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Don't confuse what people supposedly need with what they actually want!

A plea for more customer focus and less social orientation.

There is a direct line from missionaries over colonial masters to development aid volunteers and the "social business idea".  All have in common that they want to help other people by imposing them their own vision of a better life:

  • the missionary sees himself as a savior in the religious field 
  • the colonial master acts as a representative of a superior culture
  • the development aid volunteer wants to realize his vision of poverty alleviation, recently in association with "social businesses" and "social impact investors"

In the field of off-grid electrification, the latter leads to that a legion of designers are constantly developing new portable solar lights, but the people at the base of the economic pyramid often want very different things: for example, a television or a fan. The problem: what low-income people want and are willing to buy, is not always what is being offered and delivered. This is mainly due to the fact that the so-called "social businesses" still act too much with a NGO attitude: low-income people are seen as beneficiaries, not as a customer. This attitude is of course necessary because only this way the so-called "social impact investors" can be persuaded to invest their money.

The nowadays worldwide propagated idea of "social business" and the "impact investments" will though change nothing essential to the living conditions of low-income people, as long as it is the developed countries and social investors themselves who define what is meant by social impact and how it is measured. That way, you will at best soon become a missionary of your own ideas to improve the world.


Mobile phones are booming - precisely because they are not a social business!

Is it not strange that in the end always such products or ideas that meet the needs of the people prevail? Mobile phones are spreading rapidly in developing countries - perhaps precisely because they are not sold as "social business"? And to the consternation of many "social impact businesses", today low-income people sometimes abdicate a bed rather than a TV. Mobile solar lights remain dead stock if they do not have mobile phone charging function - although the developed world actually consider the elimination of kerosene lamps to be the most important.


Customers not beneficiaries

If we want to change something in the living conditions of the people at the base of the economic pyramid, then we must finally take them seriously as a customer and not as beneficiaries of our ideas to alleviate poverty. Many are doing this already with great success: besides the manufacturers of mobile phone devices, there are also the major oil companies. Their revenue from the sale of kerosene to the so-called "poorest of the poor" ranges a high double-digit billion – with tendency to rise.

Therefore, today we do not need "social businesses" but "for-profit enterprises with social orientation inside".

 

The author is President of GOGLA. Global Off-Grid Lighting Association (www.gogla.org) and StS In-ternational Federation (www.solar-federation.org).

 

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Comments

Comment by Yotam Ariel on February 26, 2013 at 6:53am

Excellent points!!!


Thank you so much for highlighting this.

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Comment by Kimberley Smith on March 1, 2013 at 6:07pm

I absolutely agree. This is a problem seen across all international development work. While many non-profit organizations have embraced the need for a customer focus, many still exist who focus on what they see as a problem and implement "solutions" that provide little or short-lived value to the end user. The primary reason for this is that non-profit groups are not answerable to the customer in the way that a for-profit business is. A well meaning non-profit can continue to perform misguided work as long as the donors continue to provide support.


While non-profit organizations certainly have a place in introducing and expanding access to appropriate technologies, for-profit ventures are needed to perpetuate these technologies. A socially responsible but for-profit business will only succeed if its products and services are truly valuable to the customer. This provides the necessary checks and balances to perpetuate sustainable change.

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Comment by
Yotam Ariel on March 1, 2013 at 8:24pm

So, how do we know what villagers feel, think and need?
How do make that public?
Perhaps we can give them a tool to speak up. (currently their voices gets filtered)

One way to do that is: www.bennuvalue.com

(partly inspired by - www.aljazeera.com/news/africa/2012/05/201259785714792.html)

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Comment by
Lucas Zaehringer on March 20, 2013 at 1:50am

Thank you for this article. However, for-profit enterprise can still be seen as a social business for me, so I am not sure to catch the limit you are talking about between both. I guess the reason is that "Social Business" has a trendy broad extent now, and things get confused. We've seen the same for the notion of "Sustainable Development", whereby one can put anything and everything. Anyway I agree with your point: the main criteria is to reach financial and economic sustainability. We should start from the needs first to make it.

I would like to raise another question: solar lighting is always said to be a suitable/affordable solution for the BoP markets (I agree since this is a goal I have). But what about all the people who can still not afford a solar lamp? I mean, do we know the size of this real BoP? Do we have solutions for them?

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Comment by
Evan Mills on March 20, 2013 at 2:12am

To Lucas' closing question about affordability of solar modules: many off-grid "pico" LED systems are  designed to be charged either with solar or via grid connection (via mobile phone AC adapter).  The latter use case is supported by the very abundant microenterprises that exist for cell-phone charging in many countries.  Thus, a lantern sold without it's optional solar panel can be grid-charged for a fee $0.10 to $0.20.  As you might expect, this is more costly for the owner in the long run, but does avoid the additional one-time outlay for the solar panel at time of purchase.

I'm not sure this has ever been formalized, but one can imagine a strategy where the kerosene savings are banked for a period of time until they are sufficient to then buy the add-on solar panel for something in the neighborhood of $5 to $10, depending on sizing.

Of course, micro-credit is another avenue for addressing the affordability issue.

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Comment by
Lucas Zaehringer on March 20, 2013 at 2:52am

Well you'r right, sure that end users adopt this solution for personal rechargeable lantern? Pay-per-recharge system are more frequently designed for phones or batteries that are used in electrical home systems, aren't they? What about the 5-15% depending on the countries living far away from a grid?

Your second point is interesting. Usually microcredit is a solution to enable end-users to get a loan, own the product, and then pay the loan off. But microcredit is not everywhere. And some people are still reluctant. There is still a cost! The idea is to provide people a solution that can replace the kerosene for some months so that they can save and after a while they have enough money to buy a lamp. As simple as you said. So bascially as soon as they get the product, users don't have anything to pay, because they already did it. Some existing companies propose a sort of energy escalator model, but I think there is always a down payment, even small. Actually I am currently working on that kind of solution, which is a small lamp powered by carbon-magnesium cathod-anods in water. I will let you know more in some weeks..

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Comment by
Seth C. Addo-Yobo on April 12, 2013 at 10:16am

I agree.  At the end of the day, people want quality no matter where they are in the world.  If you have good products, people will find a way to get the money.  Your example of mobile phones is perfect.  Some thought it was only going to be for the wealthy.  Now such a view is laughed at.  Like anything, it is going to take time for the consumer base to adjust and figure out which products are worth the expense. 

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