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A collection of posts relevant to agricultural and environmental matters such as farming, agribusiness, water, sanitation, natural resource management, and sustainability.

Thursday, July 14, 2011

Escaping the Survival Trap

By Eric Kacou

Have you ever experienced a day where nothing works? What if that day turned into two? Can you imagine what this would feel like if this situation were extended to a week? What if it became a month? How about your whole life?

In Africa, my continent, this is what most people go through day-in and day-out.  The greatest challenge is not just the difficult context, but the mindsets that operating in this environment creates.

To be fair, this experience extends beyond Africa to the rest of the developing world. Specifically, this is exactly the experience of the 4 billion people living on less than two dollars a day. This group often referred to as the "Base of the Pyramid" (BoP), is stuck in what I call the Survival Trap.

The 'survival trap' is a tendency for individuals, businesses and nations to focus on short-term crises at the expense of developing long-term strategies for prosperity. This vicious cycle keeps individuals poor, businesses struggling, and nations under-developed.

Mindsets drive actions and by extension results at base of the pyramid. Unfortunately, one of the biggest tragedies is our reluctance to confront mindset openly. Innovation and leadership is about mindset change. Make no mistake. Ignoring mindset is costing us money, market share and even lives.

Poverty is a massive problem whose solution requires massive action. Entrepreneurs operating in Base of the Pyramid markets are uniquely equipped to be that solution. By adopting new mindsets, entrepreneurs have an opportunity to improve the reality of all their stakeholders.

The good news is that entrepreneurs abound in Africa. A recent study by the Global Entrepreneurship Monitor rated Total Entrepreneurial Activity (TEA) in Africa at 15.6 percent. That is only second to Latin America (19.2 percent) and more than North America (13.4 percent) and Europe (6 percent).

The problem with entrepreneurship in BoP markets is twofold: the Survival Trap and moral purpose. While entrepreneurial activity is high, the survival trap contributes to a failure rate that is also high. The right skills and mindset are needed in order to escape the survival trap.

Archimedean entrepreneurs are businesspeople powered by moral purpose. Enabling such entrepreneurs is a solution with the scale needed to address the challenges facing the base of the pyramid. It is also a solution where the Base of Pyramid stops being assisted and instead develops its own solutions.

Consider a practical example. Most of us have heard about AIG, the US Insurance firm, became the symbol of Too Big to Fail and the US bailout at the onset of the 2008 financial crisis.

At the time when AIG was getting bailed out, a West African insurance company, NSIA, was receiving an investment of E35 millions Euros (or $48 millions) from Emerging Capital Partners, one of Africa's leading private equity fund.  

An Ivorian, Jean Diagou started NSIA in his late forties. A composer of Christian songs, the soft-spoken Diagou has built a reputation as a visionary businessman with a strong moral purpose

Yet many were skeptical about Diagou's ability to make NSIA a success. "Some French insurers were unhappy. They gave me two years to fail!" remembers the businessman. 

Fifteen years later, Diagou's bet is paying off. NSIA is maturing into an African insurance giant thanks to its long-term view. Furthermore, Diagou has gained trust not only in his community but also from international investors.

Anyone looking at NSIA group will doubtless conclude that the group has performed well. Today, the group operates in over eleven African countries with a staff of over 1,000 employees.  

What may be more difficult to see is the moral purpose pervasive throughout the business model. NSIA has build trust with integrity and empathy.

NSIA pioneered innovative products for the BoP market such as Bancassurance. By enabling all its bank account holders to get insurance, NSIA created an insurance offering that was accessible to all, not only the wealthy.

Diagou has played an important role in shaping not only his industry as head of the association of insurers in West Africa, but also the apex organization for business in his country.

The good news is that entrepreneurs such as Diagou abound in Africa. They are providing solutions that meet the needs of their community, while providing employment, and contributing to other development needs.

These entrepreneurs are the biggest unsung opportunity for Africa and other BoP markets is to unleash economic transformation. With the right tools and mindsets these change agents are poised to unleash a virtuous cycle of prosperity at the Base of the Pyramid.

Archimedean entrepreneurs can help most BoP citizens have lives dictated by their choices. The greatest opportunity is to move beyond an environment where nothing works to a place where prosperity is possible. 

To learn more about escaping the survival trap check out the book Entrepreneurial Solutions for Prosperity at www.erickacou.com 

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