Social Enterprise

Thoughts on Rugged Altruism

One sign that the U.S. political scene has reached rock bottom is David Brooks writing one of his weekly columns about development workers in Nairobi.  In “The Rugged Altruists,” Brooks discusses the virtues possessed by three smart, young development workers in the course of doing this work. The first is Read more…

Development Economics

mHealth in Northern Ghana

This post originally appeared on Next Billion. “Some women feel they want to hide their pregnancy at the early stages. Maybe because they fear the ‘the evil eye,’ miscarriages, the unknown or visiting a midwife. These fears are normal. Here are some tips to help you deal with them: Seek Read more…

Development Economics

M-PESA and Mobile Money in Kenya

I’ve now been in Nairobi for two weeks and have settled in well.  I moved into my fairly upscale apartment in Kilimani, a section of Nairobi that is the beating heart of the tech and social enterprise scene here.  Up until last Saturday, I was sleeping on a mattress on the floor.  The landlord wanted to deliver a new bed frame, so I needed to let the movers into the apartment.  It was a total gong show getting this frame up the stairs, and I had to help them move it.  When it was all done, I was instructed to call the landlord and confirm that the job was finished.  After I hung up, the phone of the lead mover made a sound, they all smiled and went on their way.  In the ten seconds that elapsed after my call, the landlord successfully paid the movers via M-PESA, the ubiquitous mobile money platform in Kenya. For those have never heard of mobile money, it is exactly as it sounds: money that can be transferred from on cell-phone to another via an SMS platform.  The most popular platform is called M-PESA, offered by Safaricom, the leading telecom provider in Kenya with almost 80% market share.  Created in March 2007, M-PESA is a dominant force in the country.  As of late 2009, an estimated two-thirds of the households in Kenya had at least one person using M-PESA.  A recent report titled “Mobile Money: The Economics of M-PESA” details a research effort that surveyed 3,000 users.  Here, the authors, William Jack and Tavneet Suri, describe the model:

Safaricom accepts deposits of cash from customers with a Safaricom cell phone SIM card and who have registered as M?PESA users. Registration is simple, requiring an official form of identification (typically the national ID card held by all Kenyans, or a passport) but no other validation documents that are typically necessary when a bank account is opened. Formally, in exchange for cash deposits, Safaricom issues a commodity known as e?float or e?money, measured in the same units as money, which is held I an account under the user’s name. This account is operated and managed by M?PESA, and records the quantity of e?float owned by a customer at a given time. There is no charge for depositing funds, but a sliding tariff is levied on withdrawals (for example, the cost of withdrawing $100 is about $1). E?float can be transferred from one customer’s M?PESA account to another using SMS technology, or sold back to Safaricom in exchange for money. Originally, transfers of e?float sent from one user to another were expected to primarily reflect unrequited remittances, but nowadays, while remittances are still a very important use of M?PESA, e?float transfers are often used to pay directly for goods and services, from electricity bills to taxi?cab fares. The sender of e?float is charged a flat fee of about 40 US cents, but the recipient only pays when s/he withdraws the funds.
It is effectively a system of cashless payments and money transfers without the need for a bank account.  In essence, it functions as either a replacement for or a compliment to a traditional current account.  Much of the country, however, has limited access to bank branches or ATMs, making M-PESA the alternative to opening an account with a bank that may be located far away. Customers can register for service on their phones and deposit money at one of the 25,000+ agents located throughout the country.  Agents can be independent retailers, stores, or any other business establishment.  The person gives the money to the agent, who then transfers the e-money to their phone.  The person can then transfer money to another M-PESA user or pay for goods or services rendered from a business.  Some people use it to pay school fees, or electric bills, or even taxi fare. The impact on the country has been significant, and will continue to be a model for future mobile money programs.  According to the authors, M-PESA has had several rippling effects that have changed the way the country operates. (more…)

Development Economics

The Economics of Solar Lanterns with Mobile Charging Stations

Develop Economies is back after a brief hiatus.   I have finished up my work on my current project and am now taking some time to appreciate some of the aspects of Ghana I hadn’t had a chance to enjoy previously.  I spent a few days living with a rice farmer about 45 minutes by motorbike from Atsusuare in a small community along a lake fed by the Volta River.  I did some work in the field (very minor – I can’t say I’m a great farmer), came across two cobra snakes, and biked an hour each way to the next village with electricity to charge my cell phone and camera.  It was the first time I have ever actually experienced rural living, with no electricity, no running water, limited transportation (you have to call a motorbike to pick you from the neighboring town), and the persistent threat of snakebites, malaria, and other calamities that hang around waterlogged fields of paddy rice.  I have discussed on this blog the different solutions to the problems of rural energy delivery and distributed power generation, to the problem of inefficiency of burning charcoal and the use of clean-burning cookstoves, and others.  But I had never actually seen any of it or experienced it with my own eyes. In terms of solar lanterns with mobile phone charging capacities, there is a huge need.  People have to travel an hour each way to get to the nearest community that is connected to the grid.  Once there, they have to pay 50 pesewas (about 30 cents) to charge their phones, and need to wait for two hours for the charge to complete.  They do this routine three times a week.  That means that 12 hours out of every week are spent on the activity (unless they couple it with a trip to the market, where they may also have electricity, or to see Manchester United play Chelsea, which is also necessitates the trip).   That is 12 hours of lost productivity, plus $1.20 for charging the phone each week. For lighting, they use battery-powered lanterns, which provide a lot of good light.  They cost 3 Ghc (~$2) and require two batteries, which cost 80 pesewas (~$0.50) for the pair.  The batteries last for three weeks.  So, the upfront cost of the lantern is low, but the all-in cost per year is closer to $15.  That is relatively low for a quality source of light, and has a low weekly cost, which is amenable to the cash flow of farmers and other people living in rural communities and working in the informal sector. (more…)

Social Enterprise

‘Active Incubator Models’ and Management for Social Enterprises (Part 2)

[caption id="" align="alignright" width="290" caption="No other image available."][/caption] Part two of my two-part Next Billion series. The ASEI incubation model has three phases. During the first phase, ASEI, in conjunction with the originator (or the visionary behind a would-be enterprise), develop a business model. The organization evaluates the specific value proposition of the company, and formulates a strategy for expansion, based on market demand, competitive landscape, production costs, and any other relevant information. For example, with incubator firm Invisible Sisters - which employs urban poor women to make dresses, purses and other accessories from plastic waste - they needed to understand the potential distribution networks, specifically retail, bazaars, and fashion companies, and identify the optimal path to market. During the second phase, the manager is brought in to run the day-to-day operations and implement the growth strategy. Invisible Sisters originally relied on schools as collection points for obtaining used plastic bags, the raw material for manufacturing. Under ASEI management, the company worked with shopping malls in the Philippines to source used bags from shoppers, and partnered with the Philippine Plastic Industry Association (PPIA) to supply the collection bins in the malls. In exchange, the PPIA and shopping malls promote recycling and improve its corporate image. This cooperation has a considerable environmental impact reaching beyond the immediate needs of Invisible Sisters. In terms of marketing, the company began producing bags for a jewelry chain and a shoe/bag importer in Manila, and partnered with fashion houses to co-brand bags. It has also developed and expanded its production capacity in order to  take contracts from international buyers. (more…)