Entries in Africa (12)


Bureaucracy (and worse) vs entrepreneurship in fighting poverty

The trailer for the documentary Poverty Inc. challenges the traditional charity/aid approach to fighting poverty, and starkly suggests that--while intentions may be good--the donor-driven approach will never bring about real change. 

At what point do aid efforts become so entrenched that they effectively compete against real business development? And how can real, sustainable economic growth be cultivated?  These are important questions to ask. As one interviewee in the film states,

I know about countries that developed on trade and innovation and business. I don't know of any that got so much aid they suddenly became a first world country."

We are focused on developing mutual solutions based on real business models, and are interested in your point of take on the issues raised here.


POVERTY, INC. | Official Trailer from POVERTY, INC. | The Movie on Vimeo.


-- Clara Shen


Gates on communication, technology and the future of smallholder farming

Bill Gates is best known for his role in founding Microsoft, but his interests -- and the interests of the Gates Foundation -- include the search for ways to improve the lives of poor, smallholder farmers in Africa. He blogged this month about ways in which he sees technology enabling a better future for agriculture on that continent.

Noting that the rapid spread of mobile technology is revolutionizing financial services for those with smaller incomes, Gates suggests that the same infrastructure can change the face of farming as well.

The key issue is the farmers' lack of ability to communicate with the broader agricultural markets. Without this stream of information, farmers can’t grow crops based on the market’s requirements because they don’t know the specifications.

Further, without a more direct and rapid channel of communication, farmers have no way to learn the agricultural practices that could allow them to vastly improve yields. Instead, they grow mostly what they can eat or trade locally, the way they’ve always grown it.

Gates is hopeful that, with time and effort, mobile technology can bridge the communication gap and transform the African agricultural landscape.

When information can flow easily, when data is democratized, the cost of doing business in agriculture goes way down, just as transaction costs go way down when financial transactions are digital."

I encourage you to read the blog, and check out the associated video.

-- Yan Toh




No compromises: profitable business model, while serving the poor?

As part of the Economics of Mutuality, we are very interested in business models that do well by doing good. In a recent article in Bloomberg Business, M-Kopa Solar's founders outline their "no trade-offs" approach to social business and profitability.

M-Kopa sells solar lighting and battery charging systems to rural African customers, most of whom rely on ancient, expensive, and "dirty" sources for their light and power. The company’s power system includes a solar panel, two LED bulbs, an LED flashlight, a rechargeable radio, and adaptors for charging a phone. In addition to the environmental benefits, M-Kopa estimates that it's customers can save about $750 over four years by switching to solar.

Company founders Nick Hughes and Jesse Moore envisioned building a company based on three conditions:

  • It had to involve mobile technology, an area in which they both had experience;
  • It had to solve a significant pain point for the very poor; and
  • It had to have the potential to become a billion-dollar business.

We think it’s possible to build a business with no trade-offs. We can benefit the environment. Our customers will be better off. And we’ll get richer. We all can win.” -- Jesse Moore

Because the company only requires a small down payment on their systems, collecting a $0.45 daily payment for one year to make up the difference, M-Kopa operates much like a finance business. Counterintuitively, the company has found that its poorest customers—those who rely on the system as their only source of electricity—make the best credit risks. “If you take the long-term view and if you treat low-income people as customers, not charity cases, you can change the world,” Moore says.

-- Yan Toh


Youth, technology, and the future of farming

In a recent article at ICTworks, graduate student Cassiane Cladis asks if information and communication technology (ICT) can generate enthusiasm among youth to be farmers. As Cladis notes, this is a particularly significant question for anyone interested in chocolate because there are fewer cocoa farmers today than there were a decade ago as older farmers are not being replaced by a younger generation.

Technological solutions are being deployed to support farmers in Africa, Asia and South America right now. These initiatives are designed to promote best practices, provide more timely and accurate weather, environmental data, and market information.

Cladis seems most interested in what else ICTs can do, and if they can entice a new generation by educating, connecting and building a community of young farmers who "work smarter and who work together." It's an interesting read, and we hope it encourages you to add your own thoughts on the subject.

Image source: Mars Sustainable Cocoa Initiative

-- Clara Shen


Public funds and private sector investment in economic development

A recent article in the Guardian reports that there is an increasing focus on private sector investment by the U.K. government's international aid agency, the Department for International Development (DfID). The agency's plan to provide £735m over the next three years to the CDC Group, the British development finance institution that specialises in private sector funding, is the immediate subject, but the article also highlights the sharp debate over the role of private sector investment in economic development, particularly when the source for that investment is public funding.

At the heart of this argument is the question of what is the most effective way to eliminate poverty. Some advocate more direct spending on housing and other necessities for the poor, while others argue that a strong private sector will provide jobs and a long-term reduction in poverty, and funding should be provided to businesses that will generate the greatest ROI--even if those businesses have little to no connection to poverty reduction.

The CDC Group's mission is "to support the building of businesses throughout Africa and South Asia, to create jobs and make a lasting difference to people's lives in some of the world's poorest places," according to its website. However, it has been criticized for investing in businesses, such as luxury hotels and high-end shopping centers, that are not focused on improving conditions for the poor.

The minister responsible for DfID points to the just-concluded Addis Ababa agreement, the U.N. sponsored initiative to coordinate global policies on sustainable development, as supporting an increased role for the investment of economic development funds in the private sector:

This is a historic international deal that takes us beyond aid. It is the first ever agreement that allows us to harness private sector investment and developing countries’ domestic resources, including tax revenues, to turbo-charge development.”

Alex Scrivener of Global Justice Now disagrees:

Pushing hundreds of millions of pounds towards the private sector like this at best seems like a waste of taxpayers’ money and at worst could end up actually causing more harm than good in the global south.”

This debate will not end here. The larger question of how the developed world can alleviate poverty and promote prosperity in Africa will require the private sector, non-governmental organizations and governments to try new approaches, measure the results, share information and find ways to work collaboratively. This is a debate of great interest to us as we focus on building new business models for Africa and elsewhere based on the Economics of Mutuality.

-- Yan Toh