Socially Entrepreneurial

cookstovesI haven’t really told you the third purpose to our Africa visit — besides safari and visiting family. Andy is involved with a program through Santa Clara University (go Jesuits!) that works with what are called Social Entrepreneurs in developing countries. A business is classified as a Social Entrepreneur enterprise when the bulk of its business involves the betterment or lifting out of poverty of a large number of people. The business can be non-profit or for-profit — in fact, it’s better that it’s the latter. But it has a business component to it. So an organization that rescues girls from sexual slavery would probably not fit this model. A business that built or sourced low-cost solar lamps that were affordable enough for rural people and slum dwellers would be. Especially if that enterprise could reach customers — by dint of affordability or distribution network — who normally wouldn’t have access to such products, and if the enterprise provided employment opportunities for some of those same people, all the better. The unique thing about the Santa Clara program is that, since the enterprises need business expertise to survive and scale, the program matches these Social Entrepreneurs with Silicon Valley businesspeople. All are mentored for several months through Skype. Then a select few are flown to the Santa Clara University campus for two weeks in the summer for an intensive “business bootcamp” with their mentors. We’ve joined up with a delegation of  key people in the program — Andy is on the advisory board and is a mentor — to do field visits to some of the program alumni. We’re charting progress, looking for synergies with other alumni and, most importantly, getting some “boots on the ground” experience in the unique challenges some of the program alumni face.

I’m not really in the program — although I feel that I’m immersed in it — I’m just going to report on the enterprises that struck me as particularly interesting and innovative. I’ve always wanted my charity work to be focussed on American communities. And I think sometimes domestic empowerment and anti-poverty work gets ignored for the “sexier” programs in developing nations. I’m keeping a sharp eye out for any ideas and models that might work in the U.S.

So, in no particular order, here are some of the programs that particularly struck me.

Juhudi Kilimo. Here’s an interesting twist on micro-finance. Did you know you could hire-purchase a cow? One of the issues with micro-finance has been that sometimes the money goes to emergency budget needs, but, in the end, the borrower isn’t significantly better off. Yet, micro-finance is the only available option for small rural farmers and businesses as they have no collateral that would allow them to get a traditional bank loan. Here’s where Juhudi is different. They have sourced a Friesian cow hybrid that produces three times more milk, yet can stand up to the African environment. So when Juhudi makes a loan to a small farmer, that loan purchases a cow which Juhudi delivers directly to the farmer. With this higher production animal, the farmer immediately gets more product to sell, more food for his family and a source of income with which to pay off the loan. The cow also becomes the collateral, which can be repossessed and returned to the program if need be (although this seldom happens.) With the cow as collateral, Juhudi has as vested an interest as the farmer to make sure that the cow thrives, so Juhudi insures the animal and provides animal husbandry help to the farmer. Cows are only part of the story — well, actually 49% of the portfolio. Juhudi also makes loans around high-production poultry, pig and rabbit breeds; irrigation, green houses and solar devices; farming equipment and transportation. Basically, anything that can significantly improve a farmer’s productivity and income. But you can see the logistical challenges. This ostensible “finance” company also has had to become a distribution channel, a livestock and equipment broker and an animal husbandry service.

I wasn’t paying too much attention to the numbers, but here are a few: the “cow loan” for the farmer is $500. A local cow produces 2 to 4 liters of milk per day. A Juhudi cow produces 12 to 15 liters of milk per day over an average high-productive lifespan of 5-7 years (of course the farmer also gets any calves produced and the meat when the cow has ended its productive life.) The average payback for the farmer — after feed, maintenance costs, and deducting the milk that went to his family — is $750 a year. So, big impact! The program is on track to service 50,000 farmers next year.

Amazing how little it takes to make a huge difference. A more productive cow, a few better chickens or some farming help can do it.

Amazing how little it takes to make a huge difference. A more productive cow, a few better chickens or some farming help can do it.

M-Farm. This program aims to give rural farmers more access to market information in an attempt to leverage their ability to command fairer prices and reach more lucrative markets. A mobile app — which can operate even on an old-style flip phone — gives farmers instant access to the prices and demand in marketplaces near their area. There is also a proactive ability to work with suppliers. Say one buyer is looking to buy one ton of maize. M-Farm’s network can quickly aggregate 20 small farmers to fulfill that order. In an additional service, M-Farm is now employing agronomists to inspect their member farmers’ wares to ensure quality and reduce the chance of rejection at the point of delivery. As the word of M-Farm members’ consistent quality gets out, that in turn improves bargaining power.

One of the most exciting things about the program: it's run by two young Kenyan women, the daughters of farmers, who graduated from college, got good corporate jobs, then quit to give back in this way. Andy's hoping to continue to mentor them.

One of the most exciting things about the program: it’s run by two young Kenyan women, the daughters of farmers, who graduated from college, got good corporate jobs, then quit to give back in this way. Andy’s hoping to continue to mentor them.

LivelyHoods. This was my absolute favorite. The founders of this business wanted to help slum-dwelling kids. One thing they learned that these kids could do well was sell. Unfortunately, it was selling their bodies or drugs or whatever they scavenged from the dump. Livelyhoods seeks to build on that strength by redirecting these kids to sell eco-friendly items such as super-efficient cookstoves back into their ghetto neighborhood. Part of our visit involved pairing up with some of these kids and watching their sales process. Andy and I were targeted by the gregarious Victor, who said he wanted to be with an Englishman “because I admire the football.” (You can see Victor at the top of this blog post showing Andy how the cookstoves work.) We set off with him and two lovely teenage girls and headed out into the ankle deep mud of that qualifies as Nairobi slum streets.

Victor targeted potential customers. Then sent Andy in to make the sale. Unfortunately, Andy couldn't close.

Victor targeted potential customers. Then sent Andy in to make the sale. Unfortunately, Andy couldn’t close.

It was a tough sales day. It had just rained and the streets were a river of mud. We also had to go into an area Victor and the girls had already saturated — since they needed to get us back to the bus in two hours. But that doesn’t mean it wasn’t a productive morning. At one point we ran into the lovely Wangae, a beauty shop operator. We started our pitch. She listened attentively, but said, although she was pretty sure she wanted to buy one for her son, she wasn’t ready to make the purchase yet. Then she gave us some of the best selling advice we’ve ever heard.

"Tell me about this stove", she said, "And make me see why I can not live without it."

“We are talking, yes, and we are getting to know each other.”

"We learn who we each are and we start to trust."

“We learn who we each are and we start to trust.”

I told her she had such lovely skin that I wanted to take her picture.

"Ah, now we are friends and we like each other."

“Ah, now you are saying these kind words and I think we are friends.”

"This is the way sales are made. With friends."

“This is the way sales are made, I think. With friends.”

"Come back next week and I think you will make your sale."

“Come back next week and I think you will make your sale.”

We left it with Victor taking Wangae’s number and promising to call back next week, me promising to print out the pictures and send them to her when I got back to the States and Wangae saying we should all stay in touch since we were now friends.

As for the program, it’s not as if it’s a slam dunk. Although these three enterprises are some of the big success stories, they are still struggling with issues such as distribution, profitability models and scalability. But the exciting thing is that these are instances of Kenyans helping Kenyans with Americans only in an advisory role. I think Wangae would agree, it’s best to make sales and transactions between friends and neighbors.

As for how these models could be applied to America? I could see an M-Farm model helping small organic farmers be more competitive or more effective with high-paying buyers such as restaurants. I guess there isn’t much call for financing cows, but surely there must be other ways this innovative micro-finance program could roll out in America. Where I really see a possibility is in LivelyHoods’ program. One of the issues LivelyHoods is targeting, besides giving youth a positive way to earn income, is addressing that last mile in underserved areas. Underprivileged urban areas in the U.S. are infamous for lack of grocery stores and retail outlets as many retailers don’t want to locate in blighted urban areas. As a result, poor people often pay up to twice as much for key items as people in wealthy areas where such goods are available, competitive and purchasable in bulk. What if an army of kids in Detroit, Oakland or Watts could make income selling fresh vegetables, household cleaning supplies and other items door to door in their neighborhoods?

It bears thinking about.

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Author: Lisa

Although I'd like to think of myself as a rootin', tootin', wine-makin' cowgirl, I currently only live in Sonoma part-time. Mostly I'm on freeways between San Jose, San Francisco and Sonoma. With two yapping terriers in crates behind me. We try to enjoy all three places and points in between. Which will explain why my post subjects are all over the map.

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1 Comment

  1. Oh Lisa! These are such inspiring stories, and your photos are wonderful! I love your new friend Wangae! And the Liveleyhood model is something that would be perfect for neighborhoods here in Memphis. We live in a mixed neighborhood that is basically a food desert. There are many people here who would benefit greatly from such a system. Our neighborhood association has an after school program for teens just up the street. I wonder if this would be a good incubator?

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