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Summer Spotlight: It’s Not About Redefining Standards, It’s About Providing Choice

Thursday, September 2nd, 2010

A pit latrine inside a free public toilet facility in Limuru Town

“Mwambie asiingie huko!“ screamed the woman in the marketplace, Swahili for “don’t let her go in there!”.  The “her” she was referring to was me and the “there” was a public toilet. After stepping into the facility, which was a local municipal toilet, I realized the concerns of the woman, and almost instantly wished I had heeded her warning. I had seen a few government facilities in Nairobi before but the uncleanliness and stench were beyond anything I had previously experienced.  My colleague at Ecotact, Rehema, and I were on a tour of some of Ikotoilets’ competing facilities as part of a larger project to create procedures around the site selection process for Ecotact. This particular incident took place in the main marketplace in Limuru Town, about one hour outside of Nairobi.

The site that had been selected for an Ikotoilet facility in Limuru Town was near the main market area, where hundreds of people gathered everyday to sell spices, maize, grains and fruit. We were on a quest to understand whether it made sense to place an Ikotoilet facility in this area and to identify what factors made a “successful” facility in order to create a process to prevent entering failing localities in the future. Ultimately, the guidelines we created looked at factors ranging from the number of competing facilities within one kilometer of the proposed site and the foot traffic around it to the accessibility of water lines and the political support of the municipality.

Out of the 16 facility visits we completed, which included locations such as Nakuru, Machakos, Uhuru Park and Railways, we were able to start piecing together exactly what commonalities existed in the more successful facilities and what criteria we needed to include in our diligence process when choosing locations. Through our visits we found that the most meaningful insights came not necessarily from the council and municipality members we were working with, but rather, from the average person who worked, lived or transited through the location we were considering. In Nakuru, it was only through asking women sitting on the side of the street and men working at the nearby repair shop that we learned that there were two free facilities- one in a nearby marketplace and one behind a carwash, within 100 meters of where we were considering putting an Ikotoilet facility. The councilman was surprised to learn of this as they were not official, public facilities and he was not aware of their presence.

What was even more interesting was how people reacted to using these public facilities – although they were not in the best conditions, they were free and a large portion of the people we spoke to said they would opt to use a dirty facility for free rather than a clean one for 5 shillings. Of course in areas like Limuru Town, where the alternative was abhorrently dirty, not just unclean, they were willing to pay the 5 shillings. This made me reflect on the concept of dignity and at what point the cost outweighs the benefits of dignity.  At Acumen, we constantly talk about the importance of providing people with a sense of dignity, so I was surprised to find so many choosing to continue using the free facilities. However, I realized that dignity doesn’t necessarily stem from using a cleaner toilet – it comes from the fact that the members of the community have a choice of which facility to use.  They can decide their own standards and don’t have to use a dirty toilet because there is no other option. I realized that our role can only go so far as providing an alternative and allowing people the opportunity to redefine their standards because if it went any further, we would destroy that which we worked so hard to create: dignity, self-empowerment – choices.

Rabia Sarwar started Acumen Fund’s volunteer chapter in Dubai. This summer, she spent four months in Acumen Fund’s East Africa office in Nairobi working with Ecotact and recently returned to Dubai.

This concludes the 2010 Summer Spotlight series featuring posts by Acumen Fund Summer Associates from around the world.

The exterior of an Ikotoilet facility

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Summer Spotlight: How to Deal with the Police in India

Wednesday, September 1st, 2010

Typical scenery in Bihar

A few weeks ago, I traveled to Patna to visit Husk Power, an Acumen Fund investee, with Acumen Fund’s Energy Portfolio Manager Karthik Chandrasekar. Husk Power is in the business of setting up mini power plants in Bihar, one of the poorer and more populous states along the Indian rice belt. I’d been spending the summer working on the energy portfolio and was excited to meet the Husk entrepreneurs. These were the guys who figured out how to roll out mini electric utilities in a state where close to 85% of the population lived in rural villages. It was a good trip, and in retrospect, I think I learned a few new (and useful) things.

One day, we were riding in a car with Gyanesh Pandey, CEO of Husk Power, when a very bored-looking policeman pulled us over and asked us to show him our vehicle registration papers. Our driver gave him our papers, which were photocopies, because in India, nobody keeps originals in their cars. The officer wasn’t satisfied. He didn’t want photocopies. He wanted money: 9,000 rupees in cash. If we paid him, he’d let us go, and if we didn’t, well, we just never asked. Unsure of what to do, we sat and waited in the stifling heat of the car. Then, for the next half hour, we watched Gyanesh and the policeman, in between long, drawn-out pauses, have a go. From what I could piece together (given my limited understanding of Hindi and the general confusion I was feeling at the time), the dialog went something like this (I think):

  • Policeman: I want my money.
  • Gyanesh: I got no money, but I’m happy to drive to an ATM with you and get you some money, but you need to write me an official receipt.
  • Policeman: I’m not driving anywhere. But I like you, so I’ll give you a discount. I want some money.
  • Gyanesh: On any other day, I’d pay you. But today, I’m with my Chinese business associate [then he points at me!] and it would be very shameful if he saw me paying you money. Think about how bad this would look!
  • Policeman: Oh snap. [long pause]  Fine, just go.

In the aftermath, I asked Gyanesh and Karthik to explain their police strategies to me. They agreed that when dealing with corrupt law enforcement officers in India, one should never give in, but must be prepared to spend a lot of time hanging around. If one simply hangs around long enough, then sooner or later, the policeman will realize that his time would be better spent extracting income elsewhere. He was, after all, a businessman, and businessmen have their own businesses to run.

At Acumen Fund, there is a tradition where team members are sometimes asked to share ‘Aha!’ moments, brief stories about the things that stood out or inspired us over the past week. So when we returned to Hyderabad, I told my policeman story during one of our weekly staff meetings. It was good to hear the reactions of the team. One person commented on how Gyanesh seemed completely prepared in advance to be patient in such a difficult situation. He was street smart, but more importantly, made it a point never to cave in to the corrupt demands of the police officer. Another person pointed out that ‘hanging around’ is what so many of our entrepreneurs have to do in order to avoid paying bribes. As a result, investors needed to be patient and expect results over the longer term. At least one other person swore that ‘hanging around’ also worked on policemen in Tamil Nadu.

For me, the experience highlighted the unexpected challenges of operating in rural parts of India.

Ken Lee is a student at Columbia University’s School of International and Public Affairs pursuing his Master’s in International Affairs.  This summer, he was working on the energy portfolio in Acumen Fund’s India office.

The Summer Spotlight series features posts by Acumen Fund Summer Associates from around the world.

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Photo of the Week: a Shopkeeper, a Community Leader, and a Role Model

Tuesday, August 31st, 2010

In 2006 I visited Kenya to look for water and sanitation deals, back when I was managing the water portfolio. It was on this trip that I first saw David Kuria’s prototype for pay toilets in the slums, which he eventually turned into Ecotact. David took me to a community he had been working with for over a year and introduced me to a community leader who carried himself as though he were the mayor of the village. He was dapper in his mustard polyester dress shirt and pants, and he proudly showed me all the investments his community had made in improving water and health services with revenues from a pay toilet that David Kuria had built with them. He showed me this water stand, pictured above, as well as a small clinic, to which they had added a maternity ward and HIV/AIDS diagnostic center. The sense of ownership and pride that he and members of the community felt was palpable.

I remember wanting to get a picture of him that would somehow highlight the impact of true leadership on a community, but he was always moving so fast, and wasn’t the type of person to pose in front of something and take credit for it. Everything that this community had built had come from revenues they generated from their own pay toilet, and from the work of the community to build the things they needed. I managed to get this photo of him at the water stand, but you can almost see the reluctance on his face. At the same time, I think you can see his seriousness and determination as someone who is committed to improving a community facing tremendous challenges. He is a local shopkeeper, but he is also a community leader, a role model, a reason to believe that what people want more than anything is to solve their own problems and, if possible, help others in need.

Yasmina Zaidman is the Director of Communications at Acumen Fund.

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Photo of the Week from Aden Van Noppen, Portfolio Associate

Thursday, August 26th, 2010


“Develop a seamless web of deserved trust”—this was the expectation set in motion at the beginning of Acumen Fund’s Portfolio Gathering in May. When we brought the CEOs of our portfolio companies together for the first time in five years, the goal was to facilitate an environment of deep peer to peer exchange across the portfolio. In doing so, we developed a web of trust that extends beyond geographies and sectors, and we stretched our concept of the value that we, as investors, can bring to the companies in our Portfolio.

Back in 2005, 11 entrepreneurs, 7 Acumen staff from New York (our only office at the time), and 4 partners and advisors met in Bellagio.  Five short years later, the Acumen Fund family looks quite different—this time 30 entrepreneurs, 20 Acumen Fund staff (just from our Portfolio team) from 4 offices (New York, India, Pakistan, and Kenya), and 21 partners, advisors, and board members came together in Nairobi.  This photo—taken during a lighthearted moment during our visit to Jamii Bora, a recently exited housing investment in the outskirts of Nairobi—captures this truly global nature of our growing community.

As the residents of Kaputei Town welcomed the group, they literally connected us in a human chain of Americans, Indians, Pakistanis, Kenyans, South Africans, French, British, entrepreneurs, investors, newly established homeowners, advisors, donors, and board members.  While it admittedly felt goofy at first (and disorientingly similar to the popular Bar-Mitzvah dances of my 7th grade existence), we quickly set aside our feelings of awkwardness and embraced this joyful gesture of welcome from the Jamii Bora community. It wasn’t necessarily Jamii Bora’s intention, but I couldn’t help but notice that this cheerful welcome physically mirrored the sense of interconnection we were working to foster across our portfolio.

The Portfolio Gathering reminded us all of the wealth of knowledge that exists within our community and of the value that Acumen Fund can add simply by connecting them to each other. It can be so easy to think of our companies in isolated boxes, but this misses out on a massive opportunity. Acumen Fund is like a laboratory with each company producing unique lessons that can benefit the rest—it would be a shame if we neglected to create a platform for them to share with each other.  When I look at this photo, I am reminded of that.

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Summer Spotlight: How Patient Capital Can Redefine Scale

Thursday, August 19th, 2010


This summer I worked with one of the Acumen Fund’s investees Ansaar Management Company (AMC) based in Lahore, Pakistan. AMC is a for-profit company run by former Acumen Fellow Jawad Aslam, which provides affordable housing and a healthy community for low-income families. Unlike conventional models, AMC is selling homes with a clear legal title and a social infrastructure of water, sanitation, roads, and schools.

One of my tasks was to survey the commercial investment landscape and develop recommendations to help scale AMC’s model. With for-profit social enterprises like AMC, it’s natural to look at attracting commercial investors to help expand business. Since I used to work in real estate investment, I quickly reached out to former colleagues to help come up with ideas based on best practices in the industry. But, before long, I began to ask myself: “Why am I going back and conducting business with the same greedy capital markets which I left behind?” I became interested in the concept of Patient Capital because I thought it would challenge the norms in the present financial markets, which I had begun to question. However, upon hearing the word “scale,” I immediately began to think about the amount of capital necessary to invest into more housing development projects. How could we attract commercial investors? What kind of legal structure would promise liquidity for our investors? What is the best way to maximize financial efficiency?

But, were these the right questions to think about how to scale social impact? Is Patient Capital only patient until the enterprise is ready for traditional capital markets?

If the ultimate goal is to provide affordable homes to as many of Pakistan’s poor as possible, scale through the attraction of commercial capital does not need to be the focus of AMC’s organizational growth. Instead, when AMC proves that it’s model is profitable, it will provide other existing or potential housing developers incentive to replicate or adopt a similar model. The followers can be non-profit organizations or even the government, and there should be open space for creative collaboration among these different players.

However, scale cannot be just about seeing replication of AMC’s model because the problem is more often about the lack of systems and infrastructure. For instance, influencing public policy is a powerful way to scale impacts. AMC is now working with local government officials to change regulations on the planning of housing projects to make them more suitable to affordable homes. These changes could benefit not only AMC, but the entire market for affordable housing. There is also a more fundamental challenge to scaling the model. When Jawad worked for Saiban, the not-for-profit inspiration for AMC, it took him 18 months to obtain the proper approvals on the development plan because he refused to pay bribes. Fighting to rid of corruption would also result in a positive ripple effect across the housing development sector in this country.

If we can think of Patient Capital as not just a grace period for social entrepreneurs before tapping the “impatient” commercial markets, but instead as a new model of investment that is challenging the current systems of capitalism, scale could be defined and understood in a broader context. Attracting commercial investors is a fine pursuit. But we need to think outside the box and experiment with new ways of investment rather than simply adopting and accommodating the existing conduct of the commercial sector. This is the powers I see with Patient Capital. If we can move beyond thinking solely in terms of financial return, we can begin to explore innovative models that go beyond the simplistic dualism of for-profit vs. not-for-profit and private vs. public. Working for a social enterprise start-up in Pakistan has helped me reflect on my own mindset based on my private sector experience, and to think more deeply about what scale really means.

Nanako Kudo was a 2010 Summer Associate working for Acumen Fund investee Ansaar Management Company (AMC) in Lahore, Pakistan. Nanako is pursuing a Master’s degree in International Development and Social Change at Clark University.

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