are integral to the team’s aim to help smaller or less experienced organisations to take their ideas forward. However, we are also looking for organisations that are open to new ideas from the global community and willing to help take innovative solutions forward. The team will encourage implementers to prototype and test their ideas within communities and to iterate the solutions before attempting to scale.

Why not be a part of it? Sign up now and add your voice.

You can find out more on the Amplify programme via http://www.ideo.org/amplify and on the first challenge in progresshttp://www.openideo.com/challenge/womens-safety/refinement.

[chris macrae]

By Tara Lundy, Concept Development Manager, Vestergaard

http://community.businessfightspoverty.org/profiles/blogs/tara-lund...

In the spring of 2011, Vestergaard embarked on a bold initiative to provide over 4 million people in Kenya’s Western Province with access to safe drinking water.  Investing roughly 30 million dollars of our own funds, the company took a significant risk to prove that carbon finance could be a new way to unlock funding for the delivery of high quality and highly protective drinking water technologies at scale.  This program, LifeStraw® Carbon for Water, was and to our knowledge remains the largest private sector investment in the provision of household level safe drinking water for the developing world.  To get the program off the ground, we collaborated with partners with strong experience in the energy and carbon finance space: Manna Energy and ClimateCare.

We are now three years into the program in which we distributed 877,505 LifeStraw® Family filters to households in Kenya. We have a full-time staff of 46 local coordinators on the ground who engage in continuous health education and community mobilization efforts.  In addition, they provide an infrastructure for free repairs and replacements of the filters.

We also undertake large-scale household visitations through a network of more than 1,500 safe water volunteers who we hire for several weeks per year to do more formalized educational visits to households. We conduct annual monitoring and evaluation of the program in which comprehensive surveys are conducted in a random sample of over 7,000 households annually. We also hire an outside agency to conduct an additional annual monitoring survey to ensure our own data is unbiased. And finally, due to the extensive requirements of running a carbon finance program, we undergo an annual audit, complete with field visits from UN accredited auditors where they too conduct household surveys to verify reported results.

All of these activities can be expensive to maintain but we have found them necessary to not only meet but also to exceed the requirements of the Gold Standard Foundation – the crediting agency for our Carbon Program- and to ensure that the program is running effectively and households continue to use the filters and access safe water from them. To ensure that programs like this are meeting targets and generating measurable health and environmental impact, it is important to us to raise the bar on the quality of monitoring and improve our data systems to get the most accurate data possible. To date, we are averaging slightly over one million tonnes of emissions reductions per year.

From the outset of the program, we were both hailed as private sector innovators making use of a new funding stream and heavily criticized as private sector players engaging in the WASH sector, using a questionable method of finance to make money.  As a result of the criticism, our program has been carefully and closely scrutinized but this has only pushed us to ensure that we are continuously improving our education and monitoring practices and transparently reporting our results (all audit and monitoring reports are publicly available via the Gold Standard Foundation website).

Being challenged on reported data generated collaborative efforts by experts to improve surveys and has ultimately made our program and reporting stronger. It is our hope that this work will continue to raise standards for similar WASH programs globally. Toward this end, we have undergone an independent expert review of our monitoring practices by Berkeley Air Monitoring Group and continue to refine our methods.

The program has not been without its challenges: when we started the program in 2011, the market for carbon credits was strong and prices were high. In the last several years we have seen a precipitous fall in prices with little recovery. This has lengthened the time it will require to recover our investment, and it has also forced us to reduce some program activities and streamline others (for example, we had originally planned household visits every 6 months).  Despite the risks, there are also advantages to a market-based, pay-for-performance system.

For starters, it brings private, external funding to a space that largely relies on public funds and is woefully under-funded.  It also encourages innovation and prioritizes longer lasting, highly protective, cost effective technologies. The system has also pushed us to be agile and adaptable: our finance is tied to program results (for example: we only claim credits from the percentage of households reported to be consistently using the filters), so we have to find ways to implement the most efficient yet effective program possible. And thus far, we have managed to find that balance: we are proud to still be going strong three years later amongst a backdrop of volatility in climate finance and lingering skepticism from some critics. We have proven the concept which has opened the sector to more investment: as an example, Del Agua is embarking on a very large initiative in Rwanda to finance distribution of LifeStraw® water filters and clean cookstoves, intending to cover over 600,000 households.

While it may have some drawbacks, carbon finance has provided a method of delivering high quality water purification to the world’s most vulnerable. Without it, millions of people in Western Kenya would remain without access to technologies that meet WHO highly protective standards of water quality. Yet, the current uncertainty in global climate policies is keeping prices low and hindering more private investment. However, there are some positive indicators: WHO just released a testing scheme for household water treatment, creating international testing and certification standards that will ensure that treatment options are properly labeled by effectiveness.

This should create more certainty around acceptable technologies. International actors are also increasingly coming to the table to invest in these types of programs that create both climate and health-related benefits.

As the markets continue to fluctuate, we will continue to adapt.  Doing good and doing good business is at the heart of Vestergaard’s humanitarian entrepreneurship business philosophy. We have and will remain steadfast in the commitment we made to the Government of Kenya and to the people of Western Province: to provide them with sustainable access to safe drinking water over the long term.

[chris macrae]

By Yi Wei, WASH Innovation Lead, iDE UK 

The Problem and Context

iDE believes in the power of the market—the private sector—to improve lives and livelihoods. In the places that iDE works—rural areas of developing countries—the markets for many basic goods and services do not work; either they do not exist or they operate very ineffectively.

Historically, the “civil society sector” – that of nonprofits and NGOs – have largely employed a traditional charity model of giving away free goods and services, be it toilets, shoes, or healthcare. While this practice stems from good intentions, the efforts at best are insufficient to serve the immense scale of need, and at worst, detrimental to the vitality of local markets through distortionary effects of subsidy.

Easy Latrine Case Study

Prior to iDE’s intervention, very few private sectors were interested in producing and selling affordable, aspirational, and accessible sanitary latrines to the rural poor. Using the Human-Centered Design approach, iDE identified the unique needs, desires, and barriers of users and produced a product that households wanted to buy and businesses wanted to sell, creating a sustainable solution that can be scaled across the country.

Easy Latrine Design Process

The design effort followed a user-centered design methodology that began with in-field contextual observations and interviews with the key stakeholders involved in latrine manufacturing, installation and use. The learnings from the observations were distilled and synthesized into a framework that illustrated the potential opportunities for the design offering and showed where the design offering fit into the greater sanitation marketing effort.

From there, multiple rounds of brainstorming, prototyping and user testing were undertaken to develop the latrine designs. From the multiple iterations, a design direction emerged that addressed user needs as well as marketing thoughts around how to position the benefits and costs of latrine ownership.

User research phase

In the first phase of the project, iDE spent two weeks in the field talking with villagers, ring producers, retailers and masons to understand behaviors, needs and desires regarding latrines. All interviews and observations were performed in context—at the villager’s home, at the retailer’s store, and at the ring producer’s lot. Coming out of the user research, eight design principles were established to guide the work moving forward:

1. Let everyone go wet: Cambodians have an extremely strong preference for pour-flush latrines over dry pits.

2. Allow self-build at entry level: A simple do-it-yourself IKEA model will help lower costs.

3. Work from the bottom up: Focus on designing the underground, as that is the element that most users do have a clue about.

4. Reflect ‘in-progress’, not ‘temporary’: Position the latrine as upgradeable over time so users are not waiting to save for the most expensive model.

5. Divide the pit, slab & shelter (mentally): Doing so makes it seem easier and more manageable.

6. Set the stage for the mason: Reduce complexity and eliminate the need for expensive skills like laying bricks, but allow the mason to provide simpler, cheaper services such as mortaring the pieces together.

7. Show few options but enable many: Offer one simple underground to avoid paralysis by analysis, but allow users to customize the shelter according to their financial means and aesthetic preferences.

8. Support the shopping: Reduce the complexity of the purchasing process.

Prototype reviews

In the course of the design project, iDE took four trips to the field after the initial user research in order to review prototypes with stakeholders—villagers, masons, ring producers and retailers. In all cases, a number of 2D and 3D prototypes were shown.

Pilot Results

During the 16-month implementation phase of the pilot project, which was funded by USAID and technically supported by the Water and Sanitation Program (WSP) of the World Bank, 10,621 Easy Latrines were purchased by households without subsidy. The Easy Latrine served as a catalyst in the project to stimulate general interest of businesses to join the latrine market by seeing “proof of concept” of other businesses making a consistent profit from selling latrines to rural households. That is, the Easy Latrine was not the only latrine being sold. For every one Easy Latrine sold, 1.12 “other latrines” were also sold resulting in a total of 17,424 additional latrines purchased, increasing the baseline rate of latrine adoption by fourfold. A total of 24 local businesses were engaged during the project through training provided in the manufacture, promotion, and sales of the Easy Latrine. On average, the annual revenue of engaged businesses increased by 259%.

Scale-up results

Given the successful results of the Pilot Project, iDE secured funding from the Bill & Melinda Gates Foundation, the Stone Family Foundation, and the Water and Sanitation Program of the World Bank (WSP) to further scale up the market-based approach from the original two provinces to a total of seven provinces across Cambodia. In just over two and a half years, the scale-up program in Cambodia has facilitated the sale of over 100,000 latrines by over 100 local businesses, and creating a ripple effect of 1:1—for every latrine sold by an iDE-trained business, another latrine is sold by an “other” business, thereby having resulted in over 200,000 latrines just in the last 2.5 years, impacting the lives of over a million people.

The successful results of the Pilot Project in Cambodia also helped secure funding for sanitation market development efforts in five other countries—Bangladesh, Ethiopia, Nepal, Vietnam, and Zambia. Replicating process, not product, iDE used the HCD approach to design products and business models that are appropriate for the widely different contexts of the various locations.

Key takeaways

• Through the replication of a process, and not a business model, iDE is able to design solutions for market failures across different country contexts.
• The user includes not only the end-user, but all stakeholders who affect the user experience of the end user, i.e., all members of the value chain who would affect the user’s purchasing experience, from before the moment the user even considers to purchase, to after purchase maintenance.
• True innovation does not lie in the product alone. It is essential to get the product right, but the product serves as a catalyst for a thriving business model that serves the needs of both producers and consumers.
• Engagement with users at every step of the design process is key to effective rapid prototyping. You will never know if it will work until you test it out with the user.

 

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[chris macrae]

By Brendan Sullivan, Safe Water Program Manager, Impact Carbon

Access to safe drinking water is a significant problem globally, with over 784 million people worldwide lacking access[1]. Waterborne disease is a leading cause of illness in developing countries, contributing to the death of approximately two million children every year. Sub Saharan Africa is the worst affected region, where 40% of the population is still using contaminated and unsafe water (WHO 2010).

Creating access to safe drinking water is a complex and daunting task. In Uganda, where the bulk of Impact Carbon’s work is based, private and public are concurrently tackling this problem, though barriers within distribution, infrastructure, and consumer purchasing potential limit the impact of safe water systems. Further, larger community level systems, like piped water, can be unsafe for consumption, due to poor maintenance of piped networks, which leads to recontamination, and poor storage of water in homes and institutions.

With this in mind, consumers are typically boiling water, and boiling rates in Uganda are some of the highest in the world, with 71% of urban households boiling water, and 38% of rural households boiling.[2] Institutions, namely schools, are even less likely to boil for their populations, with the cost of boiling 200+ liters of water per day highly prohibitive to even wealthier schools, and medium-large sized schools needing to boil 600-800 liters per day to allow for at least 1 liter per student.

In 2013, Impact Carbon began exploring the potential for a safe water program in Uganda and Rwanda. The program focused on both household and school technologies, and looked a range of options and suppliers, both domestic and foreign. Starting with focus groups, the program began to use direct sales as a way to understand willingness to purchase, and how consumers choose between different technology types and price ranges.

Very early on it became apparent that there was a tremendous demand for water filters from schools. Schools were paying a lot of money to boil a fraction of the water the students needed, and parents were paying money to provide their kids with water to supplement the shortage.[3]. Further, high prices kept these schools from accessing the higher flow rate systems needed to support their populations, with systems costing between $800-$2000 depending on size and flow, a high lump sum price for even wealthier schools. While there were two domestic suppliers in Uganda, they were running smaller businesses focused on the wealthiest clientele, and no credit/loan services existed with banks or MFIs to support the growth of the industry.

Using this knowledge, Impact Carbon developed a financing product for schools, exploring the impact of a school specific plan on willingness to purchase. The initial service was a 1-2 year credit plan inclusive of maintenance, with schools having the option to choose the payment length and the system. A range of systems were offered, tailored to different school sizes and needs, ranging from high flow UV systems, to classroom ceramic filters. Impact Carbon developed a technology matrix to assist the school with choosing the best system for their school size. Schools were asked to pay a down payment, and make three payments per year, corresponding to the start of the term, when schools would have the most money coming in. Impact Carbon also partnered with a local supplier, who provides the larger UV and Ultrafiltration systems, to conduct installation and maintenance.

 Within a month after the initial offer, 5 schools had joined the program on 1 year financing plans, purchasing systems with an average cost of $1,000. 15 more schools joined the program in the next three months, with Impact Carbon capping the 2013 pilot at 20, to better understand usage, acceptance, breakage, and maintenance. In 2014, the program has continued to grow at a fast pace, with 65 installations currently in place, over 40,000 students currently accessing safe water, and a goal of 200+ systems by the end of the year.  In the next 5 years, this program plans to expand to thousands of schools in Uganda, along with potential expansion to other countries.

While offering financing to schools is a significant risk, Impact Carbon has mitigated this with flexible payments, initial risk evaluation, product assessment, and continued monitoring and maintenance built into the price, establishing a long term connection with customers, not just a one off transaction. Further, the consumers for these products are stationary institutions with reliable revenue streams, and while the risk for default and bad debt certainly exists,, this risk pales in comparison to the potential market and the growth potential for this business.

The ultimate goal of this program is to benefit the consumer. Our consumers are small, medium, and large schools who have expressed a tremendous demand and need for safe water products, and require patient capital to be able to access the systems they need. As it develops, this program will likely grow into a stand-alone social enterprise. Impact Carbon will continue to incubate this business until that happens, with an eye towards full cost recovery, and strengthening the products offered to increase and accelerate growth.

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[1] World Health Organization and UNICEF. Progress on Drinking Water and Sanitation: 2012 Update. United States: WHO/UNICEF Joint Monitoring Programme for Water Supply and Sanitation; 2012.

[2] Government of Uganda, 2011 Demographic Health Survey

[3] During the focus group discussions, most school administrators reported boiling about 50-200 liters of water per day depending on the student size. However, when teachers and students were asked, every focus group mentioned that this water was only usually provided once a week, or at best every other day.

[chris macrae]

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If you would like to get in contact with other members of the iDE family, click on the toggles below.

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[chris macrae]

.

y Kevin Andrezejewski – iDE Global Supply and Eduardo Mendias – Toro Irrigation

I’m excited to share with you an inspiring private/ non-profit collaboration between Toro Irrigation, a US-based world leader in irrigation equipment design and manufacturing and International Development Enterprises, an international non-profit organisation with over 30 years of experience developing markets for agriculture products and services that benefit smallholder farmers.

Through the partnership, an innovative drip irrigation system   has been designed based on existing technologies utilised by commercial farmers around the world.  Building on proven designs, the Toro Small Farm Kit has been adapted to the needs of smallholder farmers in Zambia.

This is just the beginning- by leveraging both organisations’ expertise, an integrated supply chain network linking US-based manufacturers with smallholder farmers in developing countries is being established.

This exciting, innovative collaboration can offer insights into creating a successful partnership between NGOs and the business world to benefit some of the world’s poorest people.

So what in my opinion are the ingredients needed for an inspiring private/ non-profit collaboration?

Shared Values, Shared Skills, Shared Goals

Shared Values

Both Toro and iDE believe in the benefits of micro-irrigated agriculture.

Why micro-irrigated agriculture? Because one billion people in the world live on less than 75p per day, 800 million of whom are smallholder farmers relying on subsistence agriculture for their livelihood. Positioned as a non-profit, iDE has been working for over 30 years to increase the incomes and food securities of smallholder farmers, as well as contribute to a more efficient use of precious water resources by helping them move from rain-fed and bucket irrigation to the use of simple water lifting, application, and storage technologies. Toro Irrigation, a commercial company, also believes deeply in improving crop yields and decreasing water usage to protect this precious resource by engaging in new business opportunities in developing country markets.

So what have we been doing?

Both partners have worked together on a USAID-funded project in Zambia to develop a drip irrigation system that is appropriately designed and cost-effective for rural farmers. The aim is to increase income opportunities and food security for rural farmers and their families.

The key to designing this system was the old idiom – ‘talk to your customers’. iDE is using its Human Centred Design approach to understand the needs and desires of smallholder farming communities in Zambia, and find solutions to meet these needs and desires with financial sustainability in mind. iDE conducted a study of Zambian farms in order to adapt Toro’s proven irrigation products to local conditions. 

The end result is a  Drip Kit built around Toro’s Aqua-Traxx Turbulent Flow Drip Tape Technology - a proven technology that is the preferred drip tape used for over 30 years by commercial farmers around the world.  Aqua-Traxx provides precise and uniform water distribution along with a high resistance to clogging, which allows farmers to maximise their crop potential.  Through this partnership, smallholder farmers in Zambia now have access to the same technology and benefits that until now have only been available to large farming operations.

Shared Skills

A great thing about this partnership is sharing skills and expertise. Making Aqua-Traxx available to smallholder farmers could not have been accomplished without the knowledge of Toro’s irrigation engineers and iDE’s in-country staff of agriculture experts. Toro brings cutting edge technology and US based manufacturing and engineering expertise to the table.  iDE brings local knowledge and market access.

Shared Goals

Both iDE and Toro have a shared goal of providing widespread access to this cutting edge, affordable drip kit technology and other appropriate micro-irrigation products through establishing a reliable commercial distribution network in developing countries. This will be achieved by integrating the Toro drip kit into iDE’s existing supply chain in its 14 country programs in Africa, Asia and Latin America. By creating the linkages throughout the entire supply chain down to the “last mile” of distribution, our goal is to ensure smallholder farmers have access to these technologies. In addition, the goal is to leverage Toro’s US-based world-leading irrigation manufacturing expertise to engage with new clients throughout the developing world, which will increase the number of farmers that can increase crop yields while preserving water resources.

Toro and iDE will continue to push the envelope to further develop this partnership.  Long-term, the partnership will continue to leverage an innovative design process, to further refine drip systems and utilise iDE’s market-based experience to create an improved supply chain, which will provide a competitive edge in entering developing markets. This will ultimately provide farmers with easier access to these life-enhancing technologies in the future.

What do you think are the ingredients for an inspiring private/ non-profit collaboration?

Links

Toro

http://www.toro.com/en-us/Agriculture/Pages/default.aspx

 Global Supply

http://www.ideorg.org/OurTechnologies/GlobalSupply.aspx

[chris macrae]

Lewis Temple: How Do You Sell KnowledgeTo Smallholder Farmers?

• Posted by member on June 11, 2014 at 9:44
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By Lewis Temple – iDE UK

iDE has over 30 years of experience working with smallholder farmers in Africa, Asia and Latin America. As a result we know two things:

1. If smallholders are to transition from subsistence farming to the production of high-value fruits and vegetables for the market they need access to low cost agricultural technologies, such as a drip irrigation kit or a treadle pump and agricultural inputs such as seeds and fertilisers.
2. However, without technical support and advice most small farmers do not make the most of their investments in technology and other inputs.

So the question is, how can we fill this knowledge void to ensure smallholders reap the benefits of their investments?

In most countries public sector agricultural extension services are becoming increasingly limited, and the reality is that over the years iDE has been providing a lot of –grant funded- technical support to the farmers through the work of field officers.

In recent years we started to focus a lot of effort at ways of providing this knowledge transfer (as well as technology transfer) through the market. 

In 2005 the iDE team in Cambodia started to experiment with knowledge transfer through the private sector.  Small-scale farmers in Cambodia told us they had trouble accessing quality agricultural inputs, sound technical advice, and reliable markets for their produce.  Serving this market segment has traditionally been the realm of community-based NGO projects.  We set out to take the key features of NGO service delivery and turn it into a financially viable business model based on the fact that a little know-how and some basic technology improvements could create a lot of value on small farmers' fields.

It was clear right from the start that it would be almost impossible to get smallholder farmers to pay directly for training and technical support – they were too used to getting this for free from the government through extension services or from NGOs.

So, iDE Cambodia developed a micro-franchise model that has become known as ‘Farm Business Advisors’ whereby individual entrepreneurs sell productivity enhancing inputs and technologies at a small profit and also provide advice and training to the farmers on how best to use these to achieve profitable results.   The cost of the advice is ‘embedded’ in the price of the input.   iDE Cambodia created a franchisor called Lors Thmey (meaning ‘New Growth’) that supports the Farm Business Advisors with training and provision of high quality agricultural inputs – such as seeds, fertilisers and irrigation equipment - they can in turn sell on to the farmers.

There are currently 61 Farm Business Advisors serving over 15,000 client farmers. The most recent results from field evaluations among FBA clients are impressive (as of December 2013). On average the rice farmers:

• Increased yields by 27% from 3.7 to 4.7 tons per hectare.
• Boosted net profits by 57% from $395 to $620.

Lors Thmey is now one of the largest seed retailers in Cambodia through the Farm Business Advisor network and won the Nestlé Prize in Creating Shared Value in 2010 – as an embodiment of the creating shared value concept. It is poised for growth, with plans in place under a new management team to expand the number of FBAs to 150 by the end 2014.

Very similar challenges exist for smallholder farmers in Zambia.  In 2012 we started work to adapt and refine the model for Zambia – making use of the ‘lead farmer’ approach iDE in Zambia has been using for a number of years. 

 

Small farmers in Zambia and most other countries of Africa are far more dispersed than they are in Asia – so the challenges of last mile distribution of agricultural inputs and technical support are particularly acute. 

Now, in partnership with SIDA iDE Zambia are training a network of 250 Farm Business Advisors in Zambia to help them become small scale entrepreneurs supporting 25,000 poor smallholder farming families in their villages.

A comprehensive training program in business, agronomy and marketing is aimed at significantly improving the technical knowledge of FBAs. There is a strong emphasis on recruiting and training female Farm Business Advisors to increase women’s involvement in agribusiness.

Due to the strength of the private-sector in Zambia, the approach we are taking is to link FBAs to 1) existing companies selling farm tools, inputs and 2) micro-finance organisations to provide loans to buy their products – rather than creating a central Franchisor.

 

I would love to hear from others about similar approaches to delivering agricultural products and services through the market to smallholder farmers.  Have you got any experience of selling knowledge to small farmers?

A film of the iDE Cambodia Farm Business Advisor project made as part of the Creating Shared Value Prize.  

Profiles of some of the FBAs from Zambia – called the FBA files!

Blogs on the work of iDE Zambia 

iDE UK website and iDE US website 

 

[chris macrae]

Claire Penicaud: Mobile Money For The Unbanked

• Posted by member on June 11, 2014 at 12:30
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By Claire Penicaud, Writer, GSMA

The State of Mobile Money Product Offering - What do people use mobile money for?

In an article published earlier this month, we discussed the level of mobile money usage and calculated that on a monthly basis, around 54m people were making transactions globally. But what do people use mobile money for? Which products are the most popular? Which products are growing at the fastest rate? Today, I will try to answer these questions by looking at mobile money global transaction numbers.

How many mobile money transactions are being processed on a monthly basis?

326 million transfers and payments were processed by survey participants in the month of June 2013. These transactions were worth USD 3.2 billion. Including cash-ins and cash-outs, mobile money users performed 431 million transactions in that month, totalling USD 7.4 billion.

It is particularly interesting to note that in 2013, the number of mobile money transactions has been growing faster than the number of active mobile money users (99% CAGR excluding cash-ins and cash-outs; 85% including them). This clearly indicates that mobile money usage is on the rise.

To understand which products are driving mobile money usage, let’s look closer at the product mix both in terms of number of transactions and in terms of value.

Which mobile money products are the most popular?

Airtime top-ups and P2P transfers dominate the product mix; whilst bill payments continue to grow:

• In June 2013, airtime top-ups represented almost three-quarters of the total number of mobile money transactions. On average, active mobile money users perform 5.8 airtime top-ups every month (see figure 1). However, given that the average value of an airtime top-up is quite low—$1.2 —it represented only 9% of the total value transacted in June 2013 (see figure 2).
• Domestic P2P transfer is the second most popular mobile money product in terms of number of transactions (18% of the global mix) and the most popular in terms  of value transacted (68% of the global mix). After airtime top-up, P2P had the highest average number of transactions per user in June 2013: 1.2. However, P2P transfer experienced the slowest rate of transaction growth of all mobile money products, with the number of P2P transfers growing at an annualized growth rate of only 31%.
• In June, 12.9 million bill payments were paid using mobile money compared to 8.6 million in September 2012. In June 2013, bill payment represented 4.0% of total transactions and 10.8% of total transaction values. For services offering this product, the average number of bill payments per active user reached 0.3 in June 2013.

These 3 products – airtime top up, P2P transfer and bill payments – are today being offered by the vast majority of mobile money providers (>85%) (see figure 3). Not surprisingly, these products also represent the largest share of the product mix.

Let us look closer at 2 products which are not yet as common as P2P transfer, airtime top-up and bill payment, but which have been driving the MM product offering in 2013. Bulk payments and merchant payments are already offered by over 60% of providers and an additional 30% of providers plan to launch these products next year – they could both soon become mainstream mobile money products in the future.

Bulk payment has been the fastest growing product in 2013; merchant payments have been growing at a slower pace:

• Bulk payment was adopted faster than any other product in 2013, at an annualized growth rate of 617%. It represents 1.8% of the global product mix by number of transactions and 6.7% by value. In June 2013, survey respondents processed 6.0 million bulk payments compared to just 1.4 million in September 2012. It is interesting to note that this growth has not been driven by a single provider or region. Multiple providers have successfully rolled out bulk payments and six survey participants processed over 250,000 bulk payments in June 2013, two of which were banks. This indicates strong demand from payment institutions in developing markets for faster and more efficient mechanisms for delivering bulk payments, such as salary payments or government-to-person transfers (G2P). However, rolling out bulk payments is not without challenges. Unless a solid distribution network is in place to handle large amounts of liquidity, it can be extremely difficult to handle bulk payments efficiently.
• Merchant payment is growing at a more moderate pace in terms of number of transactions (at an annualized growth rate of 53%). In June 2013, it represented 1.6% of all mobile money transactions and 4.0% of the value. While mobile money providers seem to recognise the opportunity of allowing merchant payments via mobile money, adoption has not yet met their expectations. Today, merchant payment numbers are significant for just a handful of services and it is struggling to gain traction in most cases.

International remittance has a lot of potential but adoption remains limited:

• International remittance remained a marginal service in 2013, offered by only four out of ten mobile money providers in our survey. However, this is twice as many as in June 2012, and with an additional 45% of respondents planning to launch it next year, it could become widely available in 2014. Globally, mobile money providers within our sample reported less than 50,000 international remittances sent by mobile money in June 2013. This indicates that, while a large number of providers are interested in launching international remittance, major barriers continue to slow down the uptake of this product.

Figure 1 – Average number of transactions per active user (30 day) per month
(June 2013)

Figure 2 – Global product mix by volume (left) and by value (right) (June 2013)

Figure 3 – Mobile money product offering globally (June 2013)

These insights come from MMU 2013 Report on the State of the Mobile Financial Services Industry.

Download the report

Download the slides

Mobile for Development Blog: http://www.gsma.com/mobilefordevelopment/blog

Resources: http://www.gsma.com/mobilefordevelopment/resources

Life Stories: http://www.gsma.com/mobilefordevelopment/lifestories

[chris macrae]

Mike Quinn: Moving Beyond M-Pesa: Innovations In Financial Inclusion

• Posted by member on June 10, 2014 at 11:00
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By Mike Quinn, Group CEO, Zoona

Everyone has now heard about the success of M-Pesa in Kenya. With over 11.6 million active users, 79,000 agent outlets, and $1.1 billion in real time payments each month, M-Pesa has been a game changer in the quest for ubiquitous financial inclusion.

M-Pesa has been so successful that mobile network operators (MNOs) have rolled out replicated models around the world based on the assumption that they can copy and paste M-Pesa’s success in other markets. In Africa, there are now 42.4 million active mobile money users with Airtel, MTN, Vodacom, and Tigo joining Safaricom with their own branded mobile money accounts and agent networks. Some have started to gain traction in certain markets, but the elephant in the room is that the vast majority of mobile money accounts are still dormant. GSMA estimated in June 2013 that only 43.1% of registered mobile money users in Africa had done a transaction on their account in the past 90 days, which was positively skewed from the global average of 29.9% by the inclusion of M-Pesa . Furthermore, another GSMA case study of an MNO in an African market found that only 13% of registered users were using their accounts frequently, with 4% of registered users generating 43% of the service’s revenues.

This begs an interesting question: are mobile network operators destined to be the “power stations” of mobile money as was the case with M-Pesa and is often assumed? I’m not convinced they will be – at least not everywhere (and maybe not in most places). MNOs are simply too big, too set in their ways, and make too much money off their core voice services to put in the proper time and attention to successfully build the mobile money infrastructure from scratch. Even when they try, they don’t seem to be that good at it – the lack of liquidity and poor customer service from MNO mobile money agents leaves much to be desired.

Who else can do it then? The obvious alternative is the banks. Equity Bank in Kenya is the poster child in this space, having made a commendable push towards financial inclusion by building an agent network to compete with M-Pesa’s and extend appropriate financial services to previously unbanked rural and urban customers. Equity is now looking to add “mobile” to their core “banking” offering by becoming a Mobile Virtual Network Operator (MVNO) in partnership with Airtel.

But besides Equity Bank, I would argue that banking the unbanked is just not in bankers’ DNA. Banks have been around for a long time, yet 2.5 billion people in lower and middle-income countries remain unbanked . And many of those that are banked don’t have any money in their accounts, despite being counted as “financially included”.
So who else is there? Luckily there are some new kids on the block: new groups of entrepreneurial start-up companies are stepping up to the plate. These companies are small, agile, and aren’t hamstrung by the organizational constraints and traditional business models of MNOs and banks. They are focused on developing solutions for customer segments that are underserved or are not being served at all. And crucially, they are attracting investment and going to scale.

One grouping consists of service models mainly concentrated in East Africa that are plugging into all those mobile money accounts to create demand to use them. M-Kopa and Off-Grid:Electric allow consumers to use their mobile money accounts to purchase electricity to power stand-alone devices in their homes. Kopo Kopo enables merchants to accept mobile money to purchase goods at their shops. Many more of these companies are in the garage right now and will emerge in the coming years.

Another grouping consists of companies like Zoona that are working in markets where mobile money has yet to take root. We help businesses grow by providing mobile payment and financial services to micro, small, and medium enterprises (MSMEs). MSMEs in Africa are typically financially excluded or underserved, despite being key drivers of employment and economic growth. We are neither an MNO nor a bank, yet we issue mobile money and provide working capital finance to 500 MSME customers in Zambia. Each month, our MSME customers generate over $20 million in over-the-counter money transfers from a base of 500,000 unique consumers plus $5 million in mobile supplier payments to FMCG suppliers such as SABMiller. Furthermore, we focus on helping our MSME customers make money off of our services so they keep using them, open new outlets, hire new people, and generate more transactions. We also work closely with the regulator to engage them in what we do as we share common goals of financial inclusion and building a sustainable industry.

In sum, we at Zoona are building our own mobile money infrastructure and plan to invite MNOs, banks, and the new service models above to plug in and provide value-added services to our fast growing customer base. We believe that companies like ours that are independent and agnostic of MNOs and banks have an important role to play in the future of this budding industry.

What does the future of mobile money look like? In some markets, the M-Pesa model driven by MNOs will win with other services plugging in to create demand. But in many others, it will take companies like Zoona to build the infrastructure for the mobile money ecosystem to emerge. M-Pesa will be written into the history books as the catalyst for the industry, but in the future it will be one of many.

Mike Quinn is the group CEO of Zoona, an African mobile payments business that helps micro, small, and medium enterprises grow. Zoona is headquartered in South Africa and processes tens of millions of dollars per payment value per month in Zambia. The company successfully closed a $4 million venture capital round from international investors in early 2012, a first ever for a technology start-up from Zambia. Zoona is now expanding to adjacent markets on its quest to become a pan-African payments business.