Kenya

Let me congratulate Acumen investee David Kuria, founder of Ecotact, for being named the African Social Entrepreneur of the Year for 2009 by the World Economic Forum! This is fantastic recognition for David and his team’s work on bringing affordable, high quality sanitation services to thousands of people every day. Currently, Ecotact serves more than 9,000 customers daily through 10 toilets operated throughout the city of Nairobi, Kenya and other nearby locations. The toilets cost 5 shillings per use, though individuals also can pay a bit more to take a shower in a clean environment – a real luxury for thousands who travel into the city from the slums and far-flung rural areas to work in offices after long, dusty bus ride. Ecotact is showing that public-private partnerships can work on behalf of all people and we are proud to be a part of this effort.

Generally, when I do the road trip from Nairobi into Western Kenya, I stay up late the night before so I can snooze during the journey. I sleep because I’ve taken the trip too many times to count – besides, it’s often a bumpy and dusty ride.

However, my most recent trip from Nairobi to Kitale gave me a whole new perspective. Instead of making my regular trip home, I was bringing the eyes of Acumen Fund from the office in Nairobi to the ground in Kitale. In Kenya, it’s easy to find stories of famine, poverty and political unrest in the newspaper or on television, but these issues become very real along this eight hour road trip.

In Kitale, I met many smallholder farmers. I took the photograph above at one of these very farms. My perception of the smallholder farmer has always been that of a person who not only has a small piece of land, but who also cuts costs by using the cheapest seeds and the cheapest fertilizer (if any at all). Essentially, he or she is a person concerned with growing just enough to feed the family.

But listening to smallholder farmers, whom I met down dusty roads deep in some of the most remote parts of Western Kenya, brought to light how wrong my perception of this farmer was. The farmers I met know exactly the type of seeds they plant, the variety appropriate for different types of altitudes and soil, the right season to plant particular varieties, and the way to get optimal yields from inputs. This farmer typically plants maize intercropped with beans, and some napier grass for his cow and for soil erosion control. You can hear the excitement in the farmers’ voices as they talk about the different hybrid seeds they are using and how this has improved their lives as a result of increased yields.

Farmers in this part of Kenya are well informed, and are willing to adopt any changes that maximize their yields, even if it involves spending up to $60 US dollars on inputs.

My trip made me think of Acumen’s target market and how we need to know their needs. Poor, under educated and underestimated they may be, but we are dealing with savvy customers who are aware of the benefits of improved inputs. They are willing to invest in resources that increase their income. I feel that the more complex question is not whether a seed variety is new or traditional, but whether this new variety is accepted or rejected by a farmer. When new varieties offer an increased yield to farmers they will be accepted, just as new varieties that do not will be rejected.

The farmer calls the shots, based on what he sees on the ground. He is informed and has a variety of choices, and with this comes dignity. He is not in the position of begging for handouts, but has a place at the bargaining table to listen to cases presented, alongside proof and make decisions. There is a need for us to connect such farmers to the right entrepreneur who can provide an appropriate product or service to fill this need. But first, Acumen must work to engage with this customer – by spending time understanding his immediate needs and behavior. Only through our own investment of time and energy will Acumen be able to invest in the best approaches to help smallholder farmers lift themselves out of poverty, one seed at a time.

This cost analysis hangs on a wall at in the Osembe Primary School, a concrete block building surrounded by rice fields not far from Lake Victoria.

It was created by the members of the school Health Club, a group of precocious young kids I would love to see become interns in Acumen’s Nairobi office someday. It is not hard to imagine these kids making the leap from “Simple Mathematics” to Acumen’s BACO analysis.

Osembe is part of a multi-year study run by CARE and several other organizations to evaluate the impact of providing sanitation and clean water in schools. Schools like Osembe receive new pit latrines, storage containers and chlorine to purify their well water.

There is considerable evidence that clean water and good latrines in schools dramatically improve child health and school attendance (a factor of both reduced illness and better privacy: a large percentage of girls drop out when they hit puberty for the simple reason that they don’t have a private latrine to use for hygiene). And yet fewer than 30% of primary schools in Kenya have proper latrine facilities or access to clean water. If you had limited resources to spend on improving water access, schools would be a smart place to start.

The trick from Acumen’s perspective is that most of our investments rely on provision of goods and services to customers who can pay for them. But what about school children? The Osembe poster demonstrates a solid grasp of economics and an obvious appreciation for the service, but how can we expect kids to pay for clean water?

Let’s set aside the most obvious solution – government funding – which is how schools are funded in most of the world. In Kenya, the government provides each primary school $13 per student per year to cover all facilities, staff, books, and everything else. (Meanwhile a single member of parliament is paid about the same amount that the budget allocates to 40 primary schools.) Since the government is not stepping up, organizations like Acumen need to find other approaches to deliver these services to the 18,000 public primary schools in Kenya.

As our Nairobi office explores the water sector here for investments, we have seen several business models that can help expand water and sanitation access to schools. Here are two examples:

- Outside of Nairobi, several organizations have installed community water kiosks at schools, which provide the water free to students but charge a fee to the surrounding community. The fee is approximately 3.75 cents per 20 liter jerrycan, similar to the 3 to 6 cents that Acumen investees WaterHealth International and EPGL charge per 20 liter jerrycan in India, and affordable to low-income communities. Schools already have a built-in management structure to help run the kiosks, and the model and pricing can be tweaked so that the revenues cover operating costs of the system (and potentially capital expenditures too).

- A company called Manna Energy is building small community water treatment plants and toilet facilities in Rwanda and placing them at schools. The resources are provided free to the school and surrounding villagers, but the company is setting up a creative carbon finance scheme where they receive and sell carbon credits for offsetting firewood that would otherwise be burned to boil water.

Before we left the Osembe primary school, each of the visitors was called to introduce himself to the assembled kids, who were lined up in a big semi-circle marked by small bushes – the equivalent of the gym bleachers where we gather for morning assembly in the States.

“Good morning!” I said when it was my turn.

“Good morning teacher!” they chorused in the call-and-response fashion common here.

“I am visiting from America. Do you know who the president of America is?”

(Laughter) “Barack Obama!” These kids are from the Luo tribe, like Obama’s father, and he is a local hero. They know more about our President than most American kids do.

“I’m sorry President Obama couldn’t join us today, but I do know for a fact that he treats his drinking water just like you do.”

The kids laughed again, recognizing that this was a stretch. Our drinking water in the States is indeed chlorinated like the water in Osembe’s storage containers. But they know very well that our President doesn’t have to draw it from a well, carry the jerrycan to school, fill a big storage drum, and dose it with liquid chlorine himself.

It was encouraging to see the value these children place on clean water. But they, and millions of students like them, will only have access to it if we can find sustainable models to pay for that service in schools. Clean water and good health will help get these kids through school, into college, and hopefully someday applying their “Simple Mathematics” skills to Acumen investments.

Updated March 31, 2009: The application period for the East Africa Leader position has ended. Thank you for your interest in Acumen Fund!

Acumen Fund is currently in search of an experienced individual to join our East Africa team in Nairobi as the East Africa Leader. The PDF version of the job description can be found on the Work with Acumen page.

The East Africa Leader is a senior role within Acumen Fund, requiring collaboration with our Chief Investment Officer and Chief Administrative Officer. The Leader’s main responsibilities will include, but will not be limited, to developing and managing our presence in the East Africa region, developing and managing the staff in our East Africa office as well as working closely with our Business Development team to identify, cultivate and secure partner and corporate contributions in the region

If you or someone you know is interested in the position, please visit the site to learn more.

“The toilet is a godsend” says Maurice Kirimi, a 29-year old Kenyan interviewed in line outside an Ecotact Ikotoilet last week. Maurice’s comments - along with a handful of other customers’ - were featured in an article that appeared in Kenya’s Daily Nation newspaper about new, pay-per-use public toilets. Entitled “Public toilets no longer filthy dens but gleaming havens,” the article discusses pricing (5 KSh for the toilets - about $0.06 USD; 10 KSh for a shower - about $0.12 USD) and customer satisfaction.

We’re glad to see an Acumen Fund investee featured in the article, but what’s even better is to hear customers’ opinions of clean, professionally-managed sanitation facilities. And you can’t beat the photo, which is of an Ikotoilet facility on Aga Khan Walk.

I write from Nairobi, where people have been dancing in the streets on this historic day of America’s inauguration of its first African-American president, Barack Obama. The Kenyans we’ve met have called him their brother, their son, and even the Second Coming. “He will bring the fighting countries close and end the wars,” a man told me while we were in Kibera, one of this city’s largest slums.

Though expectations of President Obama may be impossibly high, this inauguration has brought the entire world together for a brief moment of unity, hope and inspiration. I couldn’t have felt prouder to be an American, to feel so connected to Kenya, to believe more strongly today than ever that we can all become global citizens in the truest sense of the word. 

President Obama’s speech carried so many themes that lie at the core of Acumen Fund’s mission.  He promised more compassion for those who are suffering in the developing world, and recognized the power - and limitations - of markets, urging a new level of innovation and creativity as we solve the problems ahead. 

Barack Obama’s vision is soaring and powerful, and he will need each and everyone of us, regardless in which country we live, to succeed.  We at Acumen Fund will do all that we can to help and will do so with determined optimism and renewed effort. 

Yes. We. Can…..

Editor’s note: Guest blogger Linda Segre is Managing Director of Google.org. Full disclosure: Google.org is an Acumen Fund Leadership Partner.

By Linda Segre

In many ways, Wednesday, November 5 was like any other day at the office. I came into work, powered on my computer, grabbed a coffee, and sat down to start the day. As usual, a host of unread e-mails awaited me. But that’s where my day ceased to be usual and instead, became truly memorable.

Innocuously nestled in with all the other messages was a note from Samuel Onyango. I first met Samuel in 2006, while traveling in Kenya with Acumen Fund’s CEO, Jacqueline Novogratz. That day, Jacqueline and I left Nairobi for western Kenya, where one of Acumen’s investments, Advanced Bio-Extracts, operates. Advanced Bio-Extracts is a for-profit company that processes raw Artemisia annua into artemisinin, the active ingredient in Coartem - one of the world’s most effective anti-malarial drugs.

ABE doesn’t source the raw Artemisia annua from just anywhere, however - they’ve invested in farmers who grow the plant and sell their yields to ABE. One such farmer is Samuel Onyango; I had the honor of meeting him and hearing about how his lifestyle had improved once ABE began to buy his Artemisia.

In January this year, I received an e-mail from Samuel - the post-election violence in Kenya had made its way to his small farm; looters and rioters had burned his house and fields.

It’s amazing how much has changed in just a few short months. Two Wednesdays back, I heard from Samuel again. His e-mail radiated hope, and brought a tear of joy to my eyes. I won’t do Samuel the injustice of trying to summarize his e-mail; instead, I’ll copy it in its entirety below:

Dear Linda, I take this special opportunity to congratulate you and the entire population of America as you celebrate the victory of your new president. Whether you supported John McCain or Barack Obama, the victory that has been achieved is the victory for the whole of America, the victory of Kenya and a victory of the whole world. Barack Obama, being a son of a Kenyan father, has made as Kenyans proud for having produced the president of the most powerful nation in the world. To that effect, the president of Kenya, H.E. Honorable Mwai Kibaki has announced that tomorrow - Thursday - will be a public holiday so that we can celebrate the Obama victory, unlike in January when he himself was controversially declared the winner, and instead of celebrating we went to war. Your elections and Obama’s victory are big lessons for us. Linda, I am so excited by Obama’s victory. Not only because he comes from Kenya, and not only because he is black, but because Onyango Husain Obama - the grandfather to Obama - and Rebecca Abongo Obama - my own grandmother - ware a brother and a sister. I have never met Barack nor will I. But I am humbled and feel greatly honored that a man who shares some blood with me is indeed today the most powerful man in the world. May God bless you. May God bless America. May God bless Kenya and may God bless ABE. I hope and pray that he will make America and Americans greater. I am praying and hoping that he will make your life more comfortable and make you proud to be an American. Thank you so much as we celebrate, SAMUEL FROM KENYA.

Editor’s Note: This post is authored by Acumen Fund Summer Associate Amy H. Lin. Amy is pursuing an MBA and International Relations MA from the Wharton School, University of Pennsylvania and the School of Advanced International Studies (SAIS), Johns Hopkins University, respectively. Her professional interests are in international development in sub-Saharan Africa. She has worked at the World Bank, with TechnoServe and with the Boston Consulting Group. Amy graduated from Yale with a BA in Political Science.

By Amy Lin

Proving that BoP services and profit can go hand in hand, Nairobi-based Meridian Medical Centre has been profitably operating three outpatient clinics with one-third of its clients earning only $4 a day. In April 2008, Meridian opened a fourth clinic in Donholm, a low-income Nairobi neighborhood, to cater to a low-income clientele interested in high quality outpatient health care at a reasonable price.

Through a new partnership with Acumen Fund and The Blue Link Mirror Fund, Meridian will open 5 more clinics over the next 3 years in higher density, lower income areas. This expansion will begin in Nairobi, but with an eye to expanding to towns on the periphery of Nairobi. As the Kenyan newspaper The Standard reported on June 17, Meridian’s partnerships will leverage both capital and management expertise—strengthening Meridian’s bottom line while meeting BoP needs.

Meridian’s push into lower-income markets is part of a larger trend of companies recognizing the market potential of the BoP. In Kenya, prominent businesses like Equity Bank and Safaricom (a mobile phone company) have enjoyed explosive growth in recent years, largely due to their success at attracting large volumes of low income clients. Investors are also recognizing the opportunity to profitably serve the BoP, as illustrated in the oversubscription of the Safaricom IPO, which drew 236 billion Kenyan shillings ($3.68 billion).

As Meridian and others launch operations targeted at lower income populations to achieve higher growth rates, in Nairobi as well as in peri-urban or rural areas, the BoP will benefit from the greater choice of products and services. Just as he predicted, Adam Smith’s “invisible hand” is using corporate self-interest to achieve a greater public good.