NextBillion - An Initiative of the William Davidson Institute at the University of Michigan

In May, Monitor Inclusive Markets released a report on market-based solutions in Africa across six countries in Sub-Saharan Africa. Profiling 440 enterprises, “Progress and Promises” represents the largest study to date of social enterprises in Africa, and perhaps the world. The study grew out of a simple observation: the aid model is broken. Recipient countries across Sub-Saharan Africa have received billions upon billions of dollars in foreign aid over the last two decades and their poor have gotten poorer. Food insecurity has risen, along with disease burden. But what is the alternative?

Acumen Fund and many other organizations have set out to prove that there is a good alternative, that by broadening our view of who is a “customer” and what defines a “market,” businesses can provide the BoP with more and better choices of essential basic services.

But what guidance is there to give entrepreneurs engaging the BoP as customers or suppliers? It is a tough market. It is more often than not a low-margin volatile space to do business in. But we want businesses willing to undertake this challenge to succeed, to be financially self-sustainable, to have positive social impact and be scalable and replicable. Because then when the day comes that the aid money goes away, is reallocated to other geographies or causes, these businesses will live on, continuing to provide better quality and better access to essential affordable services.

Before joining Acumen Fund, I worked with Monitor Inclusive Markets. My former colleagues and I spent 16 months gathering empirical data to try to answer this question in a systematic way. We racked up miles on Precision Air, Kenya Airways, Ethiopian Airlines, and South African Airways. We learned that Antrak Air between Accra and Tamale Ghana has top secret mid-day flights, some days. We owned an average of seven SIM cards and could not have been more excited about the existence of an inexplicably non-secured free wireless hot spot in the café just past Gate 14 in the Nairobi airport. We adopted a policy of “BYOTP” (toilet paper) and it was a major even when we discovered a toilet with a seat. But mostly, we talked. We talked to entrepreneurs, to managers, to employees, across sectors. We talked to customers one-on-one; we held customer and supplier focus groups. We talked to the hawkers of phone cards and water sachets and apples.

At the end of it all, we identified a set of characteristics shared by successful enterprises. We found these didn’t much vary by sector or geography. We confirmed that it takes a different way of doing business to succeed when the BoP are your major customers or suppliers. This is true whether a business is a start-up or a corporation moving downstream – redesign of traditional business practices is required. Creativity and innovation in cost structure, pricing, and distribution are critical. Details on our findings can be found here.

Suffice it to say, there are some amazing businesses providing customers with better choices for the most important things in their lives. Whenever we found them, they provided us with hope that there is a model for change, that it is maturing, and that it’s going to be here for the long haul.

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