In development, there is considerable debate and uncertainty about two related concepts: whether the poor can pay for important health products and whether paying customers value these goods more than recipients of hand outs. The first is a question of whether or not people have the resources and are even willing to pay for basic health products like anti-malarial bednets or water purification filters or tablets. 

As an investor in a long-lasting bednet manufacturer in Tanzania, we know that people are not willing to pay the full cost of the bednets, but they are willing to pay for subsidized nets.  Just how big a subsidy is required is a question that we are exploring right now with Professor Pascaline Dupas of Dartmouth. With the support of Sumitomo, the Exxon Mobil Foundation, and an anonymous donor, we are conducting a randomized trial to find the price at which people will buy them. We are also reviewing the literature to see if there is a definitive opinion on whether people who buy nets vs. those who receive them for free are more likely to invest the time and energy into figuring out how to use them properly, and ultimately receive the health benefit of reduced exposure to mosquitoes with proper use of the bednet. 

This study from the Poverty Action Lab takes up the same set of questions for water purification tablets in Zambia. The findings are fascinating, and show that in this experiment, people who paid for the Clorin were more likely to use it than those who were given it. The next step is to study whether a market for public health products can be an important complement to other essential government and NGO strategies to reach those in need with access to clean water or preventative health products and medicines.

One of my toughest days working in this field was recently, when we went to the Mukuru slums to visit one of the sites operated by a business we are considering funding. I’ve been in some of the poorest places in the world - in places far afield as Peru, Pakistan, Honduras, India, South Africa, Brazil and beyond. But I don’t ever recall being as disheartened as during my visit here.

Perhaps my discomfort was brought about by the subject matter at hand. See, the business in question, along with a few others we are looking at, is trying to improve the conditions of sanitation facilities (read: bathrooms) available to the residents of these areas. We take our tiled, marble loos for granted in the West, thinking more about which fixture would go best with our new mirror.

But here, it’s a different story. Among the 300,000 - 500,000 (it fluctuates) residents of Mukuru, few if any have their own facilities. Imagine that, no place or privacy to perform bodily functions that everyone is obligated to deal with daily. This inevitably leads to very unpleasant and unsatisfactory conditions all around, a host of diseases and infections, and an unsafe river nearby. Related is the phenomenon of “flying toilets,” where waste is disposed of in plastic bags and hurled away from the house, a common practice after dark, when leaving one’s home in these parts can be quite dangerous. (more…)

In Friday’s New York Times (subscription required), columnist Thomas L. Friedman writes about his visit to Acumen Fund investee Advance Bio-Extracts (ABE) in Nairobi along with our Kenya country team. His column sends a powerful message about the need for patient capital in building sustainable, scalable enterprises that serve poor people and create jobs. We are proud to be part of a growing movement of individuals and institutions that recognizes the entrepreneurial spirit in Africa and is focused on pragmatic, action-oriented solutions.

PDF of article here with the gracious permission of Tom Friedman.

James Surowiecki does a great job in last week’s New Yorker underlining the critical skills gap faced by India as it moves powerfully into the future.  We at Acumen Fund are seeing the same skills gap the world over – especially in the sector focused on using private sector initiatives to solve public problems.  The biggest single constraining factor to our investees’ ability to scale is talent.  They need senior management as well as middle management capabilities – and their needs are often compounded by an inability to pay premium salaries.

Increasingly, we are convinced of the need both for a global recruiting firm as well as for an expanded fellows-like program, likely created and executed by many organizations across the globe. Building not only a workforce but a corps of great managers and, especially, leaders who understand how businesses work and can navigate across international borders is key to the future we all want – and need – to create together.

Acumen Fund has just put out its quarterly update, highlighting key events over the past three months. If you are not on the distribution list for the update and would like to receive it, you can sign up here.

Acumen Fund CEO Jacqueline Novogratz spoke yesterday as part of the Reuters Global Hedge Fund & Private Equity Summit. You can see a short broadcast interview with Jacqueline here, as well as an initial story that resulted from her Q&A session.

See this blog post (NY Times subscription required) by Nicholas Kristof who has witnessed for himself the power of microfinance as one way to enable people to solve their own problems and belong to something bigger than themselves. He specifically mentions our partner Kashf Foundation of Pakistan which is run by the dynamic Roshaneh Zafar. We are proud to work with Kashf, which has grown from 100,000 borrowers last September to 150,000 today. The world is changing and it is time to capitalize on the goodwill and ability for some organizations like Kashf to execute.

For those without a subscription, you can find the entry reposted here.Â

In January, the Acumen Fund board visited some of our investments in India, witnessing firsthand the impact that these enterprises are making. (Jacqueline Novogratz shared her journal from that trip in a previous post.)  Board chair Margo Alexander also wrote about her experiences in this letter, which includes some great photographs as well as observations about the progress of our investees and the challenges they face.

This report by the IFC, the private sector arm of the World Bank Group, and World Resources Institute (WRI) looks at the size of the BOP market and reinforces the need for creative business models that can serve poor consumers. It’s exciting to see this kind of analysis, particularly as the report highlights the work of current and former Acumen Fund investees, including Saiban, SHEF (aka CFWShops) and WHI, and cites a study led by our Pakistan Country Manager, Aun Rahman.