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Tuesday, August 17, 2010

Human Networks for Social Good

By Francisco Noguera

This post is part of a series that introduces iuMAP, a web-based social enterprise directory developed by Ayllu and launched in media partnership with NextBillion. The purpose of the series is gathering feedback from the NextBillion community as the map unfolds and to share some of the information we've collected and analyzed. You can help triple iuMAP's size by submitting social enterprises and giving feedback. Read the previous entries of the series here.

This post is part of a series focused on microfranchising, a common way many social enterprises distribute their products.  There has been some great discussion of microfranchising recently (such as this SSIR article) and  this series provides an overview of different types of microfranchising. It also profiles many enterprises that are employing this method, and provides information for both investors and those looking for funding.  The last post focused on the conversion franchising model.  This post focuses on infrastructure-based models.

* * *

By Shital Shah

"Build on existing assets and make new connections."  Ayllu's research into microfranchising models has found this to be a common theme. Just as with the business in a bag, infrastructure, and conversion models, the agent network model strengthens the assets of local markets, but in this case by creating franchisesthrougha network of agents that are already embedded in communities. 

Why would a social enterprise want to use an agent network?  With a network, the enterprise can spread into every corner of a market without actually setting up a shop.  The reach of the agent network is usually a key part of the business model - for a mobile money company, the more agents, the more access points from which someone can transfer money.  For other companies, more agents may mean a larger collection of information for a specific service.  Additionally, since one of the hardest parts of scaling up is moving into new markets, bringing on agents allows the enterprise to create extensions that already belong to and understand the market.

And what's in it for the agents?  Most agents are already entrepreneurs - they own a small grocery shop, a pharmacy, or perhaps a travel booking agency.  By "partnering" with the social enterprise and selling a new product or service, the agent can add on another income stream at little or no expense to their business.  By selling the new service, agents will also see increased footfall in their shops and new customers that are drawn to their business that may not have otherwise come in.

Take the example of eSoko.  Their online software, which allows agricultural market price information to be easily uploaded to mobile phones or computers, helps individuals and businesses in West Africato make more informed decisions about buying, selling, and trading.  Users of the software train agents in market towns across the region to collect and upload information, and pay them a commission for their work.  Without agents, accurate price reporting from numerous parts of the region would be difficult, if not impossible. 

Agent networks are also common with mobile money companies, such as Mobile Transactions, which operates in Zambia. Since the lack of bank branches and ATMs make financial inclusion challenging, and since the infrastructure is expensive to build, using the existing reach of mobile networks to increase financial access is a promising model.  The more agents a company like Mobile Transactions has, the more likely customers are to have an agent near them for activities like making payments or sending money.  Other similar models exist and are emerging in all regions of the world, such as M-PESA in Kenya and GCASH in the Philippines.  Agents are attracted to mobile money companies because by offering a quick and easy service, they are able to add value to their own businesses.

Three key components can drive this model:

  • The agents - the agent is essentially the microfranchise; they become a service provider or information gatherer, in addition to what other line of business they may already engage in. The agent is the human face of the service.
  • The network - getting the extent and reach of the network right is what makes this model work. The network is what creates the limits of what the business is able to do.
  • The technology - mobile phones is a common one, but there is definitely scope for other pieces of technology to connect the network: the Internet, a switchboard or kiosk, or any type of communication technology.

Given the ubiquity of small corner shops in both urban areas and villages, there is a sense that more agent network models will emerge with a diverse range of services as social enterprises try to improve their reach.  What other kinds of companies could optimize and build on these networks?  With a new mix of established technology and existing communities, agent networks may prove as a natural step to connect the services of social enterprises with those who need them most.

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