June 2007

As an Acumen Fund Fellow, I have spent the past seven months working for Medicine Shoppe India, one of Acumen Fund’s investees, as the project head for the Sehat Clinic pilot. Medicine Shoppe is a well-established pharmacy brand in India, with over 130 stores already in operation. With Acumen Fund’s recent equity investment, Medicine Shoppe has launched the Sehat Clinics, an entirely new format aimed at the urban poor. 

The Sehat concept is simple – a health clinic and Medicine Shoppe pharmacy under one roof. The Sehat Clinic is staffed by a doctor hired by the Medicine Shoppe. Patients pay a nominal sum, usually Rs20, for the doctor’s consultation. If the patient purchases his or her prescription from Medicine Shoppe, the Rs20 is rebated back to them. As a result, the doctor’s consultation becomes free of charge and patients pay only for the medicine. The medicines prescribed by the Sehat doctor are, whenever possible, the generic version of the branded drugs, thus further lowering the cost of medical care to the consumer. Other medical services are also performed in the Clinic at above-cost, but below-market prices.

When I arrived in December, we opened the first Sehat Clinic. Last weekend we opened the seventh, with an eight shortly underway. The model has undergone a tremendous evolution in the past six months. We shifted our site selection strategy from relatively affluent areas with a slum nearby to locating the clinics right inside slums. We redesigned the process through which we recruit doctors and created an employment package that allows us to hire experienced doctors at a salary we can afford. We also implemented an entirely new concept for Medicine Shoppe called community marketing outreach. Through this program, we hire local women in each area to make daily home visits, refer sick patients to the clinic, spread health education and awareness, and promote our free health camps and health clinics. In the past four months we have held over 35 health-plus-vision-testing camps, serving over 4,000 people. We have also made some changes to the look and feel of the clinics and shops and put all our marketing materials in local language, to make our services more appealing to low-income markets.�

This article in Forbes magazine makes a very important statement about cities as the future of the world and slums as the future of cities. It quotes a lot from the book Planet of Slums by Mike Davis, citing important aspects of rapid urbanization, such as:

• By 2030, 5 billion of 8.1 billion people in the world will live in cities, of which 2 billion will be living in slums, mainly in Africa and Asia.
• Slums do function, complete with social hierarchies, commerce, mini and micro enterprises and a form of home government
• There is no free land available to urban squatters, and there is a price to be paid either to previous residents or corrupt politicians or local police.
• Ignoring the massive urban influx, as governments have been doing for decades, keeps slum dwellers out of the legal systems and tax systems and gives them tenuous rights to land on which they live. This could spawn influential groups fighting for squatter rights, but it could and does spawn criminal gangs and militant movements as well.
• The article mentions how Turkey has given legal and political rights to squatters that encourage them to invest in their homes and neighborhoods. This is a lone example but worth emulating.

The UN definition of a slum is one whose residents are missing at least some of the following: durable walls, a secure lease or title, adequate living space, access to safe drinking water and toilets. 20% of slums miss at least three of these requirements today.

Acumen Fund’s work toward funding enterprises that use market-based approaches to address critical needs of the poor is aligned with these needs of slum dwellers. For example, Acumen Fund has invested in urban squatter resettlement through loans for title to land and home improvement loans for incremental housing in Karachi. Acumen Fund is also exploring similar options for low-income housing finance in cities in India and Kenya, as well as business models for bringing sanitation services to slums. But the growing levels of poverty in cities demonstrate the need for more sustainable, scalable solutions that address the lack of critical goods and services among the poor.

On the upper east side of Manhattan, in a place where an espresso cup costs $79, you will find a courtyard full of inventions designed not for the fabulously rich, but for people who do not have access to basic goods and services. This courtyard is in the Cooper Hewitt National Design Museum, and the exhibit is called “Design for the Other 90%.”

The particular day I visited happened to be at the end of my first week at Acumen Fund as a Summer Associate. Keeping in mind Acumen’s mission and the various backgrounds of Acumen’s investees, I wanted to see how these ideas to provide goods and services to the poor through design innovations and market approaches become reality. Among the inventions were devices such as the One-Laptop-per-Child project, StarSight solar-powered street lamp and wireless communications device, and the MoneyMaker Block press. When I came across the drip irrigation system from IDE India, one of Acumen’s investees, a smile came across my face. After learning about it this past week, here it was in “practice”!

I thought you would be interested in this article about the “globalization of labor.” The issue is controversial and also metaphorical for how complex the confluence of markets, culture and values can be when considering issues of poverty and development. We’d be interested in your thoughts.

This piece in The Huffington Post by Marc Gunther highlights a really exciting trend in the water sector around the convergence of business and provision of safe water. This is an issue we have been working on since 2003, and we have been excited to partner with many of the organizations he cites, including the Global Water Challenge, WaterHealth International, and the Coca-Cola Company.

Gunther addresses what has been a controversial polemic between water as a resource versus water as a human right and makes the argument that treating water as a resource for those who can afford to pay will make it more readily accessible to those who can’t. He brings up some great points, and I wanted to add some of our reflections on the true cost of water faced by those who are often qualified as too poor to pay.

It might be possible that a government would cross-subsidize water, charging wealthier customers more and poorer customers less, but this is different from charging nothing at all. There are a few problems with any system, public or private, that provides water for free to a large segment of the population: First it eliminates the interest of entrepreneurs, distributors, innovators and investors to find cheaper and more reliable ways to make water available to those who need it most.

This is a powerful commencement speech given at Harvard, one of the world’s most elite institutions, by one of the world’s most powerful individuals. It is exciting not only that he urges this generation to take on the world’s biggest inequities but also that he is so focused on the nexus between the marketplace and the public sector. Bill Gates understands that the challenge for the world is to make markets work for the poor - and that means a more creative approach to capitalism, one that recognizes the importance of the public sector and a commitment to giving all human beings the opportunity to thrive and succeed. We’re honored to be partners with the Gates Foundation.

I found this article in YaleGlobal, written by our friend Rohini Nilekani, founder of Arghyam, an interesting read. It proposes that given the politics around water, a valuable lesson can be learned from the approach that has been taken (and mistakes that have been made) in managing oil, as the sector has had similar problems with demand management, appropriate pricing, pollution control and sustainability — and how it’s important to get the urban consumer involved in solving the problem.

The Chinese proverb in the article (“Tell me, I forget. Show me, I remember. Involve me, I understand”) that refers to local buy-in reminded me of our work in Thar, Pakistan, specifically and how Acumen Fund looks for creative solutions while increasing the ownership the poor have - and how when we speak of sharing knowledge, it’s not just with our partners and investors, but also with those with whom we work on the ground.

WaterHealth International (WHI) has been named on the “Ten to Watch” list of companies in The Clean Tech Revolution, a new book released by Collins, an imprint of HarperCollins Publishers. The book features clean technologies that can impact global development, fuel costs, security and climate change, among others. We are delighted to see WaterHealth International featured not only because we see WHI as an innovator in the water industry, but also because they are demonstrating the potential for new technologies to benefit low income consumers that have been excluded from the benefits of innovation in the past.

The economic incentives to reduce the costs of fuel, or mitigate costly climate changes, are understandable motivations for technology innovation. But it is only logical that clean technologies that create more sustainable access to sustainable and affordable services such as safe water, clean energy, and fuel efficient transportation, would hold the most value for those that live at the base of the economic pyramid (the BOP). A convergence between Cleantech, design for the BOP, and social investing could be the right combination to assure that development in emerging economies is inclusive and environmentally sustainable.

In the book, authors Ron Pernick and Clint Wilder identify ten companies in each of eight clean-technology industry sectors that bear watching for growth and industry influence in the near to mid-term. WHI has been included in the “Ten to Watch” list for the chapter titled “Water Filtration: Turning Oceans, Wastewater, and Other Untapped Sources Into Pure Water.”