Poor farmers who buy basic tech become entrepreneurs
|January 31, 2009||Posted by Staff under Progress Report, The Progress Report|
Poor farmers who buy basic tech become entrepreneurs
The Old Ways of Ending Poverty Are Not Working
More than 350,000 people have moved out of poverty thanks to the products they’ve bought from KickStart. Their water pumps and other products generate over $80 million of extra income each year for farmers in some of the poorest countries of the world. Yet questions remain. Why cant Africa develop the products? Do those who afford them have an unfair advantage over those who dont? While ambition merits reward, don’t other traits like cooperation and good cheer? What about farmers who dont own land? While a commons can yield tragedy, doesnt land monopoly yield slavery? Will progress for some enable them to pull up the ladder, create a more entrenched poverty for others (as usual)? If fair tax and subsidy policies were in place, could Africans then develop their own products? This 2009 article is from OneWorld of Jan 27.
by Martin Fisher
Poverty in Africa is deeper and wider than it was 40 years and trillions of dollars ago. Most international development efforts focus on easing the consequences of poverty instead of offering a means to develop a way out of poverty. However, will the people who have been helped, stay helped? Or will the benefit go away when the donors do? Can other people who live in the same geographical area also avail themselves of the solution without additional costs?
One reason Nick Moon and I left a big traditional charity was because they seemed disinterested in measuring the results of their work. Quantifying “Out of Poverty” in dollar figures is tough because the cost of living can vary so greatly from place to place. Our definition: A family has enough money to meet all basic needs and still has money left over to invest in the future.
A poor person in Africa’s number one need is “a way to make more money.” When we started in 1991, the idea of using private sector models to address poverty was still heresy. Now it’s the Social Enterprise movement.
About 80 percent of Africa’s poor are rural farmers, living on about $1 a day. Our local retailers offer two pumps: one for $95, the other $35. Even with family incomes of about $500-$700 per year, farmers are still able to save or borrow enough to buy a pump — nearly 83,000 have so far!
While one person operates our pump, another walks between the rows of plants with the outlet hose. Because it’s human powered, they don’t use more water than needed. When they have a little more money, and have some higher value activity to do, they might invest in sprinklers or hire some neighbors to do the watering.
Some farmers have a surface source that is often muddy, brackish, or otherwise undesirable as drinking water. Others have no surface source, yet a very poor family is unlikely to spend the money to dig their own household well — even if they have to walk 10 km to fill their jerry cans every day. But when they can irrigate crops for sale and increase income, they find a way to dig the well, get water to grow food and make money, have enough water to wash their hands, and have more and cleaner water to drink. Farmers say that it’s like having piped water.
What we’ve found is that the poorest people in the world are amazingly entrepreneurial. We were told our model couldn’t work in Mali — far too poor. Yet we are thriving there. When we expanded into Tanzania, we were told that a long history of socialism had killed any entrepreneurial spirit. But the years of waiting for the government to deliver made people hungry for an opportunity to take care of themselves.
Our farmers buy cows and start dairies, start hatcheries and egg business, buy maize mills, and even start transport businesses and build rental housing. They send their children on to secondary schools and colleges. And they build new houses, plant trees, and buy solar panels.
Some of our most powerful impacts are the ones hardest to quantify — increased marital harmony, sense of pride and accomplishment, positions of leadership within a community, and the profound relief of a parent knowing that they can feed and clothe and educate their family.
Before I founded KickStart, I built and ran one of the largest rural water programs in Kenya. It did not take long for community wells/pumps, protected springs, etc to break down. Africa is littered with hundreds of thousands of broken down community water points. It is the “tragedy of the commons” — why should I maintain it if you are going to use it, and why should you if I am? Giveaways are not a sustainable solution to the problem.
Our pumps are designed so that they can be maintained without any tools and so that the parts that will wear out can be easily and cheaply replaced. We try to design so that these efforts are as intuitive as possible. The pumps come with an instruction manual. We have reps at the store who will demonstrate. We even have a customer service line people can call (a cell phone will be one of the first things people buy when they have the means).
The hardest part of our work is marketing. The biggest part of our budget goes to marketing and sales. Our customers are very hard to reach. And they are very conservative with their investment and very risk adverse. But once you convince them that our pumps are a great opportunity, they do the rest.
Technologies that dont make money dont catch on. Solar stoves cost money for a poor person to buy and maintain, they cover a small portion of their cooking needs, they require a change in diet and eating times, and unless there is a way to spend the time they save “making money,” the “opportunity cost” of the labor they save is usually very low. Also, the firewood collected for cooking rarely involves cutting down and killing whole trees. So the vast majority of solar cooker projects have not worked well.
The poor can make money by borrowing. But I challenge the microfinance community to stop measuring their success based on the repayment rate of their loans. Instead, how profitable are the startups? Are people getting out of poverty or just making it a little easier to survive? And if everyone is doing petty trade and some get loans to increase their businesses — what happens to those who dont?
No country has, or can, develop without a growing middle class and growing small businesses. If you are starving and I am a politician, I can buy your support with small bag of maize flour. But if you have enough money to feed your family, your loyalty won’t be so easily bought. You’ll start demanding better roads and schools and clinics. And I’ll have to be more responsive to your needs to keep my job. That’s why an entrepreneurial middle class needs to come first and better governance will follow.
As we reach out to the next group of “adopters,” we expect that the average increase in income will fall (we suspect that these later adopters will be less entrepreneurial), so we are considering adding some additional services (like basic farming advice) to help these farmers earn the maximum return on their investment.
Getting funding from more traditional foundations has been very hard. We had one tell us “we love your results, we just don’t like your methods.” As if one occurred without the other.
Once our technologies are as commonly known as bicycles and sewing machines, the local private sector will continue to make money selling the technologies and no more donor funds will be required at all.
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