Entering the African Retail Market to Combat Poverty
Brian Korgaonkar, COO of Anza, took some time to share a bit about a new company he is helping to lead to new markets in Africa. Brian, formerly an Associate Consultant at Bain & Company in Boston and New Delhi, shifted his focus to Anza to pursue his passion for clean technology and international development by establishing a profitable, sustainable social enterprise. Anza, which is the Swahili word for “start”, is a “technology-focused international development start-up that sells low-cost, high-utility products made from recycled materials to rural Africans.”
Kevin Keepper, NextBillion.net: In 100 words or less, can you give me a brief overview of your company?
Brian Korgaonkar: Haha, sure. By harnessing the most unusual of raw materials -trash- our company makes breakthrough, income-generating products at a price that $1-a-day farmers at the base of the pyramid can actually afford. Founded in the summer of 2008, Anza (previously SolarCycle) has the goal of achieving a quadruple bottom line by generating profit, alleviating poverty, improving the planet, and providing health benefits to consumers. Our first product was a low-cost solar cooker made by fusing the aluminized interior of plastic chip bags.
NextBillion.net: How did you first enter African markets?
Brian Korgaonkar: After our first 9 months of product and business development, we set out on a trip to Mozambique and Tanzania to conduct a 4-month product pilot. During this time, we pressure-tested and reworked our products and set up sustainable operations in Mozambique to begin selling products. Over the course of the pilot, however, we realized that our solar cookers were not capable of achieving the scale of impact we were hoping for. This is because our cookers were most effective as a cost savings and health improvement mechanism-saving people money through avoided purchases of charcoal, and improving health by reducing deadly indoor smoke inhalation-but did not provide individuals with a bolstered income-generating capacity.
While the solar cookers still remain a part of our product portfolio, we realized that we needed to expand our offerings to both achieve the impact we were hoping for and drive the sales that would enable our company to be profitable and sustainable in the long-term.
NextBillion.net: What was the outcome of conducting new product development during your pilot?
Brian Korgaonkar: The pilot trip enabled our development team to spend a significant amount of one-on-one time working with our target demographic in Mozambique and Tanzania, which provided us with time and space to identify market needs and innovate on new products. The importance of this process cannot be understated – in any business, but especially at the BoP, taking the time to understand your customers’ needs and purchasing preferences is crucial to developing a product offering that resonates in the marketplace.
The first need we identified was for an appropriate method for clean hand washing and water sanitation, which led us to begin building and selling “tip-taps” made from upcycled jerry cans. We sold tip-taps to nearly 100% of the families in our pilot village and have a team of local Mozambicans on the ground that is currently expanding the sales of tip-taps and solar cookers in the region. However, like our solar cookers, the tip-taps are widely popular and have significant health benefits, but do not provide the customers with an improved means to generate income.
The second need we identified was for an improved method for water transportation in the absence of a strong clean water and irrigation infrastructure. The product we have developed to fill this void and meet our company’s quadruple bottom-line is a cart and water roller made from recycled automobile tires and jerry cans. With long dry seasons, and inefficient water collection that precludes irrigation in the off-season, most African farmers are only able to use their one resource-their land-for half the year. Collecting enough water to perform off-season irrigation is a significant value-add to that will yield higher income for most BoP farmers and satisfy our company’s mission.
NextBillion.net: I definitely understand the value of a good investment, but am always hesitant to assume that low cost means affordable. Can you break it down for us in real numbers?
Brian Korgaonkar: To use the water transportation example: we anticipate that the Anza roller will retail for $10-15 and earn smallholder farmers incremental revenue of approximately $150 per 100 square meters of land. In many cases this is a 50-100% increase in BoP family income.
Additionally, in order to serve consumers who cannot afford such an outlay, we will implement a local entrepreneurship model where end consumers can make regular coupon payments to the retailer. By pushing financing down to the retailers, Anza will avoid large organizational costs in originating and servicing loans while enabling additional income streams for local entrepreneurs. Additionally, Anza hopes to partner with local MFI’s to provide financing to entrepreneurs and individuals who seek to purchase our products.
NextBillion.net: You mentioned to me before this interview that you are about to embark on another pilot project. I assume you are rolling out (cheesy pun intended) this new water transportation product. Can you tell us a bit more about your trip?
Brian Korgaonkar: Our company is focusing on Tanzania as a test bed and initial market for the water roller, for two key reasons: high market potential and geography. Putting together the numbers on the country’s agricultural population, average farm size, prevalence of irrigation and water availability, we found that there is a $18-23M (1.8-2.3M units) annual market opportunity for the water roller. Second, Tanzania’s cultural and geographic landscape provides a natural expansion path within the country and the region. After identifying our initial sites, we will expand our organization in concentric rings to ensure that our second step is easier than the first.
Our engineering and business teams are spending the month of April in two Tanzanian cities -Dar Es Salaam and Moshi– to conduct market diligence on consumers and current business practices, establish preliminary connections with MFI’s and NGO’s, and hold small-scale product field tests. We will visit 10-15 villages during this trip, and put our carts in the hands of 85-100 $1-per-day farmers, to gain a deeper understanding of our target market and obtain preliminary customer feedback on our product. Equally important, this trip will give us the connections and positive momentum to launch a pilot this summer.
NextBillion.net: What is the company’s long-term plan?
Brian Korgaonkar: By continuing to interact with and gain real-time feedback from our target customers, we will be able to optimize our product design and extensively document our product’s benefits. We hope to bring our water roller to market in Tanzania in early 2011, and eventually expand to Kenya by 2013. Whether it is with our water roller, solar cooker, tip-taps, or new innovations, we hope to sustain a business that will create the products to help people pull themselves out of poverty, clean up the environment, and change the world.
NextBillion.net: Assuming that some of the readers of this post will be Tanzanian or Kenyan natives eager to help you deliver this product or become involved in some way, how would you like to address that audience?
Brian Korgaonkar: Anza would love to engage with Tanzanian or Kenyan natives, and also other individuals working in the BoP market within these countries. We are always receptive to feedback, and are eager to learn from those who are currently in the field. To get involved, contact us through our website. We hope to hear from you soon!