How Information Technology Creates Social Impact

What is social impact?  How do you measure it? How do you know when you’ve made any impact in the first place? These are just a few of the millions of questions I’ve been asking over the last couple of years on my social entrepreneurship journey.

Coming into the social sector from a solidly private sector background, the frequent use of the word “impact” was something I found puzzling at first. It was uttered in nearly every conversation I had and it appeared to refer to some common understanding that only I hadn’t caught onto. But if I asked three people what it meant I would get three completely different answers.  It started making sense to me as I got to spend more and more time working closely with non-profits and social enterprises getting a broader perspective of how success is measured.

Defining Social Impact

In the private sector, the guiding principle behind performance measurement is pretty simple: deliver profits predictably and increase shareholder value. These are not sufficient, however, for social enterprises and entirely irrelevant for non-profits. Success in these organizations is measured first and foremost by the effect they have on the well-being of the individuals and families in the communities they work in – in other words “social impact”.

Information Technology and Social Enterprise

A desired impact can be defined in broad terms (e.g. “the sustained well-being of children within families and communities“) or in very specific terms (e.g. “empower and deliver affordable small-scale biogas and bio-sanitation systems to customers“). The next step is to figure out how to measure it and, more importantly, demonstrate the link between your activities and the outcome. This is often both a qualitative and quantitative activity for which many organizations utilize information technology (IT) systems of some kind.

But what about the technology? Does IT itself create social impact? We believe it does. Information technology enables social enterprises to amplify their impact by removing barriers to scale. Well implemented IT will also increase transparency, which in turn makes it easier and less costly to secure investment and funding.

I’ll use an example to help clarify the point.

IT and Social Impact: Tackling Energy Poverty in Africa

In sub-­Saharan Africa, nearly 620 million people live without access to electricity (half of the world’s total), 36 million of them in Tanzania alone (source: WEO Report 2014). Solar energy, and in particular small solar lanterns have emerged as a promising and affordable solution for off-grid households. However, according to Lighting Africa (a joint IFC-World Bank program) these products have reached less than 4% of the target households as of the end of 2012. There is a demand and there is clearly a supply, so why has so little of this market been addressed?

Solar Light Inventory

According to the manufacturers and distributors interviewed by Lighting Africa, the two biggest barriers they face in this market are lack of access to finance and distribution challenges such as transaction costs, poor infrastructure and managing disperse and fragmented distribution networks. Thin distributor margins complicate things even further.

In order to reach all of those off-grid households, new and existing social enterprises must overcome these hurdles and scale further than they have been able so far. We believe that a purpose built data and mobile technology platform like RafikiNet is the first step toward achieving the scale needed to make the necessary impact.

"Humps Ahead" in Tanzania

Lowering Distribution Barriers

In a post earlier this year we described how we worked with Global Cycle Solutions (GCS) in Tanzania to address precisely these challenges. Since implementing RafikiNet, GCS has been able to scale up and reach more than 10,000 new households with solar technology. They did this through a network of more than 100 Village Level Entrepreneurs (VLEs) across Tanzania – who themselves earned a total of more than $40,000 USD in income – and all of that was in just one year.

The resulting data in RafikiNet itself also proved to be very valuable as it revealed important trends in the market. The data showed us that sales surged during the months of harvest seasons in regions relying heavily on agriculture – an insight which helps distributors better forecast and better align their investments and operations with local economic cycles.

We also learned that while an average VLE can reach between 60-120 off-grid households (300-600 people) in a year, a high performer working in a well-managed micro-franchising network can reach more than double that and earn between $3-5 per day in the process – not bad in a place where the average income is just $1-2 per day.

Maasai using mobile payment technology

All of this taken together, we came to a major realization:

A well managed micro-franchising network scaled successfully up to 6,000 VLEs is capable of delivering solar energy products to one half of Tanzania’s entire off-grid population within 5 years , not to mention generating millions of dollars in income for the villagers themselves in the process.

Now that is major social impact! It’s also an incredible opportunity for impact investors and social funding providers.Eliminating Financial Barriers

By virtue of having ready access to this kind of data in the first place we also begin to addresses the other major barrier: lack of access to finance. Better transparency, up-to-date metrics, and clear evidence of social impact make it much easier for potential investors and financiers to perform due diligence and make it more likely that an organization will receive the needed funding in a timely manner.

Micro-franchisee in action

Fostering Lasting and Large Scale Social Impact

None of this is to suggest that IT by itself can solve these problems. Sub-Saharan Africa is one of the toughest environments in the world to work in and there are countless organizations – both with and without IT – making incredible impact.

What information technology does do, however, is lower the barriers to scale so that immediate local impact can become lasting global impact.

The Story of RafikiNet

RafikiSoft is proud to announce the release of RafikiNet, our flagship business management platform for organizations distributing products in base of the pyramid markets. RafikiNet is a long time in the making and this is a worthwhile occasion to tell the story of inspiration behind its inception.


Last year I spent 6 months working at GCS (Global Cycle Solutions), a social enterprise in Tanzania that develops and disseminates affordable, quality technology for villagers. When I joined, they had recently added solar-powered lanterns to their product line, an item with its strongest demand in areas with little or no access to the electricity grid. As it happens, these are some of the lowest income areas in the country which also have little road and transportation access. All of this makes sales and distribution a formidable challenge to say the least.

Enter the Rafiki

To take this challenge on, the company made two fundamental changes to its business model: The first was to go from a direct sales model to an indirect one, using a microfranchising model. The second was to recruit the microfranchisees from the very same villages to which they were aiming to distribute. Hence was born the “GCS Rafiki Network” (from the Swahili word “rafiki” meaning “friend”). This arrangement significantly reduced the risk and cost of sales to the company, but also created a lucrative new source of income for the villagers themselves.

Rafiki new recruit training, August 2013
[Click images to enlarge]

We began with a manageable handful of active sales agents (or “Rafiki”) which were easy enough to keep track of with a couple of spreadsheets shared over Dropbox. A few weeks later, however, we launched a major recruitment drive and the network grew to over 100 active sales agents in a matter of weeks. Our simple Excel/Dropbox tracking system quickly broke down and threatened to put an end to any further growth.

Escaping Spreadsheet Hell

Given my background in the IT and software industry, my first inclination was to look to the market for existing solutions. Unfortunately, I found that most of the relevant products were designed for developed markets. They did not adequately address the unique circumstances we were working with such as poor network connectivity, a lack of a national postal network (or even physical addresses), and the reliance on GSM phones and SMS text for communication. They also failed to take advantage of the prevalence of mobile payment services, such as M-PESA, widely used in East Africa and quickly spreading to other parts of the developing world.

I did find a number of locally developed products that took these unique circumstances into account. Most of these that were usable, however, were what I call “point solutions” – that is, they were good at solving a specific problem in isolation but did little to address the larger context. Users of these products are left to manage and integrate them on their own with a variety of other point-solutions, creating a spreadsheet nightmare of another kind.

I sought out the advice of other companies involved in similar activities and it turned out the story was pretty much the same for them as well. Some persevered in “spreadsheet hell” while others attempted to take matters in their own hands and develop software on their own. In most cases this proved excessively costly and turned into a major distraction from their core business: distributing affordable quality products to villagers.

Silicon Valley, Meet Sub-Saharan Africa

Alas, it appeared there was a major unmet need in this market and it was right in my area of expertise. So last September I teamed up with long time friend and business associate Pushpendra Mohta, and RafikiSoft was born.

Push, who is based in Silicon Valley and builds software platforms, came down from California and we visited with several potential customers and partners in Kenya and Tanzania. We began working on a common way to meet this need and the result is RafikiNet, the first comprehensive business management platform for rural last-mile distributors in developing countries.  

We now have social enterprises using our software in places as far flung as Tanzania and Myanmar. 

Today, RafikiNet supports the tracking and management of remote sales activity and inventory movement. It provides interactive maps based on GPS data and detailed reports on the performance of critical business drivers as well as their social impact.

01_RafikiNet_Desktop_Main_Menu 98_RafikiNet_Desktop_Map 99_RafikiNet_Desktop_Charts 97_RafikiNet_Desktop_SalesAgent_Profile
RafikiNet Desktop
[Click on images to enlarge]

Our mobile app allows field agents to register sales and inventory movements directly from the field. They can log village and sales agent information straight into the database with its GPS information.

rafikinet_android_main1 rafikinet_android_salesagent_profile rafikinet_android_village_map
RafikiNet for Android
[Click on images to enlarge]

Our next release integrates mobile payments and provides a limited offline mode for working with intermittent and nonexistent network service coverage.

In Conclusion

With the help of RafikiNet GCS has escaped “spreadsheet hell” and is able to easily track and manage its rapidly growing Rafiki network. They’ve managed to reduce risk and overhead even further using local mobile payment networks to go 100% “cash free” with their sales transactions.

Bottom line, RafikiNet aims to be to software what Land Rover is to transportation.

We are at the very beginning of this amazing journey and we will be chronicling it here in this blog. Join us by following on Facebook, LinkedIn, Twitter, or simply by clicking the “Follow” button on the upper right-hand side of the this page for updates.

RafikiNet: The Land Rover of Software

RafikiSoft visits Myanmar

Sule Pagoda (small)

A few months ago an article in the Economist got my attention. It was about Myanmar (formerly Burma), a country re-emerging after nearly 50 years of economic isolation, and how it is on the verge of introducing mobile payment services similar to those used in parts of Africa today. Having seen firsthand the transformational impact these have had in East Africa, it got me interested in learning more about what was happening in Myanmar.

As it turns out I got my chance, on a recent visit to South Asia I had the opportunity to visit Myanmar for a few days and see it for myself. Prior to my visit I did some homework and got in contact with two organizations involved in the rural sales and distribution of affordable agricultural and renewable energy products: Myanmar Eco Solutions and Proximity Designs. Both generously took time to meet me during my visit and share their day to day challenges and insights on the opportunities on the horizon.


For those not familiar with the recent history of Myanmar it has been only since 2011 that the country and its economy have started to embrace the world after nearly 50 years of isolation. As a result, it has been experiencing the firehose effect as it catches up with all of the developments and innovations that the rest of the world has experienced over that time.

Indeed, GDP growth since 2011 has been impressive (5.9% in 2011) and current forecasts expect it to continue. However, Myanmar still ranks 149th out of 164 in the world on the Human Development Index (HDI), that’s 5th to lastjust behind Pakistan – among Asian countries.  There is clearly a lot of work yet to do. From all signs on the ground, this has begun in earnest.

I saw this in Yangon, the capital.  It is experiencing a serious influx of foreign investment and business activity. There is an abundance of new construction and hotel rates and real estate prices are ballooning. Bulldozers are already at work just outside the capital as they clear the way for a new Special Economic Zone as well as the luxury housing to go with it.

Future site of Thilawa

Future site of the Thilawa Special Economic Zone just outside of Yangon, Myanmar

Reasons for Optimism

While there are plenty of reasons to be cautious (it’s called “risk” for a reason), I believe there are more reasons to be optimistic, especially for organizations who address the poorest and most difficult to reach populations at the base of the pyramid.

“We are in the business of improving lives, political conditions don’t apply” said Min Chan Win, CEO of Myanmar Eco Solutions when I visited him to share with him the work we are doing with RafikiSoft. “It takes a surprisingly small amount of money to make a big difference in people’s lives.”

“For example, imagine you as a Westerner earn a salary of $10,000. It it would be very difficult to suddenly double an income like that,” Min explains. “That’s not the case for someone earning only a few dollars a day.”

The Three Trends

Overall there appear to be three specific trends promising to fundamentally transform Myanmar and make all of these efforts much easier:

1. Emergence of Internet and mobile connectivity

“Telecommunications here is still a major issue,” relates Jim Taylor, CEO of Proximity Designs.  “Mobile and even SMS text are simply not yet business reliable.” This is changing quickly, however. With the country’s first nationwide mobile networks on the horizonthe price of Android phones dropping fast, and the growing proliferation of Wi-Fi and internet access.

Jim, an American who has lived in Myanmar since 2004, recently made a trip to East Africa. “I was most impressed by the effect that mobile phones – and especially mobile payments – have had on rural commerce and distribution there,” Jim related.  “It is about to happen here in Myanmar, it’s not a matter of ‘if’ but of ‘when’.”

Free wifi at Shwedagon Pagoda

Free Wi-Fi is already available at the Shwedagon Pagoda, the most sacred Buddhist pagoda in Myanmar.

2. The simultaneous emergence of the banking infrastructure

Before I arrived in Myanmar everything I read gave dire warnings about the lack of ATMs and credit cards and implored visitors to bring all their cash with them – specifically $100 US dollar bills in nothing less than perfect mint condition.

ATM in the Bogyoke Market. Yangon, Myanmar

These didn’t even exist six months ago.

When I arrived, however, I saw nothing but Visa and MasterCard logos everywhere and ATMs galore. I double checked the publishing date of my Lonely Planet guide and it was current. It turns out all of this happened only a few months ago.

The timing couldn’t be better, though, because it happens to coincide with the development of Myanmar’s nascent telecommunications infrastructure. Unlike India, which has been painfully slow to adopt mobile payment services largely due to resistance by its established financial institutions, Myanmar’s absence of legacy institutions appears gives it much more flexibility.

3. Dropping cost of smartphone technology

Smartphones are flooding in from China and only getting cheaper by the day. People are buying them even where there is no network coverage and simply using them as entertainment systems, utilities, even status symbols.

Bo Gyoke Aung San Rd. Yangon, Myanmar

“Just as Africa famously leapfrogged landlines and went straight to GSM mobile phones, I believe Myanmar will leapfrog GSM phones and go straight to smartphones” predicts Jim Taylor.

But… there’s always a “but”…

None of this, of course, is to say that there are not still major challenges to overcome, indeed there are many. Three in particular stand out:

1. Financial inclusion and access to cash.

“Unlike countries like India or Bangladesh, which benefit from a dense population and have some basic financial infrastructure in place, Myanmar is truly rural” Jim explains. “Many of our customers simply do not have any capital whatsoever, even the smallest purchase must be financed.” In order to address this gap, Proximity Designs has taken on the risk on and provided the financing itself, but this is not a scalable long term solution and will continue to be a challenge.

2. Increased competition from China.

Cheap (and poorly built) competitive products are flooding the market. To a certain extent this is an issue in Africa as well, but its long and porous border with China make this an especially acute problem in Myanmar according to both Min and Jim.

In addition putting prices under pressure, the low quality of many of these products has given a bad reputation to entire product classes. For those selling higher quality products, extra effort must be spent to justify a higher price and reassure potential customers that their product will last longer than a week.

3. “DIY” culture.

Having been a closed society for as long as it has, most rural Burmese are accustomed to fashioning their own DIY (“do-it-yourself”) solutions. A product vendor must therefore clearly justify a $9 price tag for something that a customer believes they can build themselves with $3 worth of parts.


2014-01-14 17.00.58

It was a short visit, but it was educational and jam packed with information and inspiration. I, for one, am left strongly optimistic about the prospects for Myanmar. For every challenge posed, it seems there is a matching opportunity developing:

  • Where financial inclusion is a challenge, mobile payment infrastuctures are emerging and micro-finance institutions are beginning to take notice.
  • While low-cost product competitors are coming in from China, so too are other low-cost enabling technologies such as affordable smart phones and computers.
  • While many rural Burmese are accustomed to building solutions themselves, it also means that nearly every new technology has the potential to add value and make a major improvement in the quality of life.

Jim Taylor held a company-wide meeting with his team after his visit to East Africa. “I told them that I had seen the future, and it is coming to Myanmar!” It’s not very often you hear something like that said about Africa, but it speaks volumes about the prospects of both.

“There has never been such an exciting time for us,” said Min Chan Win, a native of Myanmar. “We are taking this opportunity with great optimism and hope that it will encourage more like minded people, both local & from overseas,  to come and join us.”

RafikiSoft for one will be there.

RafikiSoft and Myanmar Eco Solutions

Enjoying some local cuisine.
(Left to right: Jakob Nielsen, Advisor; Lee Razo, Co-Founder RafikiSoft; Min Chan Win, CEO Myanmar Eco Solutons

Recruiting Rafiki (and getting rid of the guy in the Land Rover)

In the last post I described the challenges involved in setting up and operating a sustainable last-mile distribution network in Tanzania. Chief among them is the difficult navigation of the very limited transportation infrastructure.

GCS Tanzania, like many others operating under these conditions, has chosen for a strategy of creating a network of micro-entrepreneurs (a.k.a GCS “Rafiki”) from the rural villages themselves. The primary aim of this network is to bring the cost of distribution down to a level that is affordable for everyone involved. But it also has the additional benefits of creating a source of income for villagers as well as enlisting sales agents for GCS who understand their customers better than anyone else. Taking this approach, however, introduces a number of new and very different challenges.

Typical road conditions in Arusha, Tanzania

Typical road conditions in Arusha, Tanzania

The success or failure of the entire business depends on the success of the Rafiki themselves. Yet most of them will have had little or no professional sales experience prior to joining GCS. The ability of the business, and in fact GCS itself, to survive will be determined by its ability to recruit, train, and support the Rafiki effectively. In other words the primary business drivers come down to three basic things:

  • How quickly Rafiki are recruited;
  • How much each Rafiki sells;
  • Scaling up both of them (much) faster than expenses.

In this post I will share how we are going about it and some of the lessons we’ve learned so far along the way.

Lesson #1: No need to reinvent the wheel

The decision to go the way of recruiting micro-entrepreneurs was not made overnight, it was the result of a long and painful process. In the beginning, GCS simply sent sales reps out to distant rural villages every day in a Land Rover with a trunk full of solar lights. Unfortunately, this proved to be a prohibitively expensive strategy due to the amount of fuel, labor, and vehicle wear-and-tear involved. Not to mention the need for frequent return visits to close deals.

The second approach also involved GCS reps hopping into Land Rovers, but this time to seek out and speak with the leaders of the villages to seek their support in recruiting local sales agents. This was a step in the right direction but recruitment progressed at a snail’s pace due to the time and effort required to introduce the company, its products, and the benefits of the micro-entrepreneurship. Eventually this also proved to be too costly as return visits were still required while village chairmen took time to consider the proposal.

Finally we wised up and realized that rather than build our own we should be taking advantage of networks that already exist. This was achieved more recently by partnering with World Vision, an international NGO active in Tanzania and with strong rural networks in the area. They helped us make the needed introductions in advance and enabled us to organize “tours” of areas. We would meet anywhere from 10-15 village chairmen in a single visit of just a few days and have as many as 20 new recruits by the end of the week. In just 5 weeks our network grew from 18 to more than 90 active Rafiki in just the Arusha area alone.

New recruits work on team projects at Rafiki training

New recruits work on team projects at Rafiki training

Lesson #2: Recruitment is not enough

Recruitment was a major success, but our work was hardly finished. As mentioned earlier, our long term success hangs on the the long term success of the Rafiki themselves. In order to make sure they got off to the best possible start we partnered again with World Vision to organize a comprehensive 3-day training seminar. The training itself (led by an excellent trainer from one of our local sales partners) was delivered to both new and existing Rafiki. It covered key topics such as marketing, sales, and financial fundamentals. It included role playing exercises, team projects, and presentations by top-selling Rafiki with advice on running a successful business.

More importantly the event provided an opportunity for all of the Rafiki to meet and get to know each other as well as the GCS staff. It helped to strengthen the personal bonds with each other and with the company, the value of which cannot be understated given the far-flung and impersonal nature of the rural distribution business.


A top selling Rafiki shares her secrets with new recruits.

Lesson #3: Use local innovations to address local challenges

We’d come far at this point, but we had one more critical issue to address. Payment and delivery.

Tanzania is primarily a cash-only society, bank transfers and credit card payments are out of the question. To complicate matters, there is  no regular postal delivery service as we know it in Western countries. How are we going to deliver the products and collect payment without sending out the guy in the Land Rover every week?

For now, we’ve addressed the first part, delivery of products, with the recruitment of Field Officers. They come from the same areas as the Rafiki themselves and have reliable access to some means of mobility. In addition to receiving deliveries of inventory on a regular basis (usually by courier or minibus), Field Officers are responsible for supporting a group of 10-15 Rafiki with stock deliveries and overall sales and business support on an ongoing basis. Payment, on the other hand, is a different matter. Fortunately, we’ve been able to take advantage of a fairly recent local innovation that has come into wide use across East Africa.

Mobile phone payment platforms such as M-Pesa and Airtel Money have not only eliminated the need to travel and meet face-to-face in order to collect cash but also most of the risks involved in handling large amounts of money. Using M-Pesa or Airtel, GCS will, in fact, go 100% cash-free within the next couple of weeks. This short video by Vodacom provides a quick introduction of how the mobile payment system works.

A mobile money agent in Tanzania (photo from

A mobile money agent in Tanzania (photo from

Looking ahead

GCS is now in a great position. We’ve definitely had a lot of help getting where we are and there is still plenty of work left to do. But the ingredients for success are in place. In the coming weeks we will support Rafiki by investing in promotion and marketing campaigns. We will also be working to establish partnerships with local financial institutions to make it easier for Rafiki to get the capital they need to grow their businesses.

At this time we are also looking even further out into the future seeking out other affordable technologies which can have as much of an impact on rural quality of life as solar lighting has.

This is a sure topic for a future post…


The GCS Rafiki project: A “last mile” distribution network for rural Africa

Ok, here’s a challenge: Go sell and deliver your product into the most remote, rural areas of East Africa where transportation infrastructure is underdeveloped at best (but most likely non-existent) and the average income is less than $2 USD per day. Wait, there’s also a catch: you need to be profitable.

This has come to be known as the “last-mile” or “last kilometer” distribution challenge for the base of the pyramid (BoP). Nearly anyone who has tried to do business in many parts of Africa or India has had to take it on and it is the challenge currently facing us at GCS Tanzania. The most common difficulty in serving these markets comes down to simple economics: the cost and effort required to send people and product to these communities far too often exceeds the income generated from sales.

The "last mile" is always the toughest...

The “last mile” is always the toughest…

A conventional wisdom has emerged that the best way to tackle this problem is by recruiting the villagers themselves as sales agents or “village level entrepreneurs” (VLEs). Encouraged by examples like Hindustan Unilever’s Project Shakti in India, companies have adopted this approach hoping not only to build a profitable sales and distribution channel for themselves but also to create a stable and viable source of income for the villagers. When successful,  these networks can result in a long lasting mutually beneficial arrangement for everyone involved.

This is the approach that we’ve decided to take on in Tanzania in the form of the “GCS Rafiki network” (“Rafiki” is the Swahili word for “friend”). For now, it is being used exclusively for the sale and distribution of solar lights and chargers, but the network itself is being developed for the future dissemination of innovative technologies of all kinds.

Recruiting "Rafiki" in northern Tanzania

Recruiting “Rafiki” in northern Tanzania

The more immediate goal, however, is to prove (primarily to ourselves) that it can be a profitable and  self-sustaining sales channel. Of course, nothing worthwhile comes easily and as expected there are a number of daunting challenges involved, any one of which could easily sink the entire project. Among the more salient at the moment (and in no particular order):

  • Infrastructure and logistics:  Less than 15% of the roads in Tanzania are paved (and those that are are mostly in urban areas) making it costly and challenging to go to these areas on a regular basis. There is also no postal delivery service as we know it in Western countries. How do we deliver product, monitor sales, and collect payment reliably and effectively under these conditions?
  • Entrepreneur recruitment: The success of the network depends entirely on the recruitment and success of the individual entrepreneurs. The challenge is not only to recruit good people and get them started as quickly as possible, but also to ensure that the ones who are already active continue to meet their targets and be successful.
  • Customer buying power: At retail prices ranging from $12 – 40 USD, even a basic solar light represents a significant chunk of monthly income for our typical customer. Does it provide enough value to the customer to justify the expense? If so, how do we best demonstrate and communicate that value? How do we empower our VLEs to communicate that value?
  • Entrepreneur financing: Like our target customers, newly recruited village entrepreneurs will have very few, if any, assets. In most cases they will not even qualify for microcredit loans. Do we consign them goods or extend them credit ourselves? If so, what is the risk to our company and how do we manage it?
  • Incentive structure: This can be tough to get right in any business, let alone in the context of a different culture than your own. Get this one wrong, however, and things can really backfire on you. Understanding the people who are working for you and what motivates them to be successful is absolutely imperative.
  • Risk management: A significant amount of cash and product must change hands in the process – most of the time through people we do not know and will never meet. Risk can never be eliminated, but how do we keep it to a minimum?

This post is intended as the first in a series describing the efforts to address some of these challenges and to share what we learn along the way. Future posts will go into more depth on these and other topics.

Comments are always appreciated!

Opportunity vs. Opportunism

In the blog post I wrote after the attending the DEMO Africa conference in Kenya last year, I observed that many of the companies presenting seemed to be addressing what I called “luxury problems” – ordering pizza online, chat rooms for television programs, concierge services for business travelers, etc. Others had pitches of the form “It’s like _____ but African”.

There were definitely some very good business plans presented at DEMO, but all too often I found myself wondering if some of them were primarily designed to address an unmet need in the African market or merely to impress the foreign investors in attendance by telling them what they wanted to hear. It didn’t help that many of the participants seemed to have been coached into wearing the standard issue Silicon Valley uniform (jeans and t-shirt with a sport coat).

Not long afterwards, CIO East Africa magazine (the primary sponsor of the very same event) published an editorial on the detrimental effect of what they called “compepreneurship”, referring to a proliferation of “start ups” with business plans designed  more for winning cash prizes than for actual execution in the marketplace. (Note: unfortunately article doesn’t appear to be posted publicly, but it was featured in the November 2012 issue. I will update this post if a link is found).

But how does one, especially a foreigner in a market, manage to figure out if an innovation is the real deal? How do you separate opportunity from opportunism? Changing the way we perceive innovation might be a good place to start.

Technology vs. Need

Innovation occurs, quite simply, when an unmet need finds a technology that addresses it – regardless of where it came from. All too often we fixate on the latter and not enough on the former (and those in the hype generation business like to keep it that way).

Let’s take a look at a famous African example: mobile money, pioneered by M-PESA in Kenya. This technology has enabled millions to make payments and money transfers using SMS text messaging technology from cheap basic mobile phones. Who would have guessed that such an important basic financial need would be met by a telecommunications technology, let alone one as simple and unremarkable as SMS text messaging? Prior to availability of mobile payments, people would have to spend an entire day traveling to and ultimately waiting in the nearest physical bank branch to make even the simplest transaction. Now it is all done in just a few seconds and it has transformed the way people conduct business.

Waiting in line at a bank in Tanzania

On the other hand if this technology is so great why hasn’t taken off in Europe or the U.S.? Because the need simply isn’t there. Online banking and credit card transactions may be a little more cumbersome than a text message, but they work just fine and hence our need is met. We are able to focus on much more pressing matters such as the need to download movies for free.

The first question to ask yourself when evaluating a business idea is if you can identify the unmet need being addressed by the technology in question – and if you understand its real world implications.

Think inside of the box

I had an interesting experience when I visited Rwanda last year. In my weekly Google Alert digest, I came across a headline about how Rwanda had acheived the fastest internet connectivity in Africa. I immediately clicked on the link, but the problem was that I couldn’t read the article. The page wouldn’t load. Like many other places I had been on that trip, my internet connection, while technically existent, was barely usable. Even when I could maintain a wifi connection for longer than 2 minutes it was too excruciatingly slow and left my need for the latest hot news on Rwandan tech woefully unmet.

It’s great when a country, like Rwanda, can get access to a revolutionary new technology, like blazing fast internet. But  it doesn’t do much good if the intended users are unable to access it and thus not much of an innovation if it doesn’t meet any needs. Inventing the next new game-changing product or service is great work if you can get it, but those opportunities are few and far between. There is challenge (and opportunity) enough for the rest of us in simply disseminating the ones that are already there – or even just finding ways to organize the markets that already exist.

These types of opportunities are often overlooked as they are usually not particularly sexy or glamorous and hence not very good material for magazine articles or business plan competitions. But more often than not they address important unmet needs and are refreshingly free of hype.

You’ll do as your told.

A friend and former colleague whose job it had been to manage partner relations in Africa for a large high tech firm once gave me a very simple bit of advice: “When you go to Africa, you don’t get to do what you want to do. You do what the market tells you to do.”

Truer words have never been spoken. Nearly every entrepreneur I’ve met who has done any significant amount of business in Africa has a major “pivot” story. The company I am working with here in Tanzania, for example, was founded with the mission of bringing simple bicycle powered agricultural equipment to rural farmers. “That’s nice,” the maket said, “but do you happen to have any idea where I could get some solar powered lights and chargers?” And so came the pivot… a great topic for future post.

No substitute

Statistics, editorials, books, reports and even wild speculation can all be useful guides to give a business idea some direction. Understanding the latest technologies provides us with the tools we need to accomplish great things. But there is no substitute for first hand knowledge of a market, because without understanding its true needs there can be no innovation.

Global Cycle Solutions

This blog is far overdue for a regular update, but things are about to change.

Next week I will begin a 6 months stay in East Africa. I will be spending the majority of that time in Arusha, Tanzania working with Global Cycle Solutions, a company dedicated to providing low cost, quality technology solutions to rural villagers. I intend to use this space to make periodic updates as things progress (along with the usual occasional posts about business in Africa in general).

I’ve been in contact with Global Cycle Solutions for a few months now but I haven’t yet written about them on this blog, so this video will provide a good introduction and overview of what they’re up to:


Empowering Rural Entrepreneurs