Africa : A New Way Forward

A poor person's top need is a way to make money.- Kickstart.org

Over the past fifty years, more than $1 trillion in development aid has been disbursed around Africa [1]. Today, many argue that aid is a broken concept—that it does more harm than good by fostering a relationship of dependency over self-sufficiency. My proposal for a new way forward in African development is to create government funded non-profit corporations who grind through market failure to develop viable bottom of pyramid (BOP) product and service franchise opportunities that can be sold at soft prices to African entrepreneurs.

KickStart: Innovation in Money Making KickStart is a company founded by two British citizens who met in Kenya while working on the same development projects. As one allegedly-successful project after another eventually ran out of funds with minimal impact, they decided to build their own model for real and sustainable change. Today, KickStart focuses on developing “money making technology,” meaning the development of technology that enables poor Africans to make money[2]. If the role of Micro Finance Institution (MFI) is to give the poor the means to develop their own business, KickStart offers durable and sustainable business ideas.

KickStart has a five step framework for the systematic reduction of poverty applied to every new project[3]: 1. Identify Opportunities: What businesses will be profitable for these people, in this place? 2. Design Products: What new tools will make this possible 3. Establish a Supply Chain: How can we produce these? 4. Develop the Market: How do we convince someone with little money to make a big investment 5. Measure and Move Along: Is this going as we planned? Successful execution of these steps means that KickStart would have “figured out” the required business model to sustainably scale a new money making product, taking into account every aspect of the marketing mix—product, price, place and promotion. Eventually a tipping point is reached, after which market adoption increases exponentially and the business requires minimal guidance. KickStart is then able to reinvest the growing profits back into new product development.

Most exciting about KickStart's model is not only the technology that they develop, but the supply chains they must create to bring their product into the hands of a rural farmer. KickStart manufactures the products, and works with private African partners all along the supply chain from wholesalers to local retailers. In this way, KickStart enriches each participant along the supply chain, and generates over $102 million annually in new profits and wages for the African continent despite a relatively small product portfolio[4].

The reason KickStart still requires donor funding is their chosen position at the start of the chain of value creation, ploughing all the money in to research and development of the business model, and then selling the product as cheaply as possible to wholesalers to ensure that the greatest amount of wealth is soaked up in Africa itself. That being said, it costs KickStart only $300 to get an average family out of poverty, with every donated dollar equating to fifteen dollars in profit for Africa[4]. This incredibly high impact ratio results from targeting the core of the issue rather than symptoms of poverty.

One of KickStart's most successful projects to date is the development of the Super MoneyMaker Pump. These pumps allow poor families to create a sustainable, small-scale farming business that can easily be irrigated all year round. With this pump, the net income of a farmer on average increases over ten times, dramatically improving their quality of life. The 115,000 pumps sold to date in Kenya, Tanzania and other African countries have resulted in the creation of 77,000 new enterprises, and 380,000 individuals pulled out of poverty[5].

Enter the G-Corp The efficiency and focus on quantifiable results sets the private corporation apart from any other organizational structure for delivering profits—social and financial. KickStart's niche is not a particular region or industry, but a particular phase of a product lifecycle. It is within this niche that government supported G-Corps should be created to emulate KickStart's success in countries all over Africa. This approach represents meta-development, in that almost all indicators of a functioning society are positively correlated with an increase in per capita income. Although KickStart focuses solely on products at this point, it is conceivable that G-Corps will also develop service models and low-cost turnkey franchise opportunities that are suitable for poor African entrepreneurs.

For example, according to the National Center for Policy Analysis, over 30,000 infant deaths in Sub-Saharan Africa alone could have been avoided prevented if annual incomes in the region were increased by $5[6]. This positive correlation applies to an entire spectrum of developmental goals including disease, education, and even political stability. During a speech at the NYU Reynolds Program in Social Entrepreneurship, Martin Fisher, Co-Founder of KickStart stated that he believed that increasing African incomes would result in stabler democracies across Africa as it would become more expensive for political parties to purchase votes[7].

Considerations At conception, the organization would be completely owned by the government which funded it. Over time, the G-Corp would be expected to pay back its startup costs with proceeds from product and franchise sales to become a stand-alone non-profits, above the influence of national politics. Top employees would need to be compensated near par with their private-sector peers to attract the best possible talent, with performance based bonuses as well. Another consideration is that G-Corps would be required to share all marketing information in a common repository on a quarterly basis, ensuring that only the best techniques and ideas are cycled forward, and all organizations are competing greatest social impact based off best practices.

Concerns The largest issue for cloning the KickStart model is that of oversight. KickStart was founded by two dedicated visionaries who still believe deeply in the corporate mission. G-Corps, which attract talent based on compensation and bonuses, will not have the luxury of such concerned leaders. A natural candidate to take on the responsibility of oversight is the United Nations Development Programme (UNDP): “an organization advocating for change and connecting countries to knowledge, experience and resources to help people build a better life,” 8. That being said, significant business talent would need to be infused with the UNDP's regular policy and economics experts to understand the workings and potential loopholes of a G-Corp completely.

The New Way Forward Every first aid kit has bandaids, the concern is when a medic attempts to fix a hemorrhage with one. Charities and NGOs will always have a role to play in fixing social problems, but the drastic rebooting of Africa's development is not one of them.

What the world has seen this past decade is the gradual consolidation of social-private ideas that will now be assembled into what I call the supply chain of social change. MFIs supply credit to those who previously had no access, G-Corps will provide market tested opportunities to use that credit. Like all businesses, the market will ultimately decide whether G-Corps are successful or not—if they are unable to make money, then they are not reaching their social goal. It is consoling, then, that like all businesses, G-Corps will have the flexibility to pivot their offerings until market demand is met.

What do you think?

Citations

[1] Moyo, Dambisa. "Why Aid Is Not Working and How There Is a Better Way for Africa." Dead Aid. . [2] "Our Products." KickStart. . [3] "What We Do" KickStart. . [4] "Impact" KickStart. . [5] KickStart. MoneyMaker Irrigation Pumps - B2B Brochure. Jan. 2009. . [6] Bieker, Christa. "Wealthier Is Healthier: A Better Way to Aid Africa." National Center for Policy Analysis No. 604 (2007). . [7] Fisher, Martin. "Social Entrepreneurship in the 21st Century: KickStart." Puck Building, New York City. 29 Nov. 2010. Speech. [8] "About UNDP." United Nations Development Programme. United Nations. .