Reflective Perspectives

Cleaning out my desk before leaving PlaNet Finance, I came across a promotional flyer for an EnerGcare product called the Wonderbag. A Wonderbag is essentially an insulation cooker – you heat food in a pot and then transfer it to the Wonderbag to finish cooking – this saves users fuel and money, especially on traditional stews and other delicacies that take hours to cook.

The Wonderbag has been successful due in part to its packaging – it comes in bright colors with African prints that appeal to consumers. Also, the company customizes its sales pitch for each market; for example, their South African flyers show a table with cooking times for:

  • Chicken
  • Rice
  • Root vegetables
  • Cow Intestines (Malamogudu)
  • Cow Head (Namayahlogo)

Sounds delicious, huh? But this reinforces an important point – to reach consumers at the BOP, you need to understand their lifestyle, and unless you live there, this can be very difficult.

To an outsider, problems in the townships may seem overwhelming, but for the people in these communities, this is their life. They have their struggles but they can also find happiness in everyday activities, like meeting the ladies for tea or organizing a play date for the kids.

For EnerGcare, the key to success will be in finding the right people who can truly understand and relate to this market, and I believe their approach of hiring local entrepreneurs is the best way to accomplish this. These micro-entrepreneurs are the ones who best understand the community’s needs, and can in turn speak about the benefits of EnerGcare products in a way that motivates customers.

As I reflect on my experiences in South Africa, I believe I am coming away with a  new perspective about what poverty, as well as what well-being, really means to the BOP community, and I hope I can use this understanding to continue to ignite change in this area.

For a family of six that shares one bed in a one room shack, a solar light is not going to transform their entire world, but it can make it a whole lot better. And instead of getting overwhelmed by the enormity of the problems, I believe if we all pitch in to make small changes where it really counts, we can make life easier for those who need it most.

A special thanks to the all of the readers who followed me on this journey, as well as to my friends at PlaNet Finance for making my time in South Africa so memorable!

The ladies of PlaNet Finance, Cape Town.

Advertisements

Big Goals, Modest Budgets

It’s easy to make a big splash if you have a ton of money to throw at promoting a product – I mean, did anyone not know Apple just rolled out the iPhone 5? But you have to get far more creative when you’re trying to do a lot with very little.

Like any organization targeting the Base of the Pyramid, EnerGcare faces enormous obstacles – not the least of which is a shortage of funds and personnel resources. So I was thrilled on Friday when I was asked to venture into the townships one last time on a special mission.

In May of this year, Kiva, an internet-based microfinance platform that raises over $1 million a week for the working poor, announced a partnership with Barefoot Power. Barefoot Power is the producer of the Firefly solar lights that are distributed by EnerGcare.

Through this partnership, Kiva has agreed to make interest-free financing available to Barefoot distributors, including EnerGcare, to accelerate the adoption of solar lighting in poor communities (you can read more about this partnership by clicking here).

Effectively, this funding will allow EnerGcare to purchase larger quantities of stock at lower prices, thereby aiding in their goal to get low cost, high quality products into difficult (and expensive) to reach areas.

In return for this financing, EnerGcare was asked to produce a short 4-5 minute video capturing real clients’ first hand accounts of how purchasing a solar light changed their lives.

To facilitate this project, Raymond, an EnerGcare entrepreneur in the Western Cape, coordinated meetings with several of his customers who agreed to give video testimonials. I expect the video to be available within a couple of weeks. Once it is completed, I’ll be sure to share it with you here.

EnerGcare customer demonstrating her Firefly light. She uses the light in her shop and earns a better salary now that she can stay open after dark

On a separate note, my father and sister are in town vising me this week. Inspired by my own time in the townships, I decided to take them to Mzoli’s for a genuine South African braai experience. It was an awesome day all around; we snapped photos with new friends, sampled samp and beans, pulled pork chops apart with our fingers and danced to the pulsing kwaito. The day encapsulated everything amazing about this cool city – fun times, delicious food and truly special people.

Mzoli’s – a popular hangout in Gugulethu township

Hence it’s nickname, the “Church of Meat”

Joe drumming to the beat. I bought his cd which is dedicated to “the street kids of Cape Town and to all of the good people who live in this beautiful city”

Green Where It Counts

It’s a beautiful sunny Monday here in the Western Cape. I was still reminiscing about the events of the weekend while flipping through my notebook this morning when something caught my eye … “green where it counts.”

It was a phrase one of the project partners had used to sum up the EnerGcare brand proposition during a brainstorming session a couple of weeks ago. I remember jotting it down, but it didn’t fully register until now just how powerful that statement is.

Being an organization focused on clean energy initiatives is not in itself a novel idea – there are probably a dozen or more operating in South Africa alone. But to create a business that is attempting to reduce energy poverty, increase access to clean energy and generate employment at the BOP – that takes some cutting-edge thinking. EnerGcare is not just handing out a few solar lights and clean cookstoves, because while these types of programs may be well-intentioned, they undermine growth by creating a culture of dependency. Thomas Friedman, once wrote in a New York Times article:

“People grow out of poverty when they create small businesses that employ their neighbors. Nothing else lasts.”

EnerGcare’s goal of supporting healthy economic growth while creating sustainable employment is not easy. I’ve been struggling over the past few weeks to determine what an ideal structure should look like for the EnerGcare model, and I had narrowed my focus to a few intervention models (see diagram below).

A pure microfranchise model gives aspiring entrepreneurs the opportunity to run their own business, but it also requires access to start-up capital – and most of these people have no savings. Microcredit models solve that problem by providing access to financing, but as it currently stands, the EnerGcare model is still unproven and it would be unethical to ask poor people to take loans or buy products on credit until we are sure that the model works.

So I began to look closer at a theory called microconsignment.

Overview of a microconsignment model. Source: http://microconsignment.com.

In a microconsignment model, an entrepreneur is provided with products at no cost. When the products are sold, they repay the organization and keep their mark-up as profit. If the products sell, that’s great. If the products don’t sell, capital is tied up the field, but the burden of risk remains with the organization.

Seeing it in black and white, it seems pretty straightforward. In fact, it is what EnerGcare is doing already.

But until I started researching this topic, I always thought of it as a temporary solution. In fact, I’ve spent a lot of time thinking about how to move away from this model, but maybe there is no reason to. Clearly there are issues to fix and problems to solve with the current structure, but fundamentally, it may be just as viable as a long-term solution than any other approach. What will determine the success of the model will be our ability to create powerful synergies all throughout the EnerGcare value chain – from sourcing high quality, low-cost providers to finding the best local entrepreneurs and educating our consumers to create demand for the products. If we get all of these things right, I believe a microconsignment model could be scalable, replicable and sustainable, so this is where I plan to focus my energy over the next month.

In a bit of local news, South African truck drivers have been on strike for the past two weeks, as labor unrest spread from the mines to the transport sector. The dispute has been marred by violence and I received an emergency message from the U.S. Consulate General last week urging caution on all roadways after several reported incidents of vehicles being stoned and set on fire. The truckers union is now urging rail and port workers to join the strike. If that happened, it could effectively bring the entire transport sector to a standstill and halt exports of commodities such as gold, platinum and coal from Africa’s largest economy.

I haven’t witnessed any violence here in Cape Town, but I have felt some minor affects of the disturbance. While in the Johannesburg bus terminal two weeks ago, I went to three different banks to withdraw money from the ATM, and all were empty due to the disruption. Good thing Wimpy accepts credit!

Off the Grid

This weekend I traveled north to Dar Es Salaam  (“Dar”) to visit my brother and sister-in-law. They’ve been living in Tanzania for over a year and I was eager to see how their experience in Africa compared to my own. And of course, given Dar’s close proximity to the Spice Islands, it only made sense to hop over to Zanzibar for the weekend 🙂

Zanzibar is as exotic as its name would suggest. The island is strikingly beautiful, yet it retains an unfiltered ruggedness that makes it truly unique. Upon arrival, we arranged for a driver to take us up the coast to Nungwi. I was glad to have a local escort given the prevalence of police road blocks, at which drivers are required to hand over a few thousand shillings to facilitate passage along the way.

Fishing Boat in Zanzibar

On Saturday night, we headed out beyond GPS territory through a maze of bumpy, dusty roads that led to Kendwa beach. It was rumored that Maasai warriors sometimes make appearances there, inciting the crowd with their traditional jumping dance. Apparently, when they’re not spear hunting lions in the Serengeti, some Maasai take jobs as security guards at the resorts – and there’s nobody I would feel safer with outside my door at night.

Ritual Massai Warrior Dance

We topped off the trip with a visit to a local spice farm where we met the charismatic Mr. Butterfly, who sang Jambo Bwana while scaling an 80+ foot coconut tree with nothing but some rope tied around his feet.

Mr. Butterfly

Back on the mainland, I found Dar to be interesting city. Unlike Cape Town, where poverty is primarily isolated to the outskirts of the city, in Dar you are immersed in the not-so-organized chaos of street vendors, minibuses, daring bodabodas (motorcycle taxis) and precarious bajajis (motorized rickshaws).

Looking around, the one thing you certainly cannot miss is the prominence of cell phone and mobile banking advertising. It seemed like every other fruit stand owner, chapatti fryer and newspaper vendor must moonlight as a Vodacom agent selling airtime top-ups and M-Pesa credits. The only company that came close to rivaling this presence was Coca Cola, and they were a distant second.

Initially developed as a means for microfinance customers to repay loans, M-Pesa (M for mobile, Pesa is Swahili for money) is a revolutionary mobile banking system that allows customers to transfer money to each other by sending a text message. To make a payment, customers give cash to their local agent in exchange for a cell phone credit. They then send a text payment transferring that credit another customer who can exchange it for cash with their nearest agent.

Moving money in this way may not seem very innovative in the developed world where over 90% of people have bank accounts. But for those who can’t get to a bank due to distance or expense, or for those who don’t qualify to open an account, M-Pesa becomes a bank in a phone, allowing small businesses to pay for stock and migrant workers to send money to their families back home. It also eliminates the significant risks associated with walking around with cash.

Through the success of the M-Pesa initiative, cell phone companies have developed sophisticated distribution networks in markets that have historically been difficult to access. Today, many are recognizing that there is an enormous opportunity to leverage these networks to implement meaningful change in the fight against poverty.

All in all, the Tanzanian people were incredibly friendly. I am honored to have spent time in the country and thankful for the marafiki (friends) I’ve met along the way.

Riding the Wave

Similar to the cycle of market emotions – where excitement leads to euphoria right before plummeting back towards desperation and despondency – I feel I may have overtaken my emotional crest here.

Where I initially tackled tasks with hopeful confidence, as I approach the mid-point of my assignment, I can’t help but feel disappointed that I haven’t already made more of an impact. Even looking through my old blog entries, I seemed so naïve (see Bridging the Gap, when I stated, “I’m excited to start putting some ideas to action”) to think that such complex issues could be resolved quickly with clear-cut solutions.

They warned us this may happen, but I didn’t really believe it would happen to me – I mean, I’ve always prided myself on being a problem solver. One of the reasons I chose marketing as a career was because I saw it as a creative way to solve problems.

Before I arrived in South Africa, my coach advised that a true leader is a great listener. Most of the time the answers are there, he said, but you’ll get more sustainable results if you guide people toward a solution as opposed to pushing them there. In this spirit, he told me – quite practically – to put my pen down. Truly engage. After all, you can’t be paying that much attention to what someone is saying if you’re drawing a page full of hearts and flowers.

Up to this point, I’ve tried to take his advice to heart. But as the adage goes, old habits die hard. So when I noticed myself doodling during a call the other day, I decided to investigate what my scribbles said about me. I’m mostly an arrows and boxes type of girl – all sharp points and hard lines. Here’s an (admittedly unscientific) interpretation of my masterpiece:

Drawing a square indicates you want control of a situation — that you are thinking through a problem.

Ok, well that seems about right…

If your squares progress to a cube or box, you’re likely to be a very efficient, analytical person who can deal with difficult situations with little fuss.

Hmm…well, I think my subconscious might have a little more faith in me than my rational self does right now. My saving grace was the last description:

Lots of little stars indicate optimism.

So, maybe I haven’t accomplished as much as I’d hoped, and maybe I need to readjust what I view as success here. It may not feel natural but I am going to trust in the process. I’m putting my pen back down and refocusing on what I can still do, not what I haven’t done yet. After all, the bottom of the curve is the point of maximum opportunity. And hopefully, just like the market cycle, with a little optimism I should be riding the wave right back up again shortly.

A Day in the Life

Unfortunately my iPhone got nicked on Saturday so I don’t have any pictures to support my next entry (for those who are interested, there are a few videos on YouTube, such as this one, that do a pretty nice job of showing the township and its people).

Yesterday I visited some informal settlements around Cape Town. The townships here differ from those near Johannesburg, in that they are largely segregated by race – black and “colored” (this is not a derogatory term here, but rather used to describe the Cape Malayan population – an ethnic group descending from South East Asia, originally brought to the Western Cape as slaves).

I’ve seen the townships from a distance before, driving by on my way to the airport or heading out on weekend trips to beautiful seaside towns.  I’ve seen the shacks, the children playing by the side of the road, the men hitchhiking back to their rural villages to visit family not seen in months… but I’ve never been IN these townships.

Pulling up to Khayelitsha, we were greeted by the local butcher who saluted us with the knife he was using to clean an unending string of intestines that was being pulled directly from a shopping cart. A few things struck me immediately:

  • There is no indoor plumbing here. No bathrooms, no showers, no sinks. Things we take for granted every day – jumping in the shower or brushing our teeth – become immense chores for women carry heavy buckets to collect water from the shared well. And where running water is a scarcity, hot water is a luxury.
  • And of course, where there is no plumbing, there are no toilets. Thousands of shack dwellers share communal stalls where sewage gathers in potholes and children run and play without shoes in the unpaved streets.
  • Electric wires hang in all directions – streaming precariously from poles that some brave young man shimmied up to illegally hook into the power grid. I’m told that every once in a while the power company comes and cuts the lines, we actually drove over one in the street on the way in to town, but where there’s a will there’s a way, and the wires go right back up again.
  • Yet perhaps the most amazing thing I noticed was that, that despite these conditions, the township’s residents were extremely well groomed. They take pride in their appearance; the men look impeccable and the women wear the most beautiful colors and radiant smiles that are enough to brighten up even the bleakest of surroundings.

We initially traveled to the area to meet with Raymond, one of the more successful EnerGcare entrepreneurs in the area. He invited us warmly into his home where his son assumed the role of translator between his native Xhosa and English.

Raymond described his customers, many of whom also live in his community and had purchased EnerGcare products from him. He pointed to the solar lighting system he had installed on the roof and noted how sales took off after friends came to his home, saw how well the products work and learned of how much money he is saving.

He generously offered to take us to visit some of his customers so we could hear their accounts firsthand. We walked through the streets, doing our best to avoid the worst of the runoff until we arrived at the home of a beautiful middle-aged woman. Raymond went in first to ensure she was comfortable with us entering, and when we were told to come in, my face lit up like a Christmas tree.

In the middle of the only bed in the only room was most beautiful African baby, with bright eyes the size of quarters and a smile like a big juicy slice of orange. He giggled and waved his arms as his grandma explained how she doesn’t have electricity so she uses her solar light to make his bottles during the night. She doesn’t work but was able to pay for the lights using some of the grant funding (similar to welfare) she receives for the children. When I asked how many people lived in the home , she said five.

Crime is undoubtedly an issue here, as it would be in any place where so many people have so little. But I did not feel scared. On the contrary, I felt incredibly welcomed by Raymond, his family, his customers and the community in general. And even though we didn’t speak the same language, by the time I left, I was quite proficient in the town’s ceremonial handshake and had mastered one important phrase: Enkosi kakhulu. Thank you, very much.

Raise Your Glass!

One of the personal reasons I came to Cape Town was to improve my leadership and client communication skills. In the spirit of embracing this challenge, I took a step (leap) outside of my comfort zone last night and attended a session of Toastmasters hosted at the Cape Town branch of Ernst and Young (www.toastmasters.org).

Toastmasters is an international organization that helps members hone their communication and leadership skills through a series of public speaking exercises.

I was pleasantly surprised to find that the group was a mix of young, vibrant and international members, which pretty much sums up my entire experience here. For example, last weekend I went to a South African braii (BBQ) hosted by Brazilians cooking German sausage. I ate with a Mauritian, danced with a German and laughed with a Belgian. And I met all of them through my French coworker 🙂

I’ve already volunteered to help Toastmasters in organizing and promoting their collaboration for Creative Week Cape Town (http://www.creativeweekct.co.za), which will take place later this month. More to come on that project soon.

On a separate note, I’ll be going back out into the field next week. The last time I tried to visit the townships around Cape Town the trip was cancelled due to rioting. This time, a local entrepreneur is coordinating meetings for me with some of his clients in their homes. I’m really looking forward to seeing the impact the group’s efforts have had on real people in their own communities.